Finward Bancorp (OTCPK:FNWD) (“FNWD”) entered into definitive agreement to acquire Royal Financial, Inc. (OTCPK:RYFL) (“RYFL”) for $52.4 million on July 28, 2021. FNWD will acquire RYFL and its wholly owned subsidiary, Royal Savings Bank, of Chicago, Illinois, in a stock and cash transaction. Under the terms of the agreement, stockholders of RYFL who hold 101 or more shares of RYFL common stock will have the right to elect to receive $20.14 per share in cash or 0.4609 shares of FNWD common stock, or a combination of both, for each outstanding share of RYFL common stock, subject to allocation provisions to assure that, in the aggregate, 65% of RYFL's outstanding shares of common stock will receive FNWD common stock and 35% will receive cash. Exchange ratio is subject to further adjustment. Stockholders of RYFL holding less than 101 shares of RYFL common stock will have the right to receive $20.14 in cash and no stock consideration for each share of RYFL common stock. As of January 26, 2022, 88.3% of shareholders have validly elected to receive the stock consideration, 3.3% have validly elected to receive the cash consideration and 8.4% did not make a valid election. Royal Savings Bank will be merged with and into Peoples Bank, the subsidiary bank of FNWD, and the combined operations will be continued under the Peoples Bank name. Inc case of termination of the transaction, RYFL is required to pay a termination fee of $2 million to FNWD. Robert W. Youman, a current Director of RYFL, will be appointed to the Boards of Directors of FNWD and Peoples Bank effective as of the closing date of the merger.

The transaction is subject to approval by bank regulatory authorities, approval by the shareholders of both FNWD and RYFL, the effectiveness of the registration statement to be filed by FNWD, all statutory waiting periods in respect thereof shall have expired, the total number of the Dissenting Shares shall be no greater than 7.5% of the number of shares of RYFL Common Stock outstanding,  the merger must qualify as a reorganization within the meaning of Section 368(a), the RYFL adjusted consolidated stockholders' equity, shall not be less than $48,114,000 at the end of the month prior to close of transaction, and the shares of FNWD Common Stock to be issued in the merger shall have been approved for listing on the NASDAQ Capital Market as well as the satisfaction of other customary closing conditions. The boards of directors of RYFL and FNWD unanimously approved the transaction and recommend respective shareholders to vote in favor of the transaction. The transaction requires officers of Royal Financial Each of Leonard S. Szwajkowski, Andrew Morua, Richard Nichols, Toni Gonzalez, and Colleen Thomiszer shall have executed and delivered to Finward a mutual termination of employment agreement with respect to their employment agreements with Royal Financial and Royal Bank, Royal Financial shall have obtained all required third party consents, RYFL's CIBC Line of Credit shall have been terminated, among others. On December 7, 2021, the Federal Deposit Insurance Corporation approved the transaction, and, on December 10, 2021, the Federal Reserve Bank of Chicago (FRB) approved Finward's request for a waiver of the requirement that Finward file a formal application for FRB approval of the transaction. As of December 13, 2021, the transaction has been approved by the shareholders of Royal Financial and Finward. As of December 22, 2021, the Indiana Department of Financial Institutions approved the proposed merger. As a result, all regulatory approvals necessary for the consummation of the merger and Bank Merger have now been received. The merger is expected to be completed in the first quarter of 2022. As of December 13, 2021, the transaction is expected to close during late January 2022. FNWD expects the merger to be approximately $1.08 or 21% accretive to 2022 earnings per share (excluding one-time deal related charges) and more than 25% accretive to 2023 earnings per share.

FNWD is being advised by, and received a fairness opinion from, Stephens Inc., and is being advised by David P. Hooper of Barnes & Thornburg LLP as legal counsel. RYFL is being advised by, and received a fairness opinion from, Boenning & Scattergood, Inc., and is being advised by Mark Ryerson of Howard & Howard Attorneys PLLC as legal counsel. Broadridge Corporate Issuer Solutions, Inc. is the transfer agent for FNWD's stock. Georgeson LLC acted as proxy solicitor for Royal Financial. Morrow Sodali LLC acted as proxy solicitor for FNWD. Morrow Sodali LLC will receive a fee of $12,500 for its services. Georgeson LLC will receive a fee of $6,000 for its services. Crowe LLP provided auditor's report on financials of Royal Financial. Royal Financial will pay Boenning a cash fee equal to 1.25% of the implied transaction value, $15,000 of which became payable upon retention of Boenning, $100,000 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.

Finward Bancorp (OTCPK:FNWD) (“FNWD”) completed the acquisition of Royal Financial, Inc. (OTCPK:RYFL) (“RYFL”) on January 31, 2022.