Farmers & Merchants Bancorp (F&M), the holding company for Farmers & Merchants State Bank, has agreed to purchase Ossian Financial Services (OFSI).
The all-cash transaction is valued at around $20m with each share priced at $67.71.
The consideration is subject to potential adjustment if OFSI’s equity capital is less than $12m at closing.
FSI, which is the holding company for Ossian State Bank, has two full-service offices in northeast Indiana. It oversees $122m in assets, $58m in loans, $108m in deposits and $11.9m in consolidated equity as of 30 September 2020. OFSI is taxed as an S-Corporation.
The deal bolsters F&M’s community bank footprint. It is viewed as a complementary fit to the company’s acquisition of the Bank of Geneva and asset purchase of Adams County Financial Resources.
Following the transaction, F&M will operate 11 offices in Indiana with total deposits of $462m and total loans of $445m.
F&M president and CEO Lars Eller said: “I am pleased to combine our two strong institutions as OFSI immediately enhances and complements our growing franchise in Northeast Indiana. This is an excellent opportunity for OFSI to become part of a larger community banking organisation that will allow us to offer their customers a wider range of financial services.”
F&M expects the transaction to be around 6.2% and 7.1% accretive to first and the second year diluted earnings per share, respectively. Additionally, it is expected to bring F&M’s consolidated assets to around $2bn.
Ossian State Bank president and CEO David Morrison said: “F&M shares our customer first culture and community-oriented values, and F&M is a logical and strong fit for our customers, employees, and communities.
“In addition, F&M has a strong presence throughout our markets and our customers will continue to benefit from local banking relationships and expanded products and services. We are excited to join F&M.”
The transaction is expected to close in the second quarter of the next year, subject to customary regulatory approvals, OFSI shareholder approval and other conditions.
