Springfield, Mo.-based OakStar Bank and Urbana, Mo.-based are merging in adeal set toclose in the first quarter of 2017.

According to a merger application, the purchase price willbe $15 million of Bank of Urbana's total equity capital plus $6.5 million. IfBank of Urbana's total equity capital is less than $15 million, the purchase pricewill be reduced by a dollar-for-dollar amount.

OakStar Bancshares plans to finance the deal by raising upto $25 million through equity and debt. The company plans to raise $12.5million to $15 million in equity from existing shareholders, and $10 million to$12.5 million in debt.

OakStar Bancshares already had subscription agreements with21 accredited investors for $12.1 million of common stock, by July 20. Acommercial bank also sent OakStar Bancshares a letter of intent for up to $17million in debt in connection with the deal.

SNL valuations for bank and thrift targets in the Midwestregion between July 14, 2015, and July 14, 2016, averaged 132.33% of book,136.17% of tangible book and had a median of 18.97x last-12-months earnings, onan aggregate basis.

According to the release, OakStar Bank currently has assetsof more than $440 million, while Bank of Urbana has assets of $180 million. Themerged institution will have assets of more than $620 million; six full-servicebranches; a mortgage office in Kansas City, Mo.; a loan production office inFlorida; and about 150 team members.

"Joining forces positions OakStar Bank as one of thestrongest community banks in Missouri," OakStar Bank President and CEORandy Johnson and Bank of Urbana President William Vaughan said in the release.

OakStar Bank is a unit of OakStar Bancshares Inc., while Bank of Urbana is a unitof Bancshares of UrbanaInc.

SNL records show that OakStar Bancshares will enter DallasCounty, Mo., with two branches to be ranked No. 2 with a 42.82% share of about$211.4 million in total market deposits; it will enter Camden County, Mo., withone branch to be ranked No. 1, with a 1.13% share of approximately $971.1million in total market deposits; and it will enter Hickory County, Mo., withone branch to be ranked No. 1, with a 64.61% share of approximately $88.9million in total market deposits.

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