Muncie-based First Merchants Corp. plans to acquire New Castle-based Ameriana Bank in a deal worth nearly $69 million, the companies announced Monday.
The deal is expected to close before the end of this year. The combined bank will do business under the First Merchants name.
The acquisition is valued at $68.8 million, based on Friday's $25.13 per-share closing price of First Merchants stock.
Ameriana shareholders will have the right to exchange one share of their stock for 0.9037 share of First Merchants stock, the companies said. At that rate, the implied Ameriana share price is $22.71.
First Merchants shares were down 1.9 percent in early-afternoon trading, to $24.65 each. Ameriana shares shot up 36 percent, to $21.33 each.
The Ameriana deal will help First Merchants Bank maintain its position as the second-largest bank headquartered in the state in terms of assets, inching it closer to Evansville-based Old National Bank.
Ameriana had $483 million in assets, loans of $325 million, and deposits of $391 million, as of March 31, the companies said. The combined bank would have $6.4 billion in assets.
Old National has $12 billion in assets.
The merger will give First Merchants 126 banking offices in 27 Indiana counties and two counties in both Ohio and Illinois.
First Merchants had about 370 employees at the beginning of the year; Ameriana had 60.
The purchase will be First Merchants' second acquisition within a year, following last November's $49 million buyout for Noblesville-based Community Bank.
First Merchants CEO Michael C. Rechin said the new acquisition helps his bank enter the key central Indiana communities of Greenfield, New Palestine, New Castle, Knightstown and Morristown, while adding five branches to the 13 it already has in Hamilton County.
“Like First Merchants, Ameriana Bank has a deep-rooted commitment to community banking, and we are excited to welcome Ameriana to the First Merchants family," Rechin said in a written statement. "The addition of Ameriana Bank supports our goal of becoming a more efficient, higher performing company."
Ameriana was founded in New Castle in 1890, originally as Henry County Savings and Loan Association. It changed its name to Ameriana Savings Bank in 1985 when it received a commercial charter.
“We are excited about the opportunity to become part of the First Merchants family, and we believe First Merchants was the best choice for our collective stakeholders," Ameriana CEO Jerome Gassen said in a written statement.