Ameriana Bancorp To Merge With First Merchants Corporation

First Merchants CorporationFirst Merchants. Photo by Mike Rhodes

First Merchants Corporation (NASDAQ: FRME) and Ameriana Bancorp (NASDAQ: ASBI)  announced they have executed a definitive agreement whereby Ameriana Bancorp will merge with and into First Merchants Corporation, and its wholly owned bank subsidiary, Ameriana Bank, will merge with and into First Merchants Bank, NA.

The merger agreement provides that shareholders of Ameriana Bancorp will have the right to exchange each Ameriana Bancorp common share held for 0.9037 shares of First Merchants’ common stock. Based on the closing price of First Merchants’ common stock on June 26, 2015 of $25.13, the transaction value is approximately $68.8 million, with an implied price per share of Ameriana Bancorp common stock of $22.71.

The transaction is expected to be completed in the fourth quarter of 2015, subject to the approval of Ameriana Bancorp shareholders, regulatory approvals, and other customary closing conditions. The combined financial institutions, which will do business as First Merchants Bank, expect to complete the integration during the second quarter of 2016.

Ameriana Bancorp had assets of approximately $483 million, loans of $325 million and deposits of $391 million as of March 31, 2015. Based upon current financials, First Merchants and Ameriana Bancorp will have combined assets of $6.4 billion and will remain the second largest financial holding company headquartered in Indiana. The combined company will have 126 banking offices in twenty‐seven Indiana counties, as well as two counties in both Ohio and Illinois.First Merchants Bank Merges with Ameriana

Michael C. Rechin, President and Chief Executive Officer of First Merchants, said, “Like First Merchants, Ameriana Bank has a deep‐rooted commitment to community banking and we are excited to welcome Ameriana to the First Merchants family. The addition of Ameriana Bank supports our goal of becoming a more efficient, higher performing company. With the addition of significant deposits in Henry and Madison counties, First Merchants will hold the lead market share position. Our partnership will add new neighboring communities of Greenfield, New Palestine, New Castle, Knightstown and Morristown. The merger will also add five locations to our thirteen banking centers in Hamilton County, the fastest growing Indiana market.”

Rechin also added, “Management expects this combination to be mutually beneficial to First Merchants and Ameriana Bancorp shareholders. We anticipate earnings per share accretion in the first full year of combination and beyond through identified operating efficiencies and branch overlap of approximately fifty‐five percent, resulting in a tangible book value earn‐back of four years.”

Ameriana Bank, led by Chief Executive Officer, Jerome J. Gassen, has served the banking needs of Central Indiana customers as competitors of First Merchants for many years. Mr. Gassen stated, “We are excited about the opportunity to become part of the First Merchants family, and we believe First Merchants was the best choice for our collective stakeholders. First Merchants’ size, broad array of commercial and wealth management products, banking expertise and strong capital position offer us the ability to further capitalize on opportunities in Indianapolis, while continuing to offer exceptional customer service throughout Central Indiana. First Merchants will build on our shared dedication to community involvement and service excellence, as well as offer larger commercial credits, which drives greater economic and community development efforts.”

First Merchants was assisted in the transaction by Keefe, Bruyette & Woods, Inc., and Bingham Greenebaum Doll LLP served as legal counsel.

River Branch Capital advised Ameriana Bancorp’s board of directors in this transaction, and Kilpatrick Townsend & Stockton LLP served as legal advisor to Ameriana Bancorp.