BMO Financial Group and its U.S. subsidiary, Harris Bank, today announced a definitive agreement to purchase Mercantile Bancorp, Inc., based in Hammond, Indiana for $197.4 million.

Mercantile Bank is a privately held community bank network with 19 branch locations in Lake and Porter counties in Northwest Indiana.

The transaction is expected to close in December, subject to U.S. and Canadian regulatory approval. Upon close, the proposed acquisition would increase the Harris community-banking network to 189 locations and would further expand the 450-plus network of Harris ABMs.

“Our goal is to become a leading Midwest personal and commercial bank,” said Tony Comper, president and CEO, BMO Financial Group, in a release. “Nearly one-third of our U.S. revenue comes from our strong, entrenched branch network in Illinois. This is our first acquisition in Indiana and we will be looking for other opportunities to expand our network in the states contiguous to Illinois,” he said.

“Mercantile Bank provides Harris with an excellent opportunity to extend our community banking model into a growing area that is a natural fit with our existing branch network,” said Frank Techar, President and CEO, Harris Bank. “While we already have 41 Harris ABMs in Indiana through our relationship with Speedway gas stations, Mercantile Bank will provide another convenient banking option for the large number of commuters in Lake and Porter counties.”

Mercantile Bank’s branch locations include the high-growth communities of Schererville and Dyer. “These branch locations will be all the more attractive as plans move forward on a new and improved commuter rail line linking these communities to Chicago,” said Techar.

Additionally, Harris intends to purchase the stock of Lake Commercial Corp., an entity established to develop potential branch properties for Mercantile Bank.

The impact of the purchases on BMO cash earnings per share is neutral in year one and accretive beginning year two, excluding one-time costs.