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Midwest community bank merger: First Financial buying MainSource for $1 billion

Combined bank will be sixth largest in Indiana

In a deal that will create one of largest community banks in the Midwest, First Financial Bancorp, the parent company of First Financial Bank, and MainSource Financial Group, the parent company of MainSource Bank, announced that they plan to merge.

According to the banks, the deal will be a stock-for-stock transaction with MainSource Bank merging into First Financial Bank.

Under the terms of the merger agreement, MainSource’s shareholders will receive 1.3875 common shares of First Financial common stock for each share of MainSource common stock they own.

Based on First Financial’s closing price of $28.10 on July 25, 2017, the transaction is valued at approximately $1 billion.

In a release, the banks said that the merger is an “ideal strategic, financial and operational fit, particularly given their respective strong and consistent performance over time.”

The merged bank will create a “pre-eminent community bank in the region,” serving Ohio, Indiana and Kentucky.

Once the merger is complete, the combined bank is expected to become the sixth largest bank in the state of Indiana and the fourth largest in the Cincinnati area.

The merger will result in a combined company with approximately $13.3 billion in assets, $8.9 billion in loans, $10 billion in deposits and $4 billion in assets.

As part of the deal, each of the banks’ CEOs will play “critical” roles in leading the transition, the banks said.

Claude Davis, the current CEO of First Financial, will transition into the role of executive chairman for a three-year term, while Archie Brown, MainSource’s chairman, president and CEO will assume the role of president and chief executive officer of the combined bank.

Then, Davis will transition to non-executive chairman in 2021. In the interim, Davis and Brown will lead the company and partner on overall strategy, management and performance of the company.

“By taking the best of both banks, we believe that the combined company will be even more effective in meeting the lending, economic development and financial education needs of the communities we serve,” Davis said.

“With both companies having proven records of success in organic performance as well as through acquisitions, we see this as a tremendous opportunity to partner with MainSource to create a new company that is even better positioned for growth and continued success,” Davis added. “By strengthening our position as the pre-eminent community bank in our region, we recognize the chance to make a larger impact to the communities and individuals who rely on us.”

Brown echoed Davis’ sentiments.

“We are pleased to partner with a company that has a shared vision, culture and focus on performance,” Brown said. “Our client-focused approaches and similar business models delivered across corresponding footprints position us to perform well and produce top-quartile results.”

The banks said the deal is expected to close in early 2018.

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