ACNB Corporation (NasdaqCM:ACNB) entered into a definitive agreement to acquire Frederick County Bancorp, Inc. (OTCPK:FCBI) for $60.3 million on July 1, 2019. Pursuant to the terms of the definitive agreement, FCBI shareholders will receive 0.99 share of ACNB common stock for each share of FCBI common stock that they own as of the closing date. The transaction is valued at $38.20 per share. Post completion, ACNB Bank, a subsidiary of ACNB Corporation will be merging into Frederick County Bank, FCBI's wholly-owned subsidiary. Upon termination of the Agreement under certain circumstances, FCBI will be obligated to pay ACNB a termination fee of $2.4 million. One director from FCBI will join the Boards of Directors of ACNB and ACNB Bank, respectively. In addition, the other Directors of FCBI will have the opportunity to serve on a regional advisory board to be established for the Frederick County market. Kimberly S. Chaney to be appointed to the boards of directors of ACNB and ACNB Bank upon consummation of the merger. As part of transition, FCBI will operate up to 2 years as FCB bank and ACNB will establish a regional advisory board for Frederick County. ACNB plans to retain many of FCBI's employees, specifically in the areas directly serving customers such as community banking and lending. ACNB Bank will operate former Frederick County Bank locations in the Frederick County market as “FCB Bank, A Division of ACNB Bank”. Post completion, ACNB will have 34 community banking offices in Pennsylvania and Maryland. Once the combination is complete, importantly, none of the Frederick County Bank locations will be closed.

The transaction is subject to FCBI shareholder approval, ACNB shareholder approval, regulatory approvals, approval for listing shares of ACNB common stock to be issued in the merger on NASDAQ, registration statement must be effective, all consents and authorizations of landlords and other third parties and other customary closing conditions. The transaction has been unanimously approved by the Boards of Directors of ACNB Corporation and FCBI. The special meeting of shareholders of ACNB Corporation will be held on December 20, 2019 to approve the transaction. The FCBI special meeting will be held on December 20, 2019 to approve the merger. As of December 17, 2019, the Federal Deposit Insurance Corporation, the Pennsylvania Department of Banking and Securities and the Commissioner of Financial Regulation for the State of Maryland have approved the transaction. The Federal Reserve Bank of Philadelphia has granted ACNB a waiver in regard to its merger application requirements. As of December 20, 2019, shareholders of ACNB and FCBI approved the transaction. The transaction is expected to close in the fourth quarter of 2019 or the first quarter of 2020. As of October 30, 2019, the transaction is anticipated to close in the first quarter of 2020. The transaction is mid to high digit EPS accretive with 7.8% fiscal 2021 EPS accretion, TBV share impact at close is 5.3% dilutive, TBV earn back is 4.4 years and IRR of 20.5%. Immediately meaningful earning accretive with an earn back period of less than 5 years with a favorable IRR.

Nicholas Bybel Jr. of Bybel Rutledge LLP acted as legal advisor while Boenning & Scattergood, Inc. acted as financial advisor and fairness opinion provider to ACNB. Noel M. Gruber and Ryan Pollard of Buckley LLP acted as legal advisors and Sandler O'Neill + Partners, LP acted as financial advisor and fairness opinion provider to FCBI. Miles & Stockbridge P.C acted as legal advisor to FCBI. Computershare Shareholder Services, Inc. acted as transfer agent to ACNB. Georgeson LLC acted as information agent to ACNB Corporation and Frederick County Bancorp. It was paid a base fee $9,000 by ACNB and $6,500 by FCBI. Boenning & Scattergood, Inc. was paid a cash fee equal to $0.4 million by ACNB , $0.02 million of which became payable upon retention of Boenning, $0.08 million of which became payable concurrently with the rendering of Boenning's opinion, and the balance of which is contingent upon the consummation of the merger. Sandler O'Neill + Partners, L.P. received $0.1 million from FCBI upon rendering its opinion and an amount equal to 1.375% of the aggregate merger consideration for acting as a financial advisor, which is contingent upon the closing of the merger.

ACNB Corporation (NasdaqCM:ACNB) completed the acquisition of Frederick County Bancorp, Inc. (OTCPK:FCBI) on January 11, 2020.