On October 10, 2018 First Merchants Corporation (NASDAQ: FRME) and MBT Financial Corporation (NASDAQ: MBTF) 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. On September 1, 2019, First Merchants completed the acquisition of MBTF.
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 implied transaction multiples to MBTF were 240% of TBV, 14.8x 2019E consensus EPS.
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.
MBT FINANCIAL CORPORATION
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.
FIRST MERCHANTS CORPORATION
First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation has one full-service bank charter, First Merchants Bank. The Bank also operates as Lafayette Bank & Trust and First Merchants Private Wealth Advisors (each as a division of First Merchants Bank). First Merchants Corporation’s common stock is traded on the NASDAQ Global Select Market System under the symbol FRME. As of June 30, 2018, FMRE had total assets of $9.7 billion, net loans of $7.0 billion, and total deposits of $7.5 billion.