MUNSTER | Citizens Financial Services and Muncie-based First Merchants Corp. announced Monday the two banks have agreed to merge, with First Merchants buying the Munster-based Citizens.
The combined company, taking the First Merchants Bank name, expects to complete its integration early in 2014.
The merger will benefit CFS shareholders, Citizens’ Chief Executive Officer and President Daryl D. Pomranke said.
“We are going to see earnings per share increasing in 2014 and beyond,” he said. “There are certainly efficiencies that will be identified as we go through the integration process. It provides an instant opportunity to increase the dividend return to our shareholders and expand their current dividend payout levels.”
Shareholders of CFS will have the right to receive 0.65 shares of First Merchants common stock for each share of CFS common stock owned. Based on the closing price of First Merchants’ common stock on May 10 of $16.14, the transaction value is about $114.7 million.
According to a news release, First Merchants and CFS will have combined assets of $5.4 billion and create the second-largest financial holding company headquartered in Indiana. The combined company will have nearly 100 banking offices in 26 Indiana counties, as well as two counties in Ohio and Illinois.
Pomranke said he doesn’t expect the closure of any Citizens branches.
“Customers coming into our bank will see the same high-performing people they have seen prior to any merger,” Pomranke said. “Our partners at First Merchant fully understand the importance of making sure that happens for us. This is a people business.”
Regarding job elimination, Pomranke said, “As we work our way through the integration process, we will better understand what impact it will have on our staffing levels.”
Pomranke and Dale S. Clapp, Citizens’ executive vice president, will be executives in First Merchants Banks’ newly acquired market, with Pomranke serving as regional president.
Pomranke said being part of a larger bank will offer new opportunities for customers. He said increased capital will be available for lending purposes.
Pomranke said First Merchants Bank has an insurance sales and wealth management group which will provide additional services for CFS clients.
“I think it is important to know that we will be a regional organization and that we will operate in our markets as we have in the past as part of our agreement to enter into this transaction,” Pomranke said.
Citizens Financial Services, which was founded in 1934, has 12 Northwest Indiana locations and eight in Illinois.