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First Merchants acquiring MBT Financial in $290.9M deal

Muncie, Ind.-based First Merchants Corp. has agreed to acquire Monroe, Mich.-based MBT Financial Corp. in an all-stock deal valued at approximately $290.9 million.

Upon completion of the merger, Monroe Bank & Trust will merge with and into First Merchants Bank.

MBT Financial has total assets of $1.3 billion, total loans of $733 million and total deposits of $1.1 billion, according to the news release. The combined institution will have approximately $11 billion in assets, 134 banking offices in 31 Indiana counties and two counties each in Michigan, Ohio and Illinois.

For each MBT Financial common share held, MBT Financial shareholders will receive 0.275 of a share of First Merchants common stock. Based on First Merchants' per-share closing price of $45.71 on Oct. 9, MBT Financial's implied price is $12.57 per share.

On a per-share basis, SNL calculates that the deal value is 240.1% of book, 240.1% of tangible book and 23.3x earnings. It is also 21.98% of assets, 25.32% of deposits and the tangible book premium-to-deposits ratio is 14.83%.

SNL valuations for bank and thrift targets in the Midwest region between Oct. 10, 2017, and Oct. 10, 2018, averaged 160.28% of book, 172.99% of tangible book and had a median of 20.18x last-12-months earnings, on a per-share basis.

The deal has a one-day premium of 9.31%, based on MBT Financial's closing price of $11.50 as of Oct. 9, and a one-month premium of 13.76%, based on MBT Financial's closing price of $11.05 as of Sept. 10.

The transaction is expected to be completed in the first quarter of 2019.

The combined company, doing business as First Merchants Bank, expects to complete its integration during the third quarter of 2019. First Merchants anticipates EPS accretion of approximately 2.7% in 2020, resulting in a tangible book value earnback of 3.3 years.

The combined company's executive team will include Monroe Bank & Trust President and CEO H. Douglas Chaffin; Wayne County President and Strategic Support Director Scott McKelvey; Chief Lending Manager and Sales Director Thomas Myers; and Wealth Planning, Advisory and Mentorship Director Audrey Mistor. Chaffin will assume the role of regional president.

First Merchants Corp. will enter Monroe County, Mich., with 15 branches to be ranked first with a 50.12% share of approximately $1.99 billion in total market deposits and will enter Wayne County, Mich., with six branches to be ranked No. 14 with a 0.28% share of approximately $54.81 billion in total market deposits.

Keefe Bruyette & Woods served as the financial adviser to First Merchants, while Bingham Greenebaum Doll LLP served as its legal adviser. Sandler O'Neill & Partners LP and Donnelly Penman & Partners served as financial adviser to MBT Financial, while Shumaker Loop & Kendrick LLP served as its legal adviser.

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