MainSource Bank to Merge With First Financial Bank to Serve Ohio, Kentucky and Indiana
MainSource Financial Group and First Financial Bancorp have decided to partner in a deal, which will form a new bank in Kentucky, Indiana, and Ohio. Merging these two financial institutions means that a $13 billion organization will be created to serve the Midwest community. The merger is also expected to increase the strength of the organization in the commercial and retail banking sector.
Sources indicate that the deal will be closing in the early months of 2018, subject to approval from shareholders of both MainSource and First Financial. Before the deal is closed, the firms are expected to meet all regulatory requirements as well as meeting customary closing conditions. The combined bank will operate as First Financial.
The headquarters of the superior institution will be based in Cincinnati, Ohio, and over 100 jobs will be shifted to the headquarters with a period of 18 months to two years. With the merger, the super financial institute is expected to be the sixth largest bank in the deposit sector in Indiana and the fourth largest bank in the greater Cincinnati region. The bank will also be ranked among the 100 largest banks in the United States. The acquisition will also allow both banks to continue with their plans of expanding in the Louisville, Kentucky.
What Each Party Gets
Under the terms of the agreement in the merger, MainSource Bank, a subsidiary of MainSource will get 1.39 common shares of First Financial’s common stock for each share MainSource gets. As of July 25, 2017, the closing value of First Financial Bank, a wholly owned subsidiary of First Financial was $28.10. With the inclusion of outstanding options and warrants on MainSource common stock, the deal is valued at $1.0 billion.
First Financial will own about 63 percent of the combined company while MainSource will own 37 percent. The combined bank will own approximately $13.3 billion in assets, four billion in assets under management and $8.9 billion in loans. The combined bank stands a better position to meet the needs of its community in the dynamic banking environment. However, the super bank will also face some challenges especially in complying with the strict regulations and costs that come hand in hand with crossing the set $10 billion asset ceiling.
Statement from the Banks’ Heads
According to Claude Davis, chief executive officer of First Financial, the combined bank will have more strength that will enable it to meet economic development, financial education and lending needs of their consumer base. Since both banks have a strong reputation in organic performance, the newly formed company will proliferate and achieve significant milestones. On his side, Archie Brown, chairman, chief executive officer and president of MainSource, the partnership brings in a vibrant culture that is geared for success. The MainSource boss expects the merger to perform excellently and produce the highest quartile results in the banking sector.
New Leadership
As part of the partnership, the two leaders will play essential roles leading the institution. On completion of the merger, Claude Davis of First Financial will take the role of executive chairman for three years. Archie Brown will assume the role of chief executive officer and president. After three years, Davis will transition to serve as a non-executive chairman. The two prominent leaders are expected to form a strong team that will partner to manage performance, strategy, and profitability of the bank.
Additionally, the executive management and employees of the combined bank will represent the best of both firms. The board of directors of the newly formed bank will be drawn from both banks. First Financial will have nine members while MainSource will have six members. The directors will be chosen in the next few months before the deal is closed.
Giving Back To the Community
The deal comes with a package of goodies for the three communities. The combined bank will develop a comprehensive community development strategy that will include consideration in jobs and one million dollars to support the Greensburg, Indiana community over a period of five years. According to Davis, participating in charitable activities will strengthen the bank’s position in the new community.