Farmers & Merchants Bancorp in Archbold, Ohio, has agreed to buy Perpetual Savings Bank of Urbana in Ohio.
The $2.5 billion-asset F&M said in a press release Tuesday that it will pay $103.7 million in cash and stock for the $391 million-asset Perpetual. The deal, which is expected to close in the third quarter, priced Perpetual at 131% of its tangible book value.
Perpetual has one branch, $326 million of loans and $305 million of deposits.
The acquisition would create “immediate value for our shareholders, customers and communities,” Lars Eller, F&M’s president and CEO, said in the release.
“This transaction is an excellent opportunity for [Perpetual] to become part of a larger community banking organization that offers customers a wider range of financial services,” Eller added.
F&M said it expects the deal to be 10% accretive to its earnings per share in the first full year, excluding merger-related expenses. It should take F&M about four years to earn back an expected 6.6% dilution to its tangible book value per share.
F&M plans to cut about $1.6 million in annual noninterest expenses. The company said it will likely incur $5 million of merger-related expenses.
F&M was advised by ProBank Austin and Shumaker, Loop & Kendrick. Perpetual was advised by Keefe Bruyette & Woods and Vorys, Sater, Seymour and Pease.
