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

What Happened
Capital Bancorp Inc. (the parent of Capital Bank, N.A.) and Peoples Bancorp, Inc. entered into a definitive Agreement and Plan of Merger dated September 29, 2026, which was disclosed in an 8-K filed September 30, 2026. Under the agreement, Capital will merge into Peoples (Peoples surviving), and Capital Bank will subsequently merge into Peoples Bank. The boards of both companies unanimously approved the Merger. The transaction is intended 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 convert into the right to receive 1.11 shares of Peoples common stock; cash paid in lieu of fractional shares.
• Treatment of equity awards: outstanding options will vest and be canceled for a cash payment equal to the excess (if any) of (Peoples closing price × 1.11) over the option exercise price (options with no positive spread canceled for no consideration). Unvested restricted stock/RSUs will vest (performance awards deemed at target) and convert into the merger consideration.
• Closing conditions: customary conditions including approval by Capital and Peoples shareholders, required regulatory approvals and waiting periods, effectiveness of a Form S-4 registration statement, and Nasdaq listing approval for the issued Peoples shares.
• Termination fee and protections: Capital may owe Peoples a termination fee of $30.66 million in specified scenarios (e.g., certain superior proposals or changes in Capital’s recommendation). Each Capital director and executive officer entered into support agreements to vote their shares in favor of the Merger.
• Corporate governance & indemnities: Peoples will appoint three Capital directors to its board effective after closing and will indemnify Capital’s current and former directors/officers and provide directors’ & officers’ liability insurance coverage for six years post-closing.

Why It Matters
This is a definitive merger agreement that will combine Capital and Peoples if approved by shareholders and regulators. For Capital shareholders the primary impact is the fixed exchange ratio (1.11 Peoples shares per Capital share), which determines the ownership and value shift post-closing. Employees and holders of Capital equity awards face specified cash or stock treatment and accelerated vesting in many cases. The $30.66 million termination fee and required approvals indicate the deal has deal-protection measures and will be subject to regulatory review and customary closing conditions—factors investors should watch in assessing timing and likelihood of completion.