content: 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):
                                    NOVEMBER 30, 1994
  
  
  
                                MERCHANTS BANCSHARES, INC.
                                (Exact name of Registrant
                                 as specified in charter)
  
  
  
            VERMONT                       0-11595             03-0287342
            (State or other               (Commission         (IRS Employer
             jurisdiction                 File Number)        Identification
            of incorporation)                                      Number)
  
  
  
            123 CHURCH STREET,     BURLINGTON, VERMONT        05402
            (Address of principal executive offices)          (Zip Code)
  
  
            Registrant's telephone number, including area code:(802) 658-3400
  
  
  
                                      NOT APPLICABLE
                              (Former name or former address
                              if changed since last report)
  
  
  
                                            1
  
  <PAGE>
  
  
  
  
  
  
  
  
  
  
  
  
                                        SIGNATURES
  
            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 thereunto duly authorized.
  
  
                                               MERCHANTS BANCSHARES, INC.
                                               (Registrant)
  
  
  
            DATE:  November 30, 1994           BY: /S/ Edward W. Haase
                   -----------------               -------------------
                                                   Edward W. Haase
                                                   Chief Financial Officer
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                                            2
  <PAGE>
  
  
  
  
  
  
  
  
  
  
  
            ITEM 5.  OTHER EVENTS
  
            November 30, 1994 - Merchants Bancshares, Inc. (NASDAQ;MBVT)
            announced today that it is taking a charge to earnings in the
            amount of $9 million to protect its trust customers against
            losses incurred due to investments in the Piper Jaffray
            Institutional Government Income Fund.  After taxes, the reduction
            in earnings will be approximately $6.1 million.  Merchants is
            assessing its right to reimbursement from third parties and is
            engaged in negotiations with its insurers.  A copy of the press
            release dated November 30, 1994 is attached as an exhibit to this
            Form 8-K.
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                                            3
  <PAGE>
  
  
  
  
  
  
  
  
  
  
                                    INDEX TO EXHIBITS
  
                      ITEM                                    PAGE NUMBER
            
                      Press release related to 
                      Company's announcement to protect
                      trust customers against losses 
                      incurred due to investments in the
                      Piper Jaffray Institutional Government
                      Income Fund                                5 - 7
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                                            4
  <PAGE>
  
  
  
  
  
  
                                      PRESS RELEASE
  
  
            Date for Release:                            Contact:
            November 30, 1994                            Joseph L. Boutin
                                                         (802)865-1894
  
            Burlington, VT - November 30, 1994 - 
  
            Joseph L. Boutin, President and Chief Executive Officer of
  
            Merchants Bancshares, Inc. (NASDAQ:MBVT), and Chairman of its
  
            subsidiary, The Merchants Trust Company, announced today the
  
            intention of The Merchants Trust Company to protect its trust
  
            customers against losses incurred due to investments in the Piper
  
            Jaffray Institutional Government Income Fund.  On November 23,
  
            1994, The Merchants Trust Company sold substantially all its
  
            trust account holdings of that Fund.
  
  
  
            "Total returns on long-term fixed income securities for the last
  
            fourteen months have been negative due to the dramatic decline in
  
            the bond market," said Mr. Boutin.  "That is the bad news.  The
  
            good news is that the Trust Company will absorb the loss
  
            attributable to the Piper Jaffray Institutional Government Income
  
            Fund used as an investment vehicle in our trust accounts.  Those
  
            accounts will not lose a single dollar as a result of the Piper
  
            Jaffray investment."
  
  
  
            In a letter mailed today to Trust Company clients, Mr. Boutin
  
            reported that The Merchants Trust Company will pay to each
  
            account that was invested in the Piper Jaffray Institutional
  
                                            5
  <PAGE>
  
  
  
  
            Government Income Fund the difference between the total return it
  
            earned from the Piper Jaffray Institutional Government Income
  
            Fund and the total return it would have earned during the period
  
            of its Piper Jaffray investment if the investment had been in the
  
            Federated GNMA Fund instead.  The Trust Company previously used
  
            the Federated GNMA Fund.  Total return, Mr. Boutin's letter
  
            explained, includes the income earned over time plus or minus any
  
            change in the market value of the underlying investment.
  
  
  
            The payments will be made by the Trust Company during the month
  
            of December.  The total return on the Federated GNMA Fund for the
  
            period from October 6, 1993 through November 23, 1994 was
  
            approximately -3%.  The precise payment for any particular
  
            account will depend on the specific Piper Jaffray Institutional
  
            Government Income Fund transactions in that account.
  
  
  
            Mr. Boutin further stated that the exact amount to be paid to
  
            customers was in the process of being calculated, but he
  
            estimated that in the aggregate it would be in the range of $9
  
            million.
  
  
  
            Mr. Boutin further stated that funds for these payments will be
  
            supplied by The Merchants Bank, the parent of The Merchants Trust
  
            Company, from available working capital.  Mr. Boutin said that
  
            such payments will not reduce the capital of The Merchants Bank
  
            below the amounts required by its regulators.  Mr. Boutin also
  
  
                                            6
  <PAGE>
  
  
  
  
            reported that the ultimate financial effect of these events
  
            cannot yet be determined as The Merchants Trust Company is
  
            assessing its right to reimbursement from third parties and is
  
            engaged in negotiations with its insurers.  There is also pending
  
            litigation relating to customers of The Merchants Trust Company.
  
