Carmel, Ind.-based Merchants Bancorp has agreed to acquire Paxton, Ill.-based FM Bancorp Inc. and its unit, Farmers-Merchants National Bank of Paxton, for $21.9 million, Merchants said in a regulatory filing.

Farmers-Merchants National Bank of Paxton will merge into Merchants' unit Joy State Bank, which is based in Joy, Ill.

Merchants expects the deal to close in the fourth quarter. After closing, Joy State Bank will have about $159 million in assets and five banking locations in Illinois. Merchants expects the transaction to be accretive to earnings per share starting in the first full year of combined operations. Joy State Bank is expected to exceed "well-capitalized" thresholds under all regulatory definitions after the deal closes.

FM Bancorp had total assets of $114.6 million, including gross loans of $33.6 million and deposits of $99.3 million, as of March 31.

SNL calculates the deal value to be 144.67% of common equity and tangible common equity and 23.37x earnings, on an aggregate basis. It is also 19.11% of assets and 21.74% of deposits. The tangible book premium-to-core deposits ratio is 7.98%.

For comparison, SNL Valuations for bank and thrift targets in the Midwest region between June 13, 2017, and June 13, 2018, averaged 159.86% of book, 168.03% of tangible book and had a median of 20.42x last-12-months earnings, on an aggregate basis.

Merchants Bancorp, as a result of the deal, will enter Ford County, Ill., with three branches to be ranked first with a share of 24.41% of approximately $426.2 million in total market deposits.

Boenning & Scattergood Inc. is Merchants' financial adviser, and Krieg DeVault LLP is legal counsel. Performance Trust Capital Partners LLC is serving as FM Bancorp's financial adviser, and Howard & Howard Attorneys PLLC is serving as legal adviser.

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