First Mid Bancshares in Mattoon, Ill., has agreed to buy Blackhawk Bancorp in Beloit, Wis.
The $6.7 billion-asset First Mid said in a press release that it will pay $90.3 million in stock for the $1.3 billion-asset Blackhawk. The deal, which is expected to close in the second half of this year, priced Blackhawk at 138.1% of its tangible book value.
Blackhawk has 10 branches, $782 million of loans and $1.2 billion of deposits.
The transaction is expected to be about 22% accretive to First Mid’s 2024 earnings per share, excluding nonrecurring transaction expenses. It should take about two years to earn back an estimated 7.7% dilution to First Mid’s tangible book value.
First Mid said it expects to cut about 31% of Blackhawk’s annual noninterest expenses.
Blackhawk had a 65% loan-to-deposit ratio on Dec. 31, with only 8.5% of its deposits uninsured. Blackhawk’s $444 million available-for-sale securities portfolio will be marked to fair value through purchase accounting when the deal closes.
“We have been talking to [Blackhawk] for a number of years about a possible combination of our organizations,” Joe Dively, First Mid’s chairman and CEO, said in the release.
“While there is volatility in the equity markets for banks today, the discussions which led to today’s announcement started a long time ago,” Dively added. “We have partnered with Blackhawk on many projects over the last several years and could not be more confident in the cultural and strategic alignment.”
One Blackhawk director will join First Mid’s board.
Piper Sandler and Reinhart Boerner Van Deuren advised Blackhawk. Janney Montgomery Scott and ArentFox Schiff advised First Mid.