FSBH Inc. agreed to acquire Center, Texas-based Farmers Bancshares Inc., the parent company of Farmers State Bank

The deal is expected to close in the fourth quarter subject to necessary conditions, including approval from Farmers' shareholders and regulators. The boards of directors of both companies have unanimously approved the transaction. Financial terms were not disclosed. Farmers State Bank had $379.4 million in assets as of March 31, according to S&P Global Market Intelligence data.

FSBH is led by CEO Christopher Brewer and was formed to acquire and operate Farmers State Bank, according to a merger news release. "Farmers State Bank represents the ideal banking platform for us to enter into the banking industry," Brewer said in the release.

Upon closing, FSBH expects to retain all management and employees and there will be no change to Farmers State Bank's business plan, according to the press release.

The acquisition will allow Farmers State Bank to expand its banking products, services, capabilities and technology, Luke Motley III, president of the holding company and chairman of the bank subsidiary, said in the news release. Motley will continue as director of the bank upon close.

Commerce Street Capital was financial adviser for Farmers Bancshares while Norton Rose Fulbright US LLP was legal adviser. Hunton Andrews Kurth LLP was the legal adviser for FSBH.

The announcement marks the fourth US bank acquisition by a private equity or investor group in 2023. The investor activity has remained steady and has made up nearly 8% of 2023's bank M&A deal announcements, according to Market Intelligence data.

Bank M&A has been depressed in recent quarters as bank valuations have been low and the recent industry tumult increased uncertainty. However, some investors are seeing acquisitions as an even more attractive option to enter the bank space compared to the de novo route, experts recently told Market Intelligence.