Pending Acquisition of Delta National Bancorp

6 Months Ended

Jun. 30, 2016

Pending Acquisition of Delta National Bancorp [Abstract]

Pending Acquisition of Delta National Bancorp

8. Pending Acquisition of Delta National Bancorp

On June 8, 2016, Farmers & Merchants Bancorp and Delta National Bancorp announced that a definitive agreement had been signed by both parties.  Under the terms of the agreement, Delta National Bancorp will merge into Farmers & Merchants Bancorp. The transaction is subject to customary closing conditions, including regulatory approvals and Delta National Bancorp’s shareholder approval, and is expected to close in the fourth quarter of 2016.

Delta National Bancorp, headquartered in Manteca, California, is the parent holding company for Delta Bank N.A., a locally owned and operated community bank established in 1973. As of June 30, 2016, Delta National Bancorp had approximately $109.1 million in assets and four branch locations in the communities of Manteca, Riverbank, Modesto and Turlock.  Delta National Bancorp will be merged with and into Farmers & Merchants Bancorp and Delta National Bancorp’s banking subsidiary Delta Bank, N.A. will be merged with and into Farmers & Merchants Bancorp’s banking subsidiary Farmers & Merchants Bank of Central California.  The names of the combined entities will remain Farmers & Merchants Bancorp and Farmers & Merchants Bank of Central California.

Delta National Bancorp common shareholders will be entitled to receive 12,074 shares of Farmers & Merchants Bancorp common stock, subject to certain adjustments described in the definitive merger agreement.  Based on the 20 day daily volume weighted average price of Farmers & Merchants Bancorp as of June 6, 2016, the transaction would have a value of $6.6 million, or $17.30 per Delta National Bancorp common share.  However, the deal value for the common shareholders will fluctuate with changes in Farmers & Merchants Bancorp’s stock price. Delta National Bancorp’s preferred shareholders will receive $19.827 per share in cash.

For additional information about the proposed acquisition of Delta Bank, N.A., see the Company’s Current Report on Form 8-K filed with the SEC on June 10, 2016 and the Agreement and Plan of Reorganization which is filed as an exhibit to the Current Report on Form 8-K.