Finward Bancorp in Munster, Ind., has agreed to buy Royal Financial in Chicago.
The $1.6 billion-asset Finward said in a press release Thursday that it will pay $52.9 million in cash and stock for the $533 million-asset Royal. The deal, which is expected to close in the first quarter, priced Royal at 115% of its tangible book value.
Royal has nine branches, $460 million of loans and $466 million of deposits. Finward said it plans to close at least one of those branches.
“This partnership is a strong cultural, strategic, and financial fit for both of our organizations,” Benjamin Bochnowski, Finward’s president and CEO, said in the release. “By joining together, we expect to achieve more on a greater scale to help us serve our customers and communities better than ever before.”
Finward said it expects the deal to be 21% accretive to its 2022 earnings per share, excluding merger-related expenses. It will take a little more than two years for Finward to earn back an estimated 6.1% dilution to its tangible book value.
Finward expects to incur $7.7 million of merger-related charges. The company plans to cut 42% of Royal’s annual noninterest expenses.
One Royal director or executive officer will join the Finward board.
Finward was advised by Stephens and Barnes & Thornburg. Royal was advised by Boenning & Scattergood and Howard & Howard Attorneys.