8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________________

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

______________________________

Date of report (Date of earliest event reported): October 12, 2006

Merrill Merchants Bancshares, Inc.

(Exact name of registrant as specified in its charter)

Maine (State or other jurisdiction of incorporation) 000-24715 (Commission File Number) 01-0471507 (IRS Employer Identification No.)

201 Main Street, Bangor, Maine 04401

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (207) 942-4800

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[   ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[   ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[   ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[   ]   Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 3.01.Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

(a) Nasdaq Notice of Technical Listing Violation Received; Violation Has Been Fully Corrected.

On May 4, 2006, Michael Shea was elected to the board of directors of Merrill Merchants Bancshares, Inc. (the “Company”) at the Company’s annual meeting of shareholders. The board appointed Mr. Shea to the Company’s audit committee to fill the vacancy left by the resignation of Susan B. Singer. On October 12, 2006, the Company received written notice from Nasdaq indicating that between September 23, 2005 and May 4, 2006, the Company had been out of compliance with Nasdaq’s audit committee composition requirement as set forth in Marketplace Rule 4350(d)(2). This notification was due to the Company’s audit committee only having two members during the period between Ms. Singer’s resignation on September 23, 2005, and Mr. Shea’s appointment on May 4, 2006.

As a result of Mr. Shea’s appointment, the Company’s audit committee is now comprised of three independent directors and the Company is in compliance with Marketplace Rule 4350(d)(2). In its letter dated October 12, 2006, Nasdaq agreed that the Company had gained compliance and that the matter is closed. As a result, the Company is taking no formal action in response to the Nasdaq letter.

Item 9.01.Financial Statements and Exhibits.

The following exhibit is furnished with this report on Form 8-K:

Exhibit No.     99.1  Description   Press release dated October 16, 2006.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Merrill Merchants Bancshares, Inc.
By:	/s/ Deborah A. Jordan
	Deborah A. Jordan Chief Financial Officer

Dated: October 16, 2006

EX-99.1

Exhibit 99.1

Merrill Merchants Bancshares, Inc. Adds

Third Independent Director To Audit Committee

Bangor, Maine, October 16, 2006: Merrill Merchants Bancshares, Inc. (the “Company”) (Nasdaq: MERB) today announced that Michael T. Shea, an existing member of the Company’s board of directors, was appointed to the Company’s audit committee, effective May 4, 2006. Mr. Shea’s appointment filled the vacancy on the audit committee created by Susan Singer, who resigned from the Company’s board of directors on September 23, 2005.

Prior to Mr. Shea’s appointment, the Company’s audit committee consisted of two independent directors rather than the three independent directors required under Nasdaq Marketplace Rule 4350(d)(2) as a result of Ms. Singer’s resignation. On October 12, 2006, Nasdaq’s Listing Qualifications Department informed the Company by letter that it had not been in compliance with Marketplace Rule 4350(d)(2) during the transition period between September 23, 2005 and May 4, 2006. However, Nasdaq acknowledged in the same letter that, as a result of Mr. Shea’s appointment, the Company had regained compliance and the matter is now closed.

For further information contact:

Edwin N. Clift, Chairman and Chief Executive Officer (eclift@merrillmerchants.com)

Deborah A. Jordan, Chief Financial Officer (djordan@merrillmerchants.com)

Merrill Merchants Bancshares, Inc.

www.merrillmerchants.com

(207) 942-4800