8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 1, 2020

Farmers and Merchants Bancshares, Inc.

(Exact name of registrant as specified in its charter)

Maryland	000-55756	81-3605835
(State or other jurisdiction of	(Commission file number)	(IRS Employer
incorporation or organization)		Identification No.)

4510 Lower Beckleysville Road, Suite H, Hampstead, MD	21074
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (410) 374-1510

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01. Entry into a Material Definitive Agreement.

On September 28, 2020, Farmers and Merchants Bancshares, Inc. (the “Company”), and Carroll Bancorp, Inc. (“Carroll”) entered into an Agreement and Plan of Merger pursuant to which Carroll was merged with and into the Company, with the Company as the surviving corporation (the “Roll-Up Merger Agreement”), as more particularly described in Item 2.01 of this report. A copy of the Roll-Up Merger Agreement is filed herewith as Exhibit 2.1.

Item 2.01. Completion of Acquisition or Disposition of Assets.

On October 1, 2020, the Company consummated its previously-announced acquisition of Carroll pursuant to the terms of an Agreement and Plan of Merger, dated as of March 6, 2020, among the Company, Anthem Acquisition Corp., a wholly-owned subsidiary of the Company (“Merger Sub”), and Carroll (the “Parent Merger Agreement”) and the Roll-Up Merger Agreement. Pursuant to the Parent Merger Agreement, Merger Sub was merged with an into Carroll, with Carroll as the surviving corporation and wholly-owned subsidiary of the Company (the “Parent Merger”). Immediately following the Parent Merger and pursuant to the Roll-Up Merger Agreement, Carroll was merged with and into the Company, with the Company as the surviving corporation. Thereafter, Carroll Community Bank, a Maryland commercial bank and wholly-owned subsidiary of Carroll, was merged with and into Farmers and Merchants Bank of Fowblesburg, Maryland, a Maryland commercial bank and wholly-owned subsidiary of the Company, with F&M Bank as the surviving Maryland commercial bank. A copy of the Company’s press release announcing the consummation of the acquisition is filed herewith as Exhibit 99.1.

Pursuant to the Parent Merger, the Company acquired all of the outstanding shares of Carroll common stock for cash in the amount of $25.0 million (the “Merger Consideration”). At the effective time of the Merger, each outstanding share of Carroll common stock was converted into the right to receive cash in an amount of $21.63. Carroll stockholders will receive instructions from American Stock Transfer & Trust Company, acting as exchange agent, regarding the surrender of their shares of Carroll common stock for their respective portions of the Merger Consideration. Carroll stockholders should not surrender their shares to the Company or Carroll.  

The foregoing discussion does not purport to be a complete discussion of the terms of the Parent Merger Agreement or the Roll-Up Merger Agreement and is qualified in its entirety by reference to the Parent Merger Agreement and the Roll-Up Merger Agreement. The Parent Merger Agreement was attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 11, 2020. Item 1.01 of that report summarized the material terms of the Parent Merger Agreement, which summary is incorporated herein by reference. 

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Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

The exhibits furnished with this report are listed in the following Exhibit Index:

Exhibit No. Description

2.1 Agreement and Plan of Merger, dated as of September 28, 2020, between Farmers and Merchants Bancshares, Inc. and Carroll Bancorp, Inc. (filed herewith)

2.2 Agreement and Plan of Merger, dated as of March 6, 2020, among Farmers and Merchants Bancshares, Inc., Anthem Acquisition Corp., and Carroll Bancorp, Inc. (incorporated by reference to Exhibit 2.1 to the Current Report of Farmers and Merchants Bancshares, Inc. on Form 8-K filed on March 11, 2020)

99.1 Press release dated October 1, 2020 (filed herewith)

99.2 Financial statements of Carroll Bancorp, Inc.*

99.3 Pro forma financial information*

* To be filed by amendment within 71 calendar days after the date on which this report was required to be filed.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	FARMERS AND MERCHANTS BANCSHARES, INC.
Dated: October 1, 2020	By:	/s/ James R. Bosley, Jr.
		James R. Bosley, Jr.
		President

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EX-2.1

Exhibit 2.1

AGREEMENT AND Plan of Merger

THIS AGREEMENT AND PLAN OF MERGER (the “Agreement”) by and between Farmers and Merchants Bancshares, Inc., a Maryland corporation (“Parent”) and Carroll Bancorp, Inc., a Maryland corporation (“Carroll”) is dated as of September 28, 2020.

