First Merchants Corporation (NASDAQ: FRME) and Community
Bancshares, Inc. today announced they have executed a definitive
agreement whereby Community Bancshares will merge with and into
First Merchants, and its wholly-owned bank subsidiary, Community
Bank, will merge with and into First Merchants Bank, N.A.
The merger agreement provides that shareholders of Community
Bancshares will have the right to exchange each Community
Bancshares common share held for either or a combination of (i)
4.0926 shares of First Merchants’ common stock, or (ii) $85.94 in
cash. In the event that the total amount of cash elections exceeds
$15 million, proration will occur to limit the cash paid to $15
million. Based on the closing price of First Merchants’ common
stock on July 21, 2014 of $20.38, the transaction value is
approximately $46.3 million.
The transaction is expected to be completed in the first quarter
of 2015, subject to the approval of Community Bancshares
shareholders, regulatory approvals, and other customary closing
conditions. The combined financial institutions, which will do
business as First Merchants Bank, expect to complete the
integration during the second quarter of 2015.
Based upon current financials, First Merchants and Community
Bancshares will have combined assets of $5.7 billion and will
remain the second largest financial holding company headquartered
in Indiana. The combined company will have 107 banking offices in
twenty-six Indiana counties, as well as two counties in both Ohio
and Illinois.
Michael C. Rechin, President and Chief Executive Officer of
First Merchants, said, “Like First Merchants, Community Bank has a
deep-rooted commitment to community banking and we are excited for
it to become the newest member of the First Merchants family. The
addition of Community Bank supports our goal of becoming a more
efficient, higher performing company. The Community Bank franchise
will add seven locations to our six banking centers in Hamilton
County, the fastest growing Indiana market. In addition, the
Community Bank partnership will add two new communities in Madison
County that we currently don’t serve: Summitville and Alexandria.
We believe our partnership will provide our business and consumer
customers with a broader range of services, greater access and
expanded product offerings, while maintaining our legacy of local
community banking. From Community Bank’s beginning in 1991, Chuck
Crow and his management team have played a pivotal role serving
Hamilton and Madison County commercial and consumer clients.”
“We expect this combination to be mutually beneficial to First
Merchants and Community Bancshares shareholders. We anticipate
earnings per share accretion in the first full year of combination
and beyond through identified operating efficiencies of
approximately 40 percent, resulting in a tangible book value
earnback of less than four years,” Rechin added.
Charles L. Crow, Community’s Chief Executive Officer, Larry W.
Riggs, President, and Russell W. Freed, Executive Vice President
will join the First Merchants management team working to seamlessly
assimilate the two companies’ partnership. Mr. Crow stated, “We are
excited about the opportunity to become part of the First Merchants
family, and believe this partnership will be good for our clients,
shareholders, staff and communities. Since our inception 23 years
ago, our executive management team has been driven to be the
‘community bank’ of choice in our marketplace. We look forward to
taking advantage of new product capabilities of First Merchants and
continuing to build momentum with our clients. The core values of
both companies share a commitment to local decision making,
personal service, long-term relationships and community
involvement.”
First Merchants expects the acquisition to be accretive during
the first full year with a tangible book value earnback of less
than four years. Cost savings are expected to total 40 percent,
including potential banking center consolidations. The credit and
OREO marks total $13.2 million, or 8 percent.
First Merchants’ legal advisor was Bingham Greenebaum Doll
LLP.
SunTrust Robinson Humphrey, Inc. rendered a fairness opinion to
the Community Bancshares’ board of directors in this transaction
and Krieg DeVault LLP served as legal advisor to Community
Bancshares.
CONFERENCE CALL
First Merchants Corporation will conduct its Second Quarter 2014
Earnings conference call and web cast to discuss its Second Quarter
Earnings and the pending acquisition of Community Bancshares, Inc.
at 2:30 p.m. (ET) on Thursday, July 24, 2014.
To participate, dial (Toll Free) 877-507-0578 and reference
First Merchants Corporation’s second quarter earnings release.
International callers please call +1 412-317-1073. To access a
replay of the call, US participants should dial (Toll Free)
877-344-7529 or for International participants, dial +1
412-317-0088. The replay passcode is 10048248.
In order to view the web cast and presentation slides, please go
to http://services.choruscall.com/links/frme140724.html during the
time of the call. A replay of the call will be available until July
24, 2015.
