(Bloomberg) -- UMB Financial Corp. agreed to acquire rival Heartland Financial USA Inc. for about $2 billion in an all-stock transaction poised to be the year’s largest US regional-bank deal. 

Under the terms of the agreement, approved by the boards of both companies, Heartland shareholders will receive 0.55 UMB shares for each of their shares, according to a statement Monday. The purchase is valued at $45.74 a share based on UMB’s closing price of $83.17 Friday. Talks between the two firms were first reported by Bloomberg News on Friday.

“This is a historic and exciting milestone for our company,” UMB Chief Executive Officer Mariner Kemper said in the statement. “While we have maintained an outstanding pace of organic growth during the past decade, this compelling combination with HTLF marks a truly momentous expansion of all our core services in both existing and new markets.”

UMB and Heartland have complementary branch footprints throughout the Midwest and Southwest US. With the country awash with small banks struggling to compete against giants like JPMorgan Chase & Co. and Bank of America Corp., analysts and investors see the US banking industry as ripe for consolidation. The agreement ranks as the year’s largest regional bank deal, topping Wintrust Financial Corp.’s $510 million acquisition this month of Macatawa Bank, according to data compiled by Bloomberg.

The shares of Denver-based Heartland rallied 17% at 9:58 am. in New York time, while Kansas City, Missouri-based UMB slid 5.8%. Keefe, Bruyette & Woods analyst Christopher McGratty wrote in a note to clients that the “financial metrics look compelling” for UMB.

The deal, expected to be completed in the first quarter of next year, marks the largest in the 111-year history of UMB and will result in the firm having almost $65 billion of assets. Five Heartland directors will join UMB’s board, expanding it to a combined 16 members.

Within the 11 states where it operates, Heartland does business as Minnesota Bank & Trust, Wisconsin Bank & Trust, Dubuque Bank & Trust, Illinois Bank & Trust, Bank of Blue Valley, Citywide Banks, Premier Valley Bank, Arizona Bank & Trust, New Mexico Bank & Trust and First Bank & Trust.

Bank of America Corp. and Davis Polk & Wardwell advised UMB on the deal while Stifel Financial Corp.’s Keefe, Bruyette & Woods advised Heartland along with Wachtell, Lipton, Rosen & Katz. 

(Updates with advisers in final paragraph.)

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