Peoples Bancorp to Buy Capital Bancorp in All-Stock Merger

What happened

Peoples Bancorp Inc., the Marietta, Ohio-based parent of Peoples Bank, disclosed in a Form 8-K filed September 30, 2026 that it entered into an Agreement and Plan of Merger on September 29, 2026 with Capital Bancorp, Inc., the parent of Capital Bank, N.A.

Under the agreement, Capital will merge into Peoples, with Peoples as the surviving corporation. Immediately afterward, or at a later time Peoples chooses, Capital Bank will merge into Peoples Bank, with Peoples Bank surviving. Both boards unanimously approved the deal.

The filing states that each outstanding share of Capital common stock will convert into the right to receive 1.11 shares of Peoples common stock, with cash paid instead of fractional shares. Capital's outstanding stock options and unvested restricted stock and restricted stock units will vest in full and be cashed out or converted, with performance-based awards deemed earned at target.

Peoples common shares closed at $36.59 on September 30, down 5.87% from the prior close of $38.87, on volume of about 1.36 million shares — roughly 4.7 times the average daily volume of about 288,000, according to the price data.

Deal terms and conditions

The parties intend the merger to qualify as a reorganization under Section 368(a) of the Internal Revenue Code, and each side must receive an opinion of counsel to that effect as a closing condition.

Completion requires approval by a majority of Capital shareholders and approval by Peoples shareholders of the matters required by the agreement, including issuance of the Peoples shares used as consideration. It also requires all required regulatory approvals and the expiration of waiting periods, an effective Form S-4 registration statement, and Nasdaq Global Select Market listing approval for the new shares, the filing says.

The agreement bars Capital from soliciting alternative acquisition proposals, subject to exceptions that let Capital talk with a third party about an unsolicited proposal its board determines could reasonably be expected to lead to a superior proposal. If the agreement is terminated in specified circumstances — including certain acquisition proposals, a change in the Capital board's recommendation, or certain breaches — Capital must pay Peoples a $30.66 million termination fee.

The agreement can be terminated by mutual consent or by either party in cases including a final court order blocking the deal, a failure to close by the one-year anniversary, a shareholder vote failure, a final regulatory denial, or an uncured breach. Peoples agreed that, before closing, its board will select and appoint three Capital directors to the Peoples board effective immediately after the merger.

Concurrently with the merger agreement, each director and executive officer of Capital signed a support agreement with Peoples agreeing to vote their Capital shares in favor of the deal.

What this means

A Form 8-K is the current report public companies file with the SEC when specific events occur between quarterly reports. This one is tagged Items 1.01, 7.01 and 9.01. Item 1.01 covers entry into a material definitive agreement — here, the merger contract. Item 7.01 is Regulation FD disclosure, a rule requiring that when a company gives material nonpublic information to certain outside parties, it must also disclose it publicly. Item 9.01 lists the exhibits: the merger agreement itself, the form of support agreement, a joint press release and an investor presentation.

In a stock-for-stock bank merger like this, Capital shareholders would own Peoples shares rather than receive cash, so the 1.11 figure is an exchange ratio: how many Peoples shares each Capital share converts into. The value of that consideration moves with Peoples' stock price, which is why the acquirer's shares often trade on deal news; the price data in this filing package show PEBO fell 5.87% on about 4.7 times its normal volume. Note that the filing itself does not state why the stock moved, and nothing in the sources attributes the decline to a specific cause.

The cash-out of Capital's options and restricted awards is standard deal mechanics: options are settled for the amount by which the deal value exceeds their exercise price, and options struck above that level expire worthless; unvested equity accelerates so employees are not left holding awards in a company that no longer exists.

Several features are common to public-company mergers and are worth recognizing when reading any deal filing. The no-solicitation clause limits Capital's ability to shop for a better offer, while the fiduciary out preserves the board's ability to consider an unsolicited superior proposal — and the $30.66 million termination fee is the price of walking away in those cases. The Section 368 opinion addresses whether the transaction is tax-free to the parties as a reorganization. The joint proxy statement/prospectus, filed on a Form S-4, is the document shareholders of both companies will vote on.

What happens next, according to the filing, is procedural: the S-4 must be prepared and declared effective, both shareholder votes must pass, and regulators must approve and their waiting periods must expire. The filing does not predict a closing date or a timetable for regulatory review, and it does not state the financial rationale for the deal; those details would be in the press release and investor presentation attached as exhibits, which were not provided here.