Upon the closing of the transaction, BloomBank, the wholly owned bank subsidiary of Universal, will merge into MutualFirst's wholly owned bank subsidiary, MutualBank.
The merger will expand MutualFirst's presence into Central and Southern Indiana. At closing, the combined company is expected to have $2 billion in total assets. This transaction will increase MutualFirst's branch network to a total of 40 branches.
MutualFirst will acquire 100% of the outstanding shares of Universal in exchange for a mixture of cash and common shares of MutualFirst. Under the terms of the Agreement, shareholders of Universal will be entitled to receive 15.6 shares of MutualFirst common stock plus $250.00 in cash for each common share of Universal.
The transaction, which has been unanimously approved by both MutualFirst's and Universal's boards of directors, is expected to close in the first quarter of 2018, pending receipt of regulatory approvals, the approval of the shareholders of Universal and other customary closing conditions.
The cash and stock transaction is valued at approximately $65.6 million, based on MutualFirst's closing stock price as of October 2, 2017.
The merger is expected to be accretive to MutualFirst's earnings per share in 2018 and with cost savings fully implemented in 2019 the accretion is projected to be approximately 13%. The tangible book value dilution at closing of 3.1% is expected to be earned back in approximately 2.2 years using the "crossover" method. Key transaction assumptions include a gross loan credit mark of $4.4 million and MutualFirst is expected to realize 25% cost savings on BloomBank's non-interest expense.
Mark Barkley, Chairman of BloomBank said, "We view MutualFirst as a larger version of BloomBank, with a continued strong commitment to the communities we serve, our customers, and our dedicated employees. It is a natural evolvement to move forward with a strong partner with increased opportunities for all."
Dave Heeter, President and CEO of MutualFirst said, "Merging with Universal is a very beneficial transaction that will enable us to increase the value of the franchise for the benefit of our shareholders. We will continue to pursue all strategies available to maintain and improve financial performance in order to maximize shareholder value."
William McNeely, President of Universal noted, "We are pleased to join with a partner like MutualFirst that shares our commitment to community banking. The larger size of the combined company will benefit our customers and communities with a broader array of products and services. We are very pleased to find a partner who we think is a mirror image of BloomBank in their commitment to community, customers and staff."
Keefe, Bruyette & Woods is serving as financial advisor to MutualFirst, and Silver, Freedman, Taff & Tiernan LLP is serving as legal counsel. Boenning & Scattergood, Inc. is serving as financial advisor and rendered a fairness opinion to Universal, and SmithAmundsen is serving as legal counsel.
