Farmers & Merchants Bancorp, Inc. Announces Agreement to Acquire Peoples-Sidney Financial Corporation, Sidney, Ohio

Farmers and Merchants Bancorp, Inc.

ARCHBOLD, Ohio, June 14, 2022 (GLOBE NEWSWIRE) — Farmers & Merchants Bancorp, Inc. (“F&M,” “FMAO” or the “Company”) (Nasdaq: FMAO), the holding company of Farmers & Merchants State Bank, today announced the signing of an agreement and plan of merger (the “Agreement”) whereby F&M will acquire Peoples-Sidney Financial Corporation (“Peoples” or “PPSF”) (OTC Pink: 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 branches located in Anna, Ohio and Jackson Center, Ohio, and a drive-thru in Sidney. As of March 31, 2022, PPSF reported total assets of $132.7 million, $99.9 million in loans, $114.8 million in deposits and $15.4 million in tangible common stock.

Subject to the terms of the merger agreement, which has been approved by each company’s board of directors, PPSF shareholders will elect to receive either 0.6597 FMAO shares or $24.00 per share in cash for each PPSF share held, subject to a minimum exchange of 65% of all PPSF shares for FMAO shares. As of March 31, 2022, PPSF declared 1,167,025 common shares outstanding. Based on FMAO’s closing stock price on June 14, 2022 of $34.28, the implied aggregate acquisition value equals $27.0 million.

Peoples expands F&M’s community banking franchise to Sidney, Ohio and surrounding Shelby County markets. After the Peoples transaction, F&M will operate 21 offices, a drive-up service and an LPO in Ohio, 12 offices and an LPO in Indiana, and an LPO in Michigan with total deposits of $2.4 billion. dollars, 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, said, “The combination of Peoples and F&M creates immediate value for our shareholders, customers and communities and I am excited to expand community-focused banking from F&M in Sidney and greater Shelby County. This transaction is a great opportunity for Peoples to become part of a larger community banking organization that offers its customers a wider range of financial services.

“F&M has created a successful acquisition platform and Peoples represents F&M’s fifth acquisition since the end of 2018, comprising four community banking organizations and a complementary financial services company. F&M’s acquisition strategy, combined with a track record of strong organic growth, has contributed to a compound annual growth rate of 33% in total assets on a pro forma basis since the end of 2018. On behalf of all at F&M, I am pleased to welcome Peoples’ customers and employees to the F&M family,” Mr. Eller concluded.

Debra A. Geuy, President and CEO of Peoples, said, “We are thrilled to partner with F&M. Both organizations have similar community-focused cultures, and the scale, diversity and expertise of F&M will greatly enhance the services we can provide to existing and new customers. We trust F&M’s experience in successfully completing and integrating community bank acquisitions and believe the combination will provide Peoples with the resources to pursue attractive growth opportunities in our markets.

Excluding one-time transaction costs, F&M expects the transaction to be approximately 2.5% and 3.9% accretive to estimated diluted earnings per share for 2023 and 2024, respectively. The tangible book value per share will be diluted by approximately (2.1%) at closing and is expected to be recovered in 3.25 years using the cross method.

F&M is advised by Piper Sandler & Co. and Shumaker, Loop & Kendrick, LLP. Peoples is advised by Boenning & Scattergood and Vorys, Sater, Seymour and Pease LLP.

Important information for investors and shareholders:

This press release does not constitute an offer to sell or the solicitation of an offer to buy securities or a solicitation to vote by proxy or endorsement. The proposed merger will be subject to review by PPSF shareholders. In connection with the proposed merger, F&M will file with the SEC a registration statement on Form S-4 which will include a power of attorney for PPSF and a prospectus of F&M, as well as other relevant documents relating to the proposed transaction. SHAREHOLDERS ARE ADVISED TO READ THE REGISTRATION STATEMENT AND RELATED PROXY PROSPECTUS REGARDING THE MERGER WHEN THEY BECOME AVAILABLE, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AND ANY AMENDMENTS OR SUPPLEMENTS TO SUCH DOCUMENTS, AS THEY WILL CONTAIN INFORMATION.

Once filed, you will be able to obtain a free copy of the Proxy Circular – Prospectus, when it becomes available, as well as other documents containing information about F&M and PPSF, on the SEC’s website (http://www.sec.gov). You can also obtain these documents free of charge by accessing the F&M website (http://www.fm.bank) under the “About Us” tab, then in the “Investor Relations” section, and finally under the “SEC Filings and Documents” link.

