Farmers & Merchants Bancorp, Inc. (NasdaqCM:FMAO) signed an agreement to acquire Perpetual Federal Savings Bank (OTCPK:PFOH) for approximately $100 million on May 4, 2021. Subject to the terms of the merger agreement, PFSB shareholders will elect to receive either 1.7766 shares of F&M stock or $41.20 per share in cash for each PFSB share owned, subject to adjustment based upon 1,833,999 shares of F&M to be issued in the merger. The agreement provides for the merger of PFSB with and into F&M Bank. In case of termination of the transaction, PFSB will pay a termination fee of $4.25 million to F&M.

Upon close of the transaction, F&M and F&M Bank will appoint to cause a mutually acceptable PFSB director to be appointed to the F&M and F&M Bank Boards of Directors. The officers of F&M and F&M Bank immediately prior to the merger will continue to be the officers until they resign or until their successors are duly elected and qualified. As on September 17, 2021, it was reported that David Vernon, a current Director of PFSB, will join F&M's Board of Directors upon the completion of the transaction. The transaction is subject to various conditions, including, among others, (i) requisite approval of the holders of PFSB common stock; (ii) effectiveness of a Form S-4 registration statement relating to the F&M common stock to be issued in the Merger and listing of the F&M common stock to be issued in the Merger on the NASDAQ Capital Market; (iii) receipt of regulatory approvals; and (iv) the transaction should constitute a reorganization within the meaning of Section 368(a) of the Code. A special meeting of the shareholders of PFSB will be held on September 8, 2021 to approve the transaction. The agreement also requires that PFSB shall have terminated the employment agreements and paid the change in control payments due thereunder and the shares of F&M common stock to be issued in the transaction shall have been listed for trading on The NASDAQ Capital Market, among others. The transaction has been approved by the Board of Directors of each company. The Board of PFSB recommends the shareholders to vote for the transaction. Of the approximately 64% of votes cast by PFSB shareholders, nearly 98% voted in favor of the transaction. On September 21, 2021, Farmers & Merchants Bancorp received regulatory approvals for the acquisition. Farmers & Merchants Bancorp recently received the final regulatory approval by the state of Ohio.

The transaction is expected to close in third quarter of 2021. As of July 8, 2021, the transaction is expected to close during the fourth quarter of 2021. As of July 21, 2021, the transaction is expected to close in October 2021. As of August 2, 2021, the transaction is expected close on October 1, 2021. The transaction is expected to be approximately 10.0% and 14.5% accretive to first- and second-year diluted earnings per share, respectively. Rick Maroney of ProBank Austin is acting as financial advisor to F&M and Thomas C. Blank, Martin D. Werner and David J. Mack of Shumaker, Loop & Kendrick, LLP are acting as legal advisor to F&M. Keefe Bruyette & Woods, A Stifel Company is acting as financial advisor and fairness opinion provider to PFSB. Jeffrey E. Smith and Kimberly J. Schaefer of Vorys, Sater, Seymour and Pease LLP are acting as legal advisor to PFSB. Pat McJoynt-Griffith of Keefe, Bruyette, & Woods, Inc. acted as financial advisor to Perpetual Federal Savings Bank. Crowe LLP provided auditor's report on financials of PFSB. PFSB agreed to pay KBW a total cash fee equal to 1.00% of the aggregate merger consideration, $150,000 of which became payable to KBW with the rendering of its opinion, and the balance of which is contingent upon the closing of the merger.

Farmers & Merchants Bancorp, Inc. (NasdaqCM:FMAO) completed the acquisition of Perpetual Federal Savings Bank (OTCPK:PFOH) on October 1, 2021. As a part of closing, PFSB branch signage will transition to Farmers & Merchants State Bank on October 4, 2021.