A new bank is entering the Northwest Indiana and south suburban Chicago market after buying out Citizens Financial Bank.
Muncie-based First Merchants Corp., the second-biggest bank in Indiana, expects to finalize the deal at the end of the year. First Merchants plans to keep the Munster-based bank's existing 20 branches, will consider adding more retail locations and would be able to make commercial loans to bigger businesses than Citizens Financial had been able to serve, said Michael Rechin, president and chief executive officer.
Citizens had assets of $1.1 billion, and could loan to small- or mid-market companies that bring in $25 million to $30 million in revenue per year, Rechin said. But Citizens and First Merchants together will have assets of $5.4 billion.
The merged bank, which eventually will take the name First Merchants, will be large enough to make commercial loans to mid-market companies that bring in up to $100 million in revenue.
"We'll be larger with more capital to deploy to commercial lending," Rechin said. "We'll be able to move up in the market."
First Merchants also has insurance and trust departments that can offer new services to people who are now banking with Citizens Financial.
In 2014, First Merchants will review whether any areas in the market could use new retail bank locations. The financial institution will consider a new branch on a 15-mile stretch of U.S. 30 between Merrillville and Valparaiso where Citizens Financial doesn't currently have any banking centers, and will look at whether to add a second branch in Darien, Ill.
Bank officials will study where their customers are, and see where else they might have enough to justify another retail location.
"There's clearly room to expand," Rechin said. "But as for long-term goals, we want to make sure we're service-driven. Providing the greater Chicagoland area with quality service would be our primary goal."
After regulators approve the merger by the end of the year, First Merchants will have about 100 banking offices in Indiana, Ohio and Illinois. First Merchants has expanded in recent years through acquisitions, including by purchases of Lincoln Bancorp and Shelby County Bank in suburban counties surrounding Indianapolis.
Currently, the bank's closest locations are in Jasper County.
First Merchants was interested in expanding into the Northwest Indiana region because of its size, population and prosperity, Rechin said.
"It's a great community," he said. "We like the demographics, the strong vibrant economy, the diversified communities and the proximity to both our existing franchises and the greater Chicago area. We're excited to be there."
First Merchants operates a bank in Columbus, Ohio, but Northwest Indiana will be one of the largest markets it serves. Communities such as Valparaiso, Merrillville, Schererville, Crown Point and Munster are similar to the Lafayette, Plainfield and Greenwood markets that the bank is already in, Rechin said.
"It's a collection of communities like those we serve, and the culture of Citizens fits ours very well," he said. "When we got to know (Citizens’ Chief Executive Officer and President) Daryl Pomranke, we saw their view of a high-service, high-touch community bank and and realized we had found an opportunity."
First Merchants will continue to employ all of Citizens Financial's tellers and branch staff at all of its 12 locations in Northwest Indiana and eight branches in the south suburbs, so that customers will see the same faces they're accustomed to, Rechin said.
All of the commercial lenders will be retained because they know the area and local businesses.
Top managers at Citizens Financial also will remain in place because of First Merchants' focus on being a service-oriented community bank, Rechin said. Pomranke for instance will serve as regional president, and Executive Vice President Dale Clapp will be in charge of commercial lending.
"We don't have the local expertise, so we hire competent local management," Rechin said. "We want our leaders in those communities to service all the needs of the communities, such as with economic or high school-specific initiatives."
Citizens Financial Bank branches will keep their name for a while but the First Merchants name and logo will be added to familiarize people with the bank's new ownership.