PPSF and its directors and officers may be considered participants in the solicitation of proxies from PPSF shareholders in connection with the proposed merger. Additional information regarding the interests of these participants and other persons who may be considered participants in the transaction may be obtained by reading the proxy statement – prospectus relating to the proposed merger when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.

About the State Farmers and Merchants Bank:

Farmers & Merchants State Bank is a local, independent community bank that has served Northwest Ohio and Northeast Indiana since 1897. Farmers & Merchants State Bank provides commercial banking, retail banking, retail and other financial services. Our locations are located in Champaign, Fulton, Defiance, Hancock, Henry, Lucas, Williams and Wood counties in western Ohio. In northeast Indiana, we have offices located in Adams, Allen, DeKalb, Jay, Steuben, and Wells counties, and we have loan origination offices in West Bloomfield, Michigan; Muncie, Indiana; and Oxford, Ohio.

About Federal Peoples Savings and Loan Association:

The Peoples Federal Savings and Loan Association provides financial products and services through its main office in Sidney and its two branch offices in Anna and Jackson Center, Ohio. The majority of the Peoples Federal Savings and Loan Association’s revenue comes from mortgage loans secured by one to four family residential property, agricultural loans, and to a lesser extent commercial and multifamily real estate loans, construction loans or development loans, consumer loans, business loans, as well as other investments. The Peoples Federal Savings and Loan Association accepts demand, savings and term deposits.

Forward-looking statements

This press release may contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can often, but not always, be identified by the use of words such as “believe” , “continue”, “model”, “estimate”, “project”, “intend”, “anticipate”, “expect”, and similar expressions or future or conditional verbs such as “will”, “should” , “should”, “could”, “could”, “may”, “may”, or similar expressions. These forward-looking statements include, but are not limited to, statements relating to the timing and expected benefits of the proposed merger, including future financial and operating results, cost savings, increased revenue and accretion/dilution of reported profits that may be realized from the merger (the “Merger”) of Peoples-Sidney Financial Corporation (“PPSF”) with and into Farmers & Merchants Bancorp, Inc. (“F&M”), as well as other statements of expectations regarding the merger, and other statements of F&M’s objectives, intentions and expectations; statements regarding F&M’s business plan and growth strategies; statements regarding the asset quality of M&M’s loan and investment portfolios; and estimates of the risks and future costs and benefits of F&M, whether in relation to the Merger or otherwise.

These forward-looking statements are subject to important risks, assumptions and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including, but not limited to: the risk that the businesses of F&M and PPSF will not be successfully integrated or a such integration may be more difficult, time consuming or costly than expected; anticipated revenue synergies and cost savings from the Merger may not be fully realized or realized within the anticipated timeframe; revenues following the Merger could be lower than expected; customer and employee relationships and business operations may be disrupted by the merger; the ability to obtain the required regulatory and shareholder approvals, and the ability to complete the Merger when expected; possible changes in economic and business conditions; the existence or exacerbation of general geopolitical instability and uncertainty; possible changes in monetary and fiscal policies, as well as laws and regulations; the effects of the easing of restrictions on participants in the financial services industry; the cost and other effects of legal and administrative cases; possible changes in customer creditworthiness and possible reduced ability to collect loans; fluctuations in market interest rates; competitive factors in the banking sector; changes in banking laws or regulatory requirements of federal and state agencies applicable to bank holding companies and banks such as F&M and F&M Bank; the continued availability of income and excess capital sufficient for the lawful and prudent declaration of dividends; changes in market, economic, operational, liquidity, credit and interest rate risks associated with F&M’s business; and other risks and factors identified in F&M’s filings with the Securities and Exchange Commission.

F&M undertakes no obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this document. Further, the past results of operations of F&M and PPSF are not necessarily indicative of either of their expected future results, whether or not the Merger is completed.

Farmers and Traders Bancorp, Inc. Contacts

Company Contact:

Investor and media contact:

Lars B. Eller

Andrew M. Berger

President and CEO

General director

Farmers and Merchants Bancorp, Inc.

SM Berger & Company, Inc.

(419) 446-2501

(216) 464-6400

leller@fm.bank

andrew@smberger.com

Peoples-Sidney Financial Corporation Contacts

Debra A. Geuy

President and CEO

Peoples-Sidney Financial Corporation

(937) 492-6129

Deb.Geuy@peoplesfederalsandl.com

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