RECITALS

WHEREAS, Parent, Anthem Acquisition Corp. (“Merger Sub”), and Carroll entered into an Agreement and Plan of Merger, dated as of March 6, 2020 (the “Parent Merger Agreement”), pursuant to which Merger Sub will be merged with and into Carroll, with Carroll as the surviving corporation and wholly-owned subsidiary of Parent (the “Parent Merger”);

WHEREAS, the parties to the Parent Merger Agreement contemplate that the Parent Merger will be effected at 12:01 a.m., local time, on October 1, 2020;

WHEREAS, the Parent Merger Agreement provides that Carroll will be merged with and into Parent, with Parent as the surviving corporation (the “Roll-Up Merger”), immediately following the effective time of the Parent Merger pursuant to an agreement and plan of merger;

WHEREAS, the Parent Merger Agreement further provides, and Parent and Carroll intend, that the Roll-Up Merger shall qualify as a parent-subsidiary liquidation under Section 332 of the Internal Revenue Code of 1986, as amended (the “Code”), and that the agreement and plan of merger with respect thereto constitute a plan of liquidation with respect to such liquidation; and

WHEREAS, each of the Boards of Directors of Parent and Carroll has determined that the Roll-Up Merger is in the best interests of Parent and Carroll, has approved the Roll-Up Merger, and has approved and authorized Parent and Carroll, respectively, to enter into this Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

ARTICLE I

Subject to the terms and conditions of this Agreement, Carroll shall be merged with and into Parent (and the separate existence of Carroll shall cease and Parent shall be the surviving institution) pursuant to, and shall have the effect provided in and by, Section 3-114 of the Maryland General Corporation Law (the “MGCL”).

ARTICLE II

The name of the surviving corporation in the Roll-Up Merger (hereinafter referred to as the “Surviving Corporation”) shall be “Farmers and Merchants Bancshares, Inc”.

ARTICLE III

The business of the Surviving Corporation shall be that of a Maryland corporation and a financial holding company registered with the Board of Governors of the Federal Reserve System (the “FRB”) under the Bank Holding Company Act of 1956, as amended. This business shall be conducted by the Surviving Corporation at its principal office at 4510 Lower Beckleysville Road, Suite H, Hampstead, Maryland 21074, at all offices and facilities of Parent and Carroll as of the Effective Time (as defined in Section 9.2 below).

ARTICLE IV

Section 4.1.     At the Effective Time, the separate existence of Carroll shall cease and the corporate existence of Parent, as the Surviving Corporation, shall continue unaffected and unimpaired by the Roll-Up Merger, and the Surviving Corporation shall be deemed to be the same business and corporate entity as each of Parent and Carroll. At the Effective Time, by virtue of the Roll-Up Merger and without any further act, deed, conveyance or other transfer, all of the property, rights, powers and franchises of Carroll shall vest in Parent as the Surviving Corporation, and the Surviving Corporation shall be subject to and be deemed to have assumed all of the debts, liabilities, obligations and duties of Carroll, and to have succeeded to all of the relationships, fiduciary or otherwise, of Carroll as fully and to the same extent as if such property, rights, powers, franchises, debts, liabilities, obligations, duties and relationships had been originally acquired, incurred or entered into by the Surviving Corporation; provided, however, that the Surviving Corporation shall not, through the Roll-Up Merger, acquire power to engage in any business or to exercise any right, privilege or franchise which is not conferred on the Surviving Corporation by the laws of the State of Maryland or the laws of the United States.

Section 4.2.     The Surviving Corporation, upon the consummation of the Roll-Up Merger and without any order or other action on the part of any court or otherwise, shall hold and enjoy all rights of property, franchises and interests, including appointments, designations and nominations, and all other rights and interests as agent, trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, conservator, assignee, receiver and committee of estates of incompetents, bailee or depository of personal property, and in every other fiduciary and/or custodial capacity, in the same manner and to the same extent as such rights, franchises and interests were held or enjoyed by Carroll immediately prior to the Effective Time.

