Farmers & Merchants Bancorp has signed a definitive agreement to acquire Bank of Rio Vista, a California based financial services firm for $40.7m.

Under the terms of the transaction, the shareholders of Bank of Rio Vista, holding 2,414 shares representing 60.35% of the outstanding common shares, will receive $28.7m in cash, subject to certain adjustments.

In the last one year, Farmers & Merchants Bancorp has already acquired 39.65% of the outstanding common shares of Bank of Rio Vista for $12m.

Expected to close in the third quarter of this year, the acquisition is subject to customary closing conditions, regulatory approvals and Bank of Rio Vista’s shareholder approval.

The acquisition has already received the approval from the boards of directors of the two firms.

Farmers & Merchants Bancorp chairman, president and CEO Kent Steinwert said: “It is a tremendous honor to join these two century-old institutions, both with strong ties to their communities and a long history of reinvesting back into their markets to improve the quality of life for all residents.

“Both banks share a similar culture and have earned outstanding reputations for conducting business the right way.”

Following the completion of the acquisition, Bank of Rio Vista will operate as a wholly-owned subsidiary of Farmers & Merchants Bancorp.

As at 31 December 2017, the combined entity had nearly $3.3bn in total assets with 32 locations across California’s Central Valley and San Francisco East Bay Area regions.