Under the terms of the agreement, each share of FBI common stock was converted into the right to receive a pro rata share of $14.0 million in cash and 413,101 shares of HBI common stock in the aggregate, together worth approximately $147.69 per FBI share as calculated by FBI's financial advisor at signing. FBI's financial advisor, Olsen Palmer LLC, calculated implied transaction multiples of 1.35 times FBI's tangible book value as of March 31, 2026, 9.0 times FBI's last-twelve-months net income, and 2.2% of FBI's core deposits as of March 31, 2026. The cash portion was subject to downward adjustment if FBI's closing tangible common equity, as defined in the agreement, fell below $19.0 million. The letter of intent signed August 25, 2025 had originally contemplated a consideration mix of between 45% and 55% cash and the remainder in HBI stock.
Hawthorn stated in its April 29, 2026 announcement that the transaction was expected to be accretive to its earnings per share by approximately 20% on a fully phased-in basis, with tangible book value dilution at closing of approximately 9.8%, earned back in approximately 3.0 years using the crossover method. On a combined basis, using financial data as of March 31, 2026, the companies expected total assets of approximately $2.2 billion, total loans of approximately $1.7 billion, and total deposits of approximately $1.9 billion. The acquisition added approximately $384 million in total assets and nine branch locations across Farmers State Bank's northern Missouri footprint. No specific dollar amount or percentage figure for cost synergies was disclosed; HBI's board cited "the expectation of cost synergies resulting from the merger" among its reasons for approving the deal without quantifying the figure, according to the joint proxy statement/prospectus on Form S-4.
"We are pleased to partner with Farmers State Bank as we continue to execute on our strategy of disciplined growth," said Brent Giles, Chief Executive Officer of Hawthorn, in the April 29, 2026 announcement. "Farmers has developed strong customer relationships and a respected community presence that align closely with Hawthorn's values. This proposed transaction expands our footprint in Northwest Missouri and positions us to deliver an expanded range of products and services while maintaining the personalized service that customers expect from a community bank." Michael Poland, President of FSC, added that the deal "represents a compelling opportunity for our customers, employees, and communities" and would allow FSC to "offer broader capabilities, enhanced technology, and additional financial solutions while preserving the local decision-making and service culture our customers value."
According to the background-of-the-merger section of the Form S-4 registration statement, FBI's board began exploring a sale or merger in early 2025 and engaged Northland Capital Markets (then The Capital Corp., n/k/a Northland Securities) as exclusive financial advisor in June 2025. Northland contacted twelve potential merger partners, seven of which, including HBI, signed confidentiality agreements. On July 11, 2025, Northland received two written indications of interest, one from HBI and one from an unnamed competing bidder referred to as "Bank A." FBI's board determined HBI's combined cash-and-stock offer was superior to Bank A's all-cash offer because it represented greater total value and gave FBI shareholders a public-market liquidity option through HBI stock. The parties signed a non-binding letter of intent on August 25, 2025, and the definitive merger agreement on April 29, 2026.
The merger agreement provided for a termination fee of $1,120,000 payable by FBI under certain circumstances, and for termination by either party if the merger did not close by January 31, 2027, subject to extension. Closing was conditioned on, among other things, approval by FBI shareholders, Nasdaq listing of the HBI shares to be issued, receipt of required regulatory approvals, and effectiveness of HBI's Form S-4 registration statement. FBI held its special shareholder meeting on September 1, 2026 at Farmers State Bank's Cameron, Missouri offices to vote on the merger. The transaction was structured as a two-step merger (FBI into a Hawthorn merger subsidiary, then into HBI) followed by a merger of Farmers State Bank into Hawthorn Bank, and was intended to qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code.
Raymond James & Associates, Inc. served as financial advisor to Hawthorn Bancshares, and Hunton Andrews Kurth LLP served as its legal counsel. Northland Capital Markets served as financial advisor to FSC Bancshares, and Stinson LLP served as its legal counsel. Olsen Palmer LLC rendered the fairness opinion to FSC's board.
Hawthorn announced completion of the merger on September 4, 2026, confirming the mergers became effective September 3, 2026, and that Farmers State Bank's customer conversion onto Hawthorn's platform was expected during the first quarter of 2027. Following the closing, Hawthorn Bank operates twenty-seven banking locations across northern, central, western and mid-Missouri, plus one location in Kansas, with the combined company's total assets at approximately $2.2 billion.