Farmers & Merchants Bancorp has agreed to acquire Perpetual Federal Savings Bank (PFSB) in a stock and cash deal.

Based in Ohio, PFSB has $391m in total assets, $326m in loans, $305m in deposits and $79m in tangible equity at the end March 2021.

The acquisition is expected to expand F&M’s banking services into the Urbana, Columbus, Dayton, Springfield, Piqua, Tipp City, Troy and Sidney markets.

It would also support significant fill-in potential between Findlay and Urbana, the firm noted.

The two firms have also agreed on a plan of reorganisation.

Shareholders of PFSB can now opt to either receive 1.7766 shares of FMAO stock or $41.20 per share in cash for each share held in PFSB.

This is subject to adjustment based upon 1,833,999 FMAO shares planned to be issued in the merger.

Based on FMAO’s closing share price of $24.22  on 3 May 2021, the acquisition’s implied aggregate value is estimated at $103.7m.

F&M president and CEO Lars Eller said: “This transaction is an excellent opportunity for PFSB 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 PFSB represents F&M’s fourth acquisition over the past two years of banking and complementary financial services companies.”

Upon completion of the deal, F&M will have total deposits of $2.129bn, total loans of $1.730bn, and total assets valued $2.513bn.

Perpetual Federal Savings Bank president and CEO Michael Melvin said: “F&M has a history of completing successful acquisitions and provides PFSB with the necessary resources to pursue compelling growth opportunities throughout our markets.”

F&M said its acquisition strategy and strong organic growth have resulted in 125% increase of total assets since 2018, on a pro forma basis.