Whitehall-headquartered Heartland BancCorp has agreed to merge Victory Community Bank, a federal savings association with its main office in Ft. Mitchell, Kentucky, into Heartland Bank, in a transaction valued at approximately $41.1 million. The transaction expands Heartland’s presence in the Northern Kentucky and Cincinnati markets.

Under the agreement, Victory Bancorp Inc., as the sole shareholder of Victory Community Bank, will receive 58,934 shares of Heartland common stock and $35.5 million in cash, subject to adjustment as set forth in the merger agreement. The combined company will have approximately $1.32 billion in assets.

The merger has been unanimously approved by the boards of directors of both institutions. The merger, subject to all requisite regulatory approvals and other customary closing conditions, is anticipated to be completed early in the second quarter of 2020. Upon completion of the transaction, Victory Community Bank President and CEO John G. “Jack” Kenkel Jr. will join Heartland’s board.

The transaction equates to approximately 161.3 percent of Victory’s tangible book value as of Sept. 30, 2019, and 13 times its net income for the last 12 months. Based on assumptions prepared by Heartland’s management, the merger is anticipated to be approximately 12.2 percent accretive to Heartland’s earnings per share in 2020 and approximately 19.4 percent accretive to EPS in 2021, resulting in a 3.3-year earnback period.

Victory Community Bank is a 16-year old community bank that serves the Northern Kentucky and Greater Cincinnati area, with a focus on residential mortgage lending. At Sept. 30, 2019, Victory Community Bank had assets of $179 million, a high-quality loan portfolio of $154 million, and an attractive deposit base of $137 million with three banking locations in Boone, Kenton and Campbell counties in Kentucky. Its sister company, Victory Mortgage, which is affiliated with Fischer Homes, has mortgage lending offices in Louisville, Columbus, Indianapolis and Atlanta. As part of the merger, Victory Mortgage has entered into a cooperation agreement with Heartland Bank for certain products and services.

“Victory’s strong non-interest income generation complements our own strategies and its loan portfolio provides diversity to our balance sheet,” Heartland Chairman and CEO G. Scott McComb said, in a statement. “The combination of our two organizations provides the opportunity to create efficiencies and enhance the value of the combined company while offering Victory customers a broader product offering, increased lending limits and an expanded branch delivery system.”

Heartland is being advised by D.A. Davidson & Co., as financial advisor, and Hunton Andrews Kurth LLP, as legal counsel. Victory is being advised by Boenning & Scattergood, Inc., as financial advisor, and Dinsmore & Shohl LLP, as legal counsel.