First Merchants Corporation and MBT Financial Corporation Announce Merger Agreement

First Merchants CorporationFirst Merchants Corporation. Photo by: Mike Rhodes

By: Chad Mertz—

Muncie, IN and Monroe, MI— First Merchants Corporation (NASDAQ: FRME) and MBT Financial Corporation (NASDAQ: MBTF) today announced they have executed a definitive agreement whereby MBT Financial Corporation will merge with and into First Merchants Corporation in a 100% stock transaction valued at approximately $290.9 million.  Upon completion of the merger, Monroe Bank & Trust, will merge with and into First Merchants Bank.

Headquartered in Monroe, Michigan, MBTF operates 20 banking center locations in the southeastern Michigan area.  Since its founding in 1858, Monroe Bank & Trust has grown to one of the largest community banks in Michigan.  MBTF has total assets of $1.3 billion, total loans of $733 million, and total deposits of $1.1 billion (96% of which are core) and also earned a 1.51% return on average assets and 16.59% return on tangible common equity for the three months ended June 30, 2018.  Additionally, as of June 30, 2018, MBTF had approximately $998 million of deposits in the Monroe, Michigan Metropolitan Statistical Area, ranking it first in deposit market share with approximately 50% of the market.  MBTF’s Wealth Planning & Advisory Group has the fifth largest trust/investment services group among all banks in Michigan, with assets under management in excess of $700 million.

The merger agreement provides that shareholders of MBTF will have the right to receive 0.275 shares of First Merchants common stock for each share of MBTF common stock owned.  Based on the closing price of First Merchants’ common stock on October 9, 2018 of $45.71 per share, the implied price of MBTF common stock is $12.57 per share.

The transaction is expected to be completed in the first quarter of 2019, subject to the affirmative vote of MBTF shareholders, regulatory approvals, and other customary conditions.  The combined company, doing business as First Merchants Bank, expects to complete its integration during the third quarter of 2019.

First Merchants and MBTF will have combined assets of approximately $11 billion and will be the second largest financial holding company headquartered in Indiana. The combined company will have 134 banking offices in thirty-one Indiana counties, as well as two counties each in Michigan, Ohio and Illinois.

Michael C. Rechin, President and Chief Executive Officer of First Merchants, said, “Like First Merchants, Monroe Bank & Trust has a long history and a deep-rooted commitment to community banking and we are excited they have chosen to become the newest member of the First Merchants family.  The MBTF franchise opens an entirely new contiguous banking market for us with a high-quality and prudently managed 160 year old institution.  We believe that our strategy to be a service-driven alternative to our super-regional bank competitors will support the acceleration of Monroe Bank & Trust’s current initiatives while furthering our goal of growing as a high-performing company.”

Rechin added, “We expect this combination to be mutually beneficial to First Merchants and MBTF shareholders.  We anticipate earnings per share accretion of approximately 2.7% in 2020 resulting in a tangible book value earnback of 3.3 years.”

In First Merchants Bank’s newly acquired market, the executive team will include Monroe Bank & Trust President and CEO, H. Douglas Chaffin; Wayne County President and Strategic Support Director, Scott McKelvey; Chief Lending Manager and Sales Director, Thomas Myers; and Wealth Planning, Advisory and Mentorship Director, Audrey Mistor.  Mr. Chaffin will assume the role of Regional President.

Mr. Chaffin stated, “We believe our partnership with First Merchants will provide tremendous benefits to our customers, shareholders and communities as we look forward to continuing the legacy of exceptional customer service, local responsiveness and strong community engagement that has defined Monroe Bank & Trust for 160 years.”

Keefe, Bruyette & Woods, a Stifel Company, served as the financial advisor to First Merchants and legal advisor was Bingham Greenebaum Doll LLP.

Sandler O’Neill + Partners, L.P. and Donnelly Penman & Partners served as financial advisor to MBTF in this transaction and Shumaker, Loop & Kendrick, LLP served as legal advisor to MBTF.