ARTICLE V

Section 5.1.     At the Effective Time, all of the issued and outstanding shares of capital stock of Carroll (the “Carroll Shares”) shall, by virtue of the Roll-Up Merger and without any action on the part of the holder thereof, be canceled and retired, and no cash, securities, or other property shall be delivered in exchange therefor.

Section 5.2.     At and after the Effective Time, certificates evidencing the Carroll Shares shall not evidence any interest in Carroll.

Section 5.3.     The stock transfer book of Carroll shall be closed as of the Effective Time and, thereafter, no transfer of Carroll Shares shall be recorded therein.

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ARTICLE VI

Section 6.1.     Upon the Effective Time, the Board of Directors of the Surviving Corporation shall be comprised of those persons serving as directors of Parent immediately prior to the Effective Time. Each director of the Surviving Corporation shall hold office until the expiration of his or her term, unless sooner removed, disqualified or deceased, or unless such director resigns, and until his successor has been elected and qualified.

Section 6.2.     Upon the Effective Time, the executive officers of the Surviving Corporation shall be comprised of those persons serving as executive officers of Parent immediately prior to the Effective Time.

ARTICLE VII

Section 7.1.     From and after the Effective Time, (a) the charter of the Surviving Corporation shall be the charter of Parent in effect immediately prior to the Effective Time and shall thereafter continue in full force and effect until further altered, amended or repealed in accordance with law, and (b) the bylaws of the Surviving Corporation shall be the bylaws of Parent in effect immediately prior to the Effective Time and shall thereafter continue in full force and effect until further altered, amended or repealed in accordance with law.

ARTICLE VIII

This Agreement may be amended by mutual consent of Parent and Carroll at any time prior to the Effective Time, except that no provision in Article IX may be amended or waived at any time pursuant to its terms.

ARTICLE IX

Section 9.1.     This Agreement and the Roll-Up Merger were adopted and approved by: (a) resolutions adopted by the board of directors of Parent at a meeting thereof held on September 21, 2020; and (b) resolutions adopted by the board of directors of Carroll at a meeting thereof held on September 21, 2020. Pursuant to Section 3-106 of the MGCL, the Roll-Up Merger need not be approved by the stockholders of Parent or Carroll.

Section 9.2.     The Merger shall be effective on the date and time the Articles of Merger reflecting the Roll-Up Merger are filed with the State Department of Assessments and Taxation of Maryland (the “Effective Time”); provided, however, that in no event shall the Effective Time be earlier than, or at the same time as, the effective date and time of the Parent Merger.

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ARTICLE X

All notices under this Agreement shall be in writing and shall be deemed sufficient and duly given: (a) on the date established by the sender as having been personally delivered to the recipient; (b) on the date delivered by a private courier as established by the sender by evidence obtained from the courier; (c) on the date sent by electronic correspondence if sent during normal business hours of the recipient, if not, then on the next business day; or (d) on the fifth day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications, to be valid, must be addressed as follows:

if to Parent:

James R. Bosley, Jr.

President

Farmers and Merchants Bancshares, Inc.

4510 Lower Beckleysville Road, Suite H

Hampstead, Maryland 21074

E-mail: jim.bosley@fmb1919.bank

if to Carroll:     

Russell J. Grimes, Jr.

President and Chief Executive Officer

Carroll Bancorp, Inc.

1321 Liberty Road,

Sykesville, Maryland, 21784

E-mail: rgrimes@carrollcobank.com

or to such other address as such party may designate by notice to the others and shall be deemed to have been given upon receipt.

ARTICLE XI

From time to time as and when reasonably requested by the Surviving Corporation and to the extent permitted by law and at the expense of the Surviving Corporation, the officers and directors of Carroll last in office shall execute and deliver such assignments, deeds and other instruments and shall take or cause to be taken such further or other action as shall be necessary in order to vest or perfect in or to confirm of record or otherwise to the Surviving Corporation title to, and possession of, all of the property, rights, power and franchises of Carroll, including, without limitation, all rights and interests of Carroll in any fiduciary and/or custodial capacity, and otherwise to carry out the purposes of this Agreement, and the proper officers and directors of the Surviving Corporation as the receiving and surviving entity, are fully authorized to take any and all such action in the name of Carroll or otherwise.

