An Iowa-based community bank is expanding its footprint in southeastern Minnesota with the acquisition of two local banks.

MBT Bank, headquartered in Forest City, Iowa, has entered into an agreement to acquire Farmers & Merchants State Bank of Blooming Prairie and Citizens State Bank of Hayfield.

The ownership change is awaiting approval by regulators and bank shareholders. MBT President and CEO Dennis Busta said he hopes to finalize the acquisition in September or early October. After closing the deal, all of the branches will be under the MBT brand.

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When transition is completed, MBT will have added branches in Blooming Prairie, Austin, Hayfield, Dodge Center and Mantorville, three in Iowa and its growing Rochester branch. Plus it will have approximately $680 million in assets.

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MBT opened a small branch in Rochester in 2012. That presence has expanded to a 4,000-square-foot space at 4408 U.S. 52 NW in the former America's Mattress building.

“With us in north Iowa, it made sense to look at the footprint in between there and Rochester,” said Busta. ”It gives us the opportunity to look at some growth. It was important with our success in Rochester to fill in that footprint and allow further efficiencies to take place.”

MBT plans to keep the about 50 employees of Farmers & Merchants/Citizens State in place after the transition. That will bring MBT’s workforce to a total of 125.

Account holders at Farmers & Merchants/Citizens State shouldn’t see major changes with the shift in ownership. However, Busta said MBT will be able to offer additional service, including more digital offerings.