Merchants, Citizens Bank to merge

Carmel-based Merchants Bank of Indiana is merging into Mooresville-based Citba Financial Corp., the parent of the $375 million-in-assets Citizens Bank—a deal that sent Citba shares soaring 87 percent Thursday morning.

Merchants' eight shareholders will receive Citba shares that were valued at $98.3 million before the announcement of the deal caused the stock to surge from $26.60 to $49.50. The increase—fueled by optimism that the deal will boost profits—swelled the value of the transaction to $183.5 million.

Although Citba will be the surviving corporation, it will take on the name Merchants Bancorp, and its branches will take on the Merchants Bank moniker.

Merchants is larger than Citba, with assets of $1.2 billion. But much of that involves Merchants’ multifamily mortgage and health care facilities financing arm, P/R Mortgage & Investment Corp., which was particularly attractive to Citba.

“Margin compression is really impacting all traditional community banks,” said Lynn Gordon, Citba's CEO.

“All community banks are looking for non-interest income revenue streams. The P/R Mortgage and Investment subsidiary of Merchants Bank historically has been a strong source of non-interest income. We anticipate that it will continue to be so for the combined companies,” Gordon told IBJ.

P/RMIC has “become nationally recognized in that area. They’re one of the larger lenders of that type in the country,” said Mike Renninger, principal of local investment banking firm Renninger & Associates LLC, which represented Merchants.

“I think they have an opportunity to be a powerhouse in central Indiana,” Renninger said of the combined company.

In a rarity for a banking merger, no job cuts are planned among Citba’s 133 employees or Merchants’ 74 employees. “In fact, we expect this merger to create more job opportunities,” Merchants’ CEO Michael Petrie said in a statement.

Merchants' shareholders—principally Petrie and Randall D. Rogers—will own 80 percent of Citba when the deal is complete. The men previously worked at the former Merchants National Bank. About a year before Merchants National was acquired in 1991 by Cleveland-based National City Corp. (now owned by PNC) they left and founded their own mortgage unit.

After Petrie and Rogers acquired Richmond-based Greensfork Township State Bank and Carmel-based Symphony, they renamed their company Merchants Bank of Indiana. Merchants adopted the same "M" logo that had been used by the former Merchants National and still has name recognition here.

“The name Merchants is well-respected in central Indiana banking dating back to the days before National City. Yes, the name recognition was a major factor in the decision to rename the company,” Gordon said.

For now at least, don’t expect to see the return of the green frog mascot of the former Merchants National.