ARTICLE XII

This Agreement is binding upon and is for the benefit of Parent and Carroll and their respective successors and permitted assigns; provided, however, that neither this Agreement nor any rights or obligations hereunder may be assigned by any party hereto to any other person without the prior consent in writing of each other party hereto. This Agreement is not made for the benefit of any person, firm, corporation or association not a party hereto and no other person, firm, corporation or association shall acquire or have any right under or by virtue of this Agreement.

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ARTICLE XIII

Notwithstanding any other provision of this Agreement, the parties may, by mutual agreement, terminate this Agreement at any time prior to the Effective Time.

ARTICLE XIV

This Agreement shall in all respects be interpreted, enforced, and governed under the laws of the State of Maryland, without regard to Maryland’s conflict of laws rules or provisions, except to the extent federal law may be applicable. The parties hereby submit to the jurisdiction and venue of the courts of Maryland, and any legal or equitable action to enforce this or any related agreements may only be brought in the circuit courts therein.

ARTICLE XV

The parties hereto intend that the Roll-Up Merger shall qualify as a parent-subsidiary liquidation under Code Section 332, and they hereby adopt this Agreement as a plan of liquidation with respect to such liquidation.

ARTICLE XVI

Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective only to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only as broad as is enforceable.

ARTICLE XVII

This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission or electronic transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile shall be deemed to be their original signatures for all purposes.

[Signatures Appear on Next Page]

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IN WITNESS WHEREOF, the parties have each caused this Agreement and Plan of Merger to be executed as of the date first above written.

ATTEST:	FARMERS AND MERCHANTS
	BANCSHARES, INC.

By:	/s/ Lynnette Kitzmiller	By:	/s/ James R. Bosley, Jr.
Name:	Lynnette Kitzmiller	Name:	James R. Bosley, Jr.
Title:	Secretary	Title:	President

ATTEST: CARROLL BANCORP, INC.

By:	/s/ Michael Gallina	By:	/s/ Russell J. Grimes, Jr.
Name:	Michael Gallina	Name:	Russell J. Grimes, Jr.
Title:	Assistant Secretary	Title:	President & CEO

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EX-99.1

Exhibit 99.1

Press Release

Farmers and Merchants Bancshares, Inc. Completes Acquisition of Carroll Bancorp, Inc.

Bank Deepens Presence and Commitment to the Community

Hampstead, Maryland, October 1, 2020 – Farmers and Merchants Bancshares, Inc. (OTC PINK: FMFG) (“Farmers and Merchants”), parent company of Farmers and Merchants Bank, announced today that it has completed the acquisition of Carroll Community Bank.

With the transaction finalized, the combined Farmers and Merchants team continues to work diligently to successfully integrate the former Carroll Community Bank with the systems conversion planned for December 2020, at which point Carroll Community’s branding will change to Farmers and Merchants.

“We are thrilled to welcome Carroll Community Bank customers and staff to the Farmers and Merchants Bank family”, said James R. Bosley Jr., President and CEO of Farmers and Merchants Bank. “This combination allows us to deepen and expand our presence in our core market and will allow us to continue investing to enhance our products and services to better serve our customers and communities.”

About the Company

Farmers and Merchants Bancshares, Inc. is a financial holding company and the parent of Farmers and Merchants Bank. The Bank was chartered in Maryland in 1919 and is currently celebrating over 100 years of service to the community. The Bank serves the deposit and financing needs of both consumers and businesses in Carroll and Baltimore Counties along the Route 30 and Route 795 corridors from Owings Mills, Maryland to the Pennsylvania State line. The main office is located in Upperco, Maryland, with eight additional branches in Owings Mills, Hampstead, Greenmount, Reisterstown, Eldersburg and Westminster. Certain broker-dealers make a market in the common stock of Farmers and Merchants Bancshares, Inc., and trades are reported through the OTC Markets Group’s Pink Market under the symbol “FMFG”.

Forward-Looking Statements

The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “will,” “expect,” “believe,” “intend,” and similar expressions. Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. For a discussion of these risks and uncertainties, see the section of the periodic reports filed by Farmers and Merchants Bancshares, Inc. with the Securities and Exchange Commission entitled “Risk Factors”.

For additional information or questions, please contact:

James R. Bosley, Jr.

President and CEO

4510 Lower Beckleysville Road, Suite H

Hampstead, MD 21074

410-374-1510

Jim.Bosley@fmb1919.bank