ARCHBOLD — Farmers & Merchants Bancorp Inc., the holding company for Farmers & Merchants State Bank, has announced it has signed an agreement and plan of merger with Peoples-Sidney Financial Corporation (PPSF) and its wholly owned subsidiary Peoples Federal Savings and Loan Association, in a stock and cash transaction.
Peoples operates from its main office in Sidney, Ohio, two full-service branch offices located in Anna, Ohio, and Jackson Center, Ohio, and a drive-through facility in Sidney.
At March 31, 2022, PPSF reported $132.7 million in total assets, $99.9 million in loans, $114.8 million in deposits and $15.4 million in tangible common equity.
Subject to the terms of the merger agreement, which has been approved by the Board of Directors of each company, PPSF shareholders will elect to receive either 0.6597 shares of FMAO stock or $24.00 per share in cash for each PPSF share owned, subject to a minimum of 65% of all PPSF shares being exchanged for FMAO stock. As of March 31, 2022, PPSF reported 1,167,025 shares of common stock outstanding. Based on FMAO’s closing share price as of June 14, 2022 of $34.28, the implied aggregate acquisition value equals $27.0 million.
Peoples expands F&M’s community banking franchise into compelling Sidney, Ohio, and surrounding markets in Shelby County. After the Peoples transaction, F&M will operate 21 offices, a drive-up facility and an LPO in Ohio, 12 offices and an LPO in Indiana, and an LPO in Michigan with total deposits of $2.4 billion, total loans of $2.1 billion, and total assets of $2.8 billion on a pro forma basis as of March 31, 2022.
Lars Eller, president and CEO of F&M, stated, “The combination of Peoples and F&M creates immediate value for our shareholders, customers, and communities and I am excited to expand F&M’s community-oriented banking in Sidney and greater Shelby County. This transaction is an excellent opportunity for Peoples to become part of a larger community banking organization that offers customers a wider range of financial services.”
“F&M has created a successful acquisition platform and Peoples represents F&M’s fifth acquisition since year-end 2018, including four community banking organizations and one complementary financial services company. F&M’s acquisition strategy, combined with a history of strong organic growth, have contributed to a 33% compound annual growth rate for total assets on a pro forma basis since year-end 2018. On behalf of everyone at F&M, I am pleased to welcome Peoples’ customers and employees to the F&M family,” concluded Eller.
Geuy said, “We are very excited to be joining forces with F&M. The two organizations have similar community-focused cultures, and F&M’s scale, diversity, and expertise will dramatically enhance the services we will be able to offer to existing and new customers alike. We trust F&M’s experience of successfully completing and integrating community bank acquisitions and believe the combination will provide Peoples with the necessary resources to pursue compelling growth opportunities throughout our markets.”
While the name of Peoples Federal will be changing to Farmers & Merchants, the legacy of the building designed by architect Louis H. Sullivan will continue. The building was built in 1917 and recently celebrated its 100th anniversary.
“They (F&M) are committed to our national landmark and treasure,” said Geuy. “They understand the significance of the building. This is a very positive transaction that will benefit the community, our customers, our employees and our shareholders. It’s good for everyone and our building will be in good hands.”
Excluding one-time transaction costs, F&M expects the transaction to be approximately 2.5% and 3.9% accretive to estimated 2023 and 2024 diluted earnings per share, respectively. Tangible book value per share will be diluted approximately (2.1%) at closing and is expected to be recovered in 3.25 years using the crossover method.
F&M is being advised by Piper Sandler & Co. and Shumaker, Loop & Kendrick LLP. Peoples is being advised by Boenning & Scattergood and Vorys, Sater, Seymour and Pease LLP.
Geuy anticipates the merger to be completed in the fourth quarter of this year subject to shareholder and regulatory approval.