Northwest Bancshares in Warren, Pa., has agreed to buy MutualFirst Financial in Muncie, Ind.
The $10.6 billion-asset Northwest said in a press release Tuesday that it will pay $346 million in stock for the $2.1 billion-asset MutualFirst. The deal, which is expected to close in the second quarter, priced MutualFirst at 172% of its tangible book value.
MutualFirst has 39 branches, $1.6 billion in deposits and $1.5 billion in loans.
Northwest said it expects the deal to be immediately accretive to its earnings per share, excluding merger costs. The company said it should take less than three years to earn back the deal’s expected 3.5% dilution to its tangible book value, including the impact of the Current Expected Credit Loss method.
David Heeter, MutualFirst’s president and CEO, will become regional CEO and market leader for Northwest's Indiana operations. Christopher Caldwell, MutualFirst’s senior vice president of commercial banking and Christopher Cook, the company’s chief financial officer, will also join Northwest.
One MutualFirst director will join Northwest’s board.
"Indiana is an attractive market with a business-friendly environment which we have targeted as part of our Mid-Atlantic and Midwest expansion plans,” Ronald Seiffert, Northwest’s president and CEO, said in the release.
“MutualFirst represents a unique and sizable opportunity that is highly accretive to both Northwest's franchise value and shareholder value,” Seiffert added. “Maintaining MutualFirst's executive management team and the presence of similar cultures allows us to consistently serve the customer base with little to no disruption.”
Northwest expects to incur $30 million in merger-related expenses. It plans to cut 30% of MutualFirst’s annual noninterest expense, or roughly $17.2 million.
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B. Riley FBR and Luse Gorman advised Northwest. Keefe, Bruyette & Woods and Silver, Freedman, Taff & Tiernan advised MutualFirst.
