Peoples Bancorp Inc. Announces Merger with Capital Bancorp — 1.11 Exchange Ratio

What Happened

• Peoples Bancorp, Inc. (Peoples) and Capital Bancorp, Inc. (Capital) signed an Agreement and Plan of Merger dated September 29, 2026, filed on Form 8‑K on September 30, 2026. Under the agreement Capital will merge into Peoples, and Capital Bank will subsequently merge into Peoples Bank, with Peoples continuing as the surviving company and bank. The boards of both companies unanimously approved the Merger. The parties intend the transaction to qualify as a tax‑free reorganization under Section 368(a) of the Internal Revenue Code.

Key Details

• Exchange ratio: each outstanding share of Capital common stock will be converted into the right to receive 1.11 shares of Peoples common stock; cash will be paid in lieu of fractional shares.
• Treatment of Capital equity awards: all outstanding options vest and will be cashed out (cash = max[0, (Peoples closing price × 1.11) − exercise price] × shares); underwater options will be canceled without consideration. Unvested restricted awards will vest (performance awards deemed at target) and convert into the merger consideration, net of withholding.
• Termination fee: Capital must pay Peoples a $30.66 million termination fee in specified circumstances (e.g., certain superior proposals or breaches of non‑solicitation provisions).
• Closing conditions include shareholder approvals (Capital and Peoples), required regulatory approvals and waiting periods, effectiveness of a Form S‑4 registration statement, and Nasdaq Global Select Market listing approval for the shares to be issued.
• Governance and protections: Peoples will appoint three Capital directors to its board effective after closing; Peoples will indemnify Capital’s current and former directors/officers and provide directors’ & officers’ insurance coverage for six years. Capital directors and executive officers entered into support agreements to vote their shares in favor of the Merger.
• Timing: Merger agreement can be terminated if not consummated within one year (subject to mutual extension); customary termination rights and breach/cure provisions apply.

Why It Matters

• For investors, this is a material acquisition: Capital shareholders receive Peoples stock (1.11 exchange ratio), which will dilute existing Peoples shareholders to the extent new shares are issued. The deal includes cash obligations (equity award cash‑outs and a possible $30.66M termination fee) that could affect capital and cash flows. The transaction is subject to shareholder votes, regulatory approvals, effectiveness of an S‑4 and Nasdaq listing approval, so it is not final until those conditions are satisfied. Peoples filed a press release and an investor presentation (Exhibits 99.1 and 99.2) describing the Merger for further details.