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First Merchants enters Michigan through MBTF
Posted on Thursday, 11 October 2018 10:31
First Merchants is carrying out its largest acquisition to date through the all-scrip takeover of MBT Financial (MBTF) for USD 290.90 million to create what will be the second-largest banking holding company headquartered in Indiana.

The deal provides a strategic entry into Michigan and equates to USD 12.57 apiece, a multiple of 14.8x expected consensus earnings per share (EPS) in 2019 and 240.0 per cent tangible book value (TBV) per share.

Founded in 1858 and headquartered in Monroe, Michigan, MBTF operates 20 branches in the southeastern Michigan area.

For the three months ended 30th June 2018, the lender had total assets of USD 1.30 billion, total loans of USD 733.00 million, and total deposits of USD 1.10 billion.

As at the same date, it had also earned a return of 1.5 per cent on average assets and of 16.6 per cent on tangible common equity.

MBTF was ranked first with a 50.0 per cent share of the deposit market in the Monroe, Michigan metropolitan statistical area, while its wealth planning and advisory arm was the fifth-largest trust among all banks in the state.

Following the deal, which is expected to add 2.7 per cent to EPS in 2020, resulting in a TBV earnback of 3.3 years, shareholders will end up owning 11.0 per cent of the enlarged group.

Post-acquisition, First Merchants will be a leading Midwest franchise, with 134 branches in 31 Indiana counties, as well as two each in Michigan, Ohio and Illinois.

This group will have total assets that cross the USD 10.00 billion threshold (USD 11.10 billion), loans of USD 7.80 billion and deposits of USD 8.70 billion.

MBFT represents First Merchants’ eighth acquisition since 2012: previous purchases include Independent Alliance Banks in July 2017 for USD 239.39 million and Arlington Bank in May 2017 for USD 83.18 million.

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