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First Merchants' deal to make it state's second-biggest bank

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Muncie-based First Merchants Corp. is buying CFS Bancorp Inc. of Munster for $115 million in stock—a deal that elevates First Merchants into the second-largest Indiana-headquartered bank.

The acquisition of CFS and its Citizens Financial Bank subsidiary will boost First Merchants’ assets from $4.2 billion to $5.4 billion. Closure of the deal, expected late this year, will leave First Merchants second in assets only to Evansville-based Old National Corp., which has $9.5 billion.

The deal will expand First Merchants into the northern reaches of the state, leaving it with nearly 100 offices in 26 Indiana counties and two counties in both Ohio and Illinois.

“We believe that our strategy to be a service-driven alternative to our super-regional bank competitors will support the acceleration of Citizens’ current initiatives while furthering our goal of becoming a more efficient, higher-performing company," First Merchants CEO Michael Rechin said in a statement.

First Merchants also has been stepping up its central Indiana presence. In 2008, it bought Lincoln Bancorp in Plainfield, and last year, it bought the loans and deposits of the failed SCB of Shelbyville.

First Merchants is providing stock valued at $10.49 for each CFS share. Announcement of the deal Monday morning gave CFS shares a healthy lift. They were trading late morning at $10.12, up nearly 10 percent on the day. First Merchants shares were trading at $15.96, down almost 1 percent.

 

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  • No-payment mortgages!
    First Merchant's has a fiscal secret that must work. They held a second mortgage (the first mortgage was 'straw') on a piece of property in Madison County that was supposed to have a dump built on it. The 8.95% 30- year mortgage for $879,500 was issued in '79 and they let the statutue of limitations expire on their interest without receiving a penny in debt service! That was a loss of over $20M with accrued interest. I tried to get them to give me a mortgage like that but they weren't interested. Hmmm?

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