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In Illinois, Midland States Bancorp buying Centrue Financial

Effingham, Ill.-based Midland States Bancorp Inc. is buying Ottawa, Ill.-based Centrue Financial Corp. in a cash-and-stock deal valued at approximately $175.1 million, based on Midland's 10-day volume-weighted average stock price through Jan. 13, or $35.18 per share.

Under the terms of the deal, Centrue shareholders will have the right to receive a fixed exchange ratio of 0.7604 Midland common share, or a fixed cash consideration of $26.75, or a combination of both for each Centrue share they hold.

The deal value, according to SNL data, is 139.2% of book, 139.2% of tangible book, 28.9x earnings, and 33.2x last-12-months core earnings, on a per-share basis. It is also 23.37% of deposits and 17.69% of assets. The deal also carries a tangible book premium-to-core deposits ratio of 6.99%.

The one-day premium on the deal is 15.55%, based on Centrue Financial's closing price of $22.98 on Jan. 25. The one-month premium is 21.08%, based on the target's closing price of $22.93 on Dec. 27, 2015.

SNL valuations for bank and thrift targets in the Midwest region between Jan. 26, 2016, and Jan. 26, 2017, averaged 130.55% of book and 133.67% of tangible book and had a median of 18.41x last-12-months earnings, on an aggregate basis, and averaged 142.84% of book, 147.92% of tangible book and had a median of 18.63x last-12-months earnings, on a per-share basis.

Midland will expand in Illinois by 21 branches to be ranked No. 25 with a 0.46% share of approximately $472.11 billion in total market deposits. In addition, the company will expand in Missouri by one branch to be ranked No. 26 with a 0.56% share of approximately $165.99 billion in total market deposits.

Midland expects the deal to be 8% to 9% accretive to earnings per share in 2018. Midland also expects to incur tangible book value per share dilution of less than 1.5% upon the closing of the transaction, with an expected earn-back period of approximately two years. The company also expects $18.2 million transaction-related expenses, according to a Jan. 26 press release.

As of Sept. 30, 2016, Midland has $3.25 billion in assets, while Centrue has $1.00 billion in assets, per SNL data.

The transaction is set to close mid-2017, subject to regulatory and shareholder approvals.

Barack Ferrazzano Kirschbaum & Nagelberg LLP acted as Midland's legal adviser, while Stephens Inc. served as Midland's financial adviser, and provided a fairness opinion. Meanwhile, Howard & Howard Attorneys PLLC acted as Centrue's legal adviser, while Sandler O'Neill & Partners LP acted as financial adviser and provided a fairness opinion.

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