In a merger that will create the nation's 10th-largest thrift and the third-largest insured financial institution in Missouri, Roosevelt Financial Group has agreed to buy Farm and Home Financial Corp. in a stock swap worth some $258 million.

This marks the fourth acquisition in the last year announced by St. Louis-based Roosevelt, which has grown from approximately $2 billion of assets to $4 billion in 12 months.

Stocks Jump in Reaction

The Farm and Home deal, which is expected to close in June 1994, would bring Roosevelt's total assets to just over $8 billion.

Nevada, Mo.-based Farm and Home's stock price jumped after the acquisition was announced late Friday. Roosevelt's offer for the $3.8 billion-asset thrift was for more than $8 above its $20.25 closing price, according to analysts.

"This is pretty unique because Roosevelt has quadrupled in size in 18 months and at the same time has been extremely profitable," said Joseph Stieven, director of financial research at St. Louis-based Stifel Nicolaus & Co.

Although Mr. Stieven approved of the deal, pointing out that Farm and Home Financial will add to book value and earnings-per-share immediately, he also noted that Farm and Home has not had nearly as strong an earnings record as Roosevelt has had during the past two years.

Stephens Inc. analyst Frank Anderson said the sharpness of Farm and Home's stock price rise immediately following the merger announcement was partially attributable to the shock value of the news.

"You can tell by Farm and Home's stock, which has been languishing for quite some time, that they did an excellent job of keeping it quiet," he said.

Analysts said the in-market merger is a logical acquisition for Roosevelt given that it doubles its deposit base to $5.5 billion without being dilutive to its earnings. Roosevelt's stock closed at $40.75 on Monday, down $1.50. Farm and Home Financial's stock price closed at $25.125, up $4.875 on the day.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.