FX.co ★ Alerus Financial To Buy HMNF For Around $116.4 Mln In All Share Deal

Alerus Financial Corp. (ALRS) and HMN Financial, Inc. (HMNF), the parent company of Home Federal Savings Bank, jointly announced on Wednesday that they have finalized an agreement for Alerus to acquire HMNF in an all-stock transaction.

Using Alerus' closing price of $20.69 as of May 14, the total deal value is estimated at approximately $116.4 million, translating to $25.86 per share.

"The transaction is projected to immediately enhance Alerus' estimated earnings, excluding one-time costs. It includes a tangible book value earn-back period of around 2.2 years, accounting for interest rate adjustments, and is expected to generate an internal rate of return exceeding 25%," the companies stated.

Under the terms of the agreement, which is anticipated to close in the fourth quarter, HMNF shareholders will receive 1.25 shares of Alerus for each HMNF share they hold.

Following the completion of the transaction, the combined entity will possess total assets of approximately $5.5 billion and total loans amounting to $3.7 billion. Additionally, the new company will have $4.3 billion in total deposits and manage or administer around $43.1 billion in assets. It will operate 29 locations across the Midwest, as well as in Arizona.

Post-merger, HMNF will be consolidated into Alerus, and Home Federal will be integrated into Alerus' wholly-owned banking subsidiary, Alerus Financial, National Association.

Established in 1934, Home Federal currently operates 12 branches in Minnesota, in addition to one branch each in Iowa and Wisconsin.

As of March 31, HMNF reported total assets of $1.2 billion, comprising approximately $872.3 million in loans and $1 billion in total deposits.