  
  
            Boutin said that "The Merchants Trust Company has been privileged
  
            to serve Vermont and Vermonters for more than a century.  With
  
            this action, we reaffirm our commitment to put the interests of
  
            our clients and our customers first."
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                                            7
  <PAGE>
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metadata_filer: {"company-data": {"conformed-name": "MERCHANTS BANCSHARES INC", "cik": "0000726517", "assigned-sic": "6022", "irs-number": "030287342", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-11595", "film-number": "94563921"}, "business-address": {"street1": "123 CHURCH ST", "city": "BURLINGTON", "state": "VT", "zip": "05401", "phone": "8026583400"}, "mail-address": {"street1": "PO BOX 1009", "city": "BURLINGTON", "state": "VT", "zip": "05401"}}
text: 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):
                                    NOVEMBER 30, 1994
  
                                MERCHANTS BANCSHARES, INC.
                                (Exact name of Registrant
                                 as specified in charter)
  
            VERMONT                       0-11595             03-0287342
            (State or other               (Commission         (IRS Employer
             jurisdiction                 File Number)        Identification
            of incorporation)                                      Number)
  
            123 CHURCH STREET,     BURLINGTON, VERMONT        05402
            (Address of principal executive offices)          (Zip Code)
  
            Registrant's telephone number, including area code:(802) 658-3400
  
                                      NOT APPLICABLE
                              (Former name or former address
                              if changed since last report)
  
                                            1
  SIGNATURES
  
            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 thereunto duly authorized.
  
                                               MERCHANTS BANCSHARES, INC.
                                               (Registrant)
  
            DATE:  November 30, 1994           BY: /S/ Edward W. Haase
                   -----------------               -------------------
                                                   Edward W. Haase
                                                   Chief Financial Officer
  
                                            2
  ITEM 5.  OTHER EVENTS
  
            November 30, 1994 - Merchants Bancshares, Inc. (NASDAQ;MBVT)
            announced today that it is taking a charge to earnings in the
            amount of $9 million to protect its trust customers against
            losses incurred due to investments in the Piper Jaffray
            Institutional Government Income Fund.  After taxes, the reduction
            in earnings will be approximately $6.1 million.  Merchants is
            assessing its right to reimbursement from third parties and is
            engaged in negotiations with its insurers.  A copy of the press
            release dated November 30, 1994 is attached as an exhibit to this
            Form 8-K.
  
                                            3
  INDEX TO EXHIBITS
  
                      ITEM                                    PAGE NUMBER
            
                      Press release related to 
                      Company's announcement to protect
                      trust customers against losses 
                      incurred due to investments in the
                      Piper Jaffray Institutional Government
                      Income Fund                                5 - 7
  
                                            4
  PRESS RELEASE
  
            Date for Release:                            Contact:
            November 30, 1994                            Joseph L. Boutin
                                                         (802)865-1894
  
            Burlington, VT - November 30, 1994 - 
  
            Joseph L. Boutin, President and Chief Executive Officer of
  
            Merchants Bancshares, Inc. (NASDAQ:MBVT), and Chairman of its
  
            subsidiary, The Merchants Trust Company, announced today the
  
            intention of The Merchants Trust Company to protect its trust
  
            customers against losses incurred due to investments in the Piper
  
            Jaffray Institutional Government Income Fund.  On November 23,
  
            1994, The Merchants Trust Company sold substantially all its
  
            trust account holdings of that Fund.
  
            "Total returns on long-term fixed income securities for the last
  
            fourteen months have been negative due to the dramatic decline in
  
            the bond market," said Mr. Boutin.  "That is the bad news.  The
  
            good news is that the Trust Company will absorb the loss
  
            attributable to the Piper Jaffray Institutional Government Income
  
            Fund used as an investment vehicle in our trust accounts.  Those
  
            accounts will not lose a single dollar as a result of the Piper
  
            Jaffray investment."
  
            In a letter mailed today to Trust Company clients, Mr. Boutin
  
            reported that The Merchants Trust Company will pay to each
  
            account that was invested in the Piper Jaffray Institutional
  
                                            5
  Government Income Fund the difference between the total return it
  
            earned from the Piper Jaffray Institutional Government Income
  
            Fund and the total return it would have earned during the period
  
            of its Piper Jaffray investment if the investment had been in the
  
            Federated GNMA Fund instead.  The Trust Company previously used
  
            the Federated GNMA Fund.  Total return, Mr. Boutin's letter
  
            explained, includes the income earned over time plus or minus any
  
            change in the market value of the underlying investment.
  
            The payments will be made by the Trust Company during the month
  
            of December.  The total return on the Federated GNMA Fund for the
  
            period from October 6, 1993 through November 23, 1994 was
  
            approximately -3%.  The precise payment for any particular
  
            account will depend on the specific Piper Jaffray Institutional
  
            Government Income Fund transactions in that account.
  
            Mr. Boutin further stated that the exact amount to be paid to
  
            customers was in the process of being calculated, but he
  
            estimated that in the aggregate it would be in the range of $9
  
            million.
  
            Mr. Boutin further stated that funds for these payments will be
  
            supplied by The Merchants Bank, the parent of The Merchants Trust
  
            Company, from available working capital.  Mr. Boutin said that
  
            such payments will not reduce the capital of The Merchants Bank
  
            below the amounts required by its regulators.  Mr. Boutin also
  
                                            6
  reported that the ultimate financial effect of these events
  
            cannot yet be determined as The Merchants Trust Company is
  
            assessing its right to reimbursement from third parties and is
  
            engaged in negotiations with its insurers.  There is also pending
  
            litigation relating to customers of The Merchants Trust Company.
  
            Boutin said that "The Merchants Trust Company has been privileged
  
            to serve Vermont and Vermonters for more than a century.  With
  
            this action, we reaffirm our commitment to put the interests of
  
            our clients and our customers first."
  
                                            7