Alerus Financial Corp. (ALRS) and HMN Financial, Inc. (HMNF), the parent company of Home Federal Savings Bank, announced on Wednesday that they inked a deal that allows Alerus to buy HMNF in an all-share deal.
Based on Alerus' closing price of $20.69 as of May 14, the aggregate deal value is approximately $116.4 million, or $25.86 per share.
"The transaction is expected to be immediately accretive to Alerus' estimated earnings before one-time costs, with a tangible book value earn back of approximately 2.2 years (inclusive of interest rate marks), and an internal rate of return in excess of 25%," the companies said in a statement.
Under the terms of transaction, expected to be closed in the fourth-quarter, HMNF shareholders will receive 1.25 shares of Alerus for each share of HMNF they own.
Post transaction, the combined company will have around $5.5 billion in total assets, $3.7 billion in total loans. It will also have $4.3 billion in total deposits, assets under administration and management of around $43.1 billion, with 29 locations across the Midwest, as well as Arizona.
HMNF will merge with and into Alerus and Home Federal will merge with and into Alerus' wholly-owned bank subsidiary, Alerus Financial, National Association.
Founded in 1934, Home Federal operates 12 branches in Minnesota and one branch in each of Iowa and Wisconsin.
As of March 31, HMNF had $1.2 billion in total assets, which included approximately $872.3 million in loans and $1 billion in total deposits.
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