Illinois continues to be the busiest state for bank M&A in 2022.

HBT Financial Inc.'s announced acquisition of Town and Country Financial Corp. brings the total number of deals announced in the state to 14 so far this year, approaching 2021's total of 16 announcements. But the total of assets acquired is lagging the prior year, with only $2.59 billion in total target assets compared to $7.10 billion in 2021, excluding Old National Bancorp's merger of equals with First Midwest.

Illinois stays hot

Though the total target assets sold in the state so far this year is down compared to 2021, HBT Financial's buy of Town and Country provided a hefty boost to the year-to-date total. Based on Town and Country's $876.2 million in total assets at June 30, the deal is the largest deal announced in Illinois so far this year and the largest overall in the state since July 2021 when Old Second Bancorp Inc. announced it would acquire West Suburban Bancorp.

The deal punctuates an intense stretch for bank mergers in the prairie state, where 20 M&A transactions have occurred since August 2021. Credit unions were buyers in a quarter of those 20 transactions.

With the 14 total announcements targeting Illinois-based banks year-to-date, the state boasts the most bank deal announcements this year among all 50 states. Further, the state accounts for roughly 12% of overall deal activity among the 112 deal announcements across the country so far this year.

If Illinois M&A continues apace, the state could surpass 2021's 16 deals in the state or 2019's 20 deal announcements.

HBT Financial, Town and Country joining forces

Town and Country was a logical target for HBT because it occupies similar markets in Illinois, including some overlap in Bloomington and Lincoln, HBT President and COO Lance Carter said in an interview. Furthermore, both companies are majority family-owned community banks, and Town and Country has a similar, low-cost deposit base to HBT with a commercial-focused loan portfolio, including C&I and small business lending, the executive added.

"They also go south down to the metro-east area in St. Louis, which would be a new market for us, but the central Illinois markets of Springfield, Decatur, Jacksonville and Quincy are very similar to the central Illinois markets that we're in," Carter said.

The Town and Country transaction marks HBT Financial's fourth bank deal announcement since 2015.

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For Town and Country, HBT was an attractive partner because of the bank's bigger balance sheet with a larger lending limit and greater exposure in agricultural lending, Town and Country President and CEO Micah Bartlett said in an interview.

"We're all surrounded by agriculture and farmland and they had a stronger concentration in ag to kind of complement what we had done, but otherwise as far as our loan portfolios, we're both commercially focused, both C&I and CRE," Bartlett said.

Both banks are on the Jack Henry banking platform, which the executives believe should make for a fairly low-risk integration model.

"They're less than 20% our size so it's not a huge acquisition for us to be able to digest," Carter said. "We're sitting with strong capital before the transaction and we'll still have strong capital after. We believe that we can still do additional M&A if an opportunity came about."