MAF Bancorp ( MAFB) agreed Wednesday to buy St. Francis Capital ( STFR) in an all-stock transaction valued at $264 million, in a sign that small deals may be gaining steam in the banking sector.

With the merger, Illinois-based MAF plans to command a larger presence in the Milwaukee area through the 22 branches that St. Francis operates in the region. MAF said it expects the deal to add 29 cents a share to 2004 earnings.

The merger is the second in six months for MAF, which in December purchased Fidelity Bancorp in Chicago for $101 million.

The deal also follows Wells Fargo's ( WFC) announcement Monday that it will acquire Seattle-based Pacific Northwest ( PNWB) for $591 million in an all-stock merger.

Banking analysts have been pointing out that niche acquisitions are the most likely scenario in the sector at the moment, as megamergers are being shunned amid continued economic weakness.

Shares of MAF gained $1.46, or 4.3%, to $35.09 on Wednesday, while St. Francis shares rose $2.67, or 10.8%, to $27.47.