ADDITIONAL INFORMATION
Communications in this press release do not constitute an offer
to sell or the solicitation of an offer to buy any securities or a
solicitation of any proxy vote or approval. The proposed merger
will be submitted to Community Bancshares’ shareholders for their
consideration. In connection with the proposed merger, First
Merchants will file with the SEC a Registration Statement on Form
S-4 that will include a Proxy Statement for Community Bancshares
and a Prospectus of First Merchants, as well as other relevant
documents concerning the proposed transaction. SHAREHOLDERS ARE
URGED TO READ THE REGISTRATION STATEMENT AND THE CORRESPONDING
PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN THEY BECOME
AVAILABLE, AS WELL AS ANY OTHER RELEVANT DOCUMENTS FILED WITH THE
SEC, TOGETHER WITH ALL AMENDMENTS OR SUPPLEMENTS TO THOSE
DOCUMENTS, AS THEY WILL CONTAIN IMPORTANT INFORMATION. Once filed,
you may obtain a free copy of the Proxy Statement/Prospectus, when
it becomes available, as well as other filings containing
information about First Merchants at the SEC’s Web Site
(http://www.sec.gov). You may also obtain these documents, free of
charge, by accessing First Merchants’ Web site
(http://www.firstmerchants.com) under the tab “Investors,” then
under the heading “Financial Information,” and finally under the
link “SEC Filings.”
Community Bancshares and its directors and executive officers
may be deemed to be participants in the solicitation of proxies
from the shareholders of Community Bancshares in connection with
the proposed Merger. Additional information regarding the interests
of those participants and other persons who may be deemed
participants in the transaction may be obtained by reading the
Proxy Statement/Prospectus regarding the proposed merger when they
become available. Free copies of this document may be obtained as
described in the preceding paragraph.
FORWARD-LOOKING STATEMENTS
This press release and the related conference call contains
forward-looking statements made pursuant to the safe-harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements can often, but not always, be
identified by the use of words like “believe”, “continue”,
“pattern”, “estimate”, “project”, “intend”, “anticipate”, “expect”
and similar expressions or future or conditional verbs such as
“will”, would”, “should”, “could”, “might”, “can”, “may”, or
similar expressions. These forward-looking statements include, but
are not limited to, statements relating to the expected timing and
benefits of the proposed merger (the “Merger”) between First
Merchants Corporation (“First Merchants”) and Community Bancshares,
Inc. (“Community Bancshares”), including future financial and
operating results, cost savings, enhanced revenues, and
accretion/dilution to reported earnings that may be realized from
the Merger, as well as other statements of expectations regarding
the Merger, and other statements of First Merchants’ goals,
intentions and expectations; statements regarding the First
Merchants’ business plan and growth strategies; statements
regarding the asset quality of First Merchants’ loan and investment
portfolios; and estimates of First Merchants’ risks and future
costs and benefits, whether with respect to the Merger or
otherwise. These forward-looking statements are subject to
significant risks, assumptions and uncertainties that may cause
results to differ materially from those set forth in
forward-looking statements, including, among other things: the risk
that the businesses of the First Merchants and Community Bancshares
will not be integrated successfully or such integration may be more
difficult, time-consuming or costly than expected; expected revenue
synergies and cost savings from the Merger may not be fully
realized or realized within the expected time frame; revenues
following the Merger may be lower than expected; customer and
employee relationships and business operations may be disrupted by
the Merger; the ability to obtain required governmental and
shareholder approvals, and the ability to complete the Merger on
the expected timeframe; possible changes in economic and business
conditions; the existence or exacerbation of general geopolitical
instability and uncertainty; the ability of First Merchants to
integrate recent acquisitions and attract new customers; possible
changes in monetary and fiscal policies, and laws and regulations;
the effects of easing restrictions on participants in the financial
services industry; the cost and other effects of legal and
administrative cases; possible changes in the credit worthiness of
customers and the possible impairment of collectability of loans;
fluctuations in market rates of interest; competitive factors in
the banking industry; changes in the banking legislation or
regulatory requirements of federal and state agencies applicable to
bank holding companies and banks like First Merchants’ affiliate
bank; continued availability of earnings and excess capital
sufficient for the lawful and prudent declaration of dividends;
changes in market, economic, operational, liquidity, credit and
interest rate risks associated with the First Merchants’ business;
and other risks and factors identified in each of First Merchants’
filings with the Securities and Exchange Commission. Neither First
Merchants nor Community Bancshares undertakes any obligation to
update any forward-looking statement, whether written or oral,
relating to the matters discussed in this presentation or press
release. In addition, First Merchants’ and Community Bancshares’
past results of operations do not necessarily indicate either of
their anticipated future results, whether the Merger is effectuated
or not.
About First Merchants Corporation
First Merchants Corporation is a financial holding company
headquartered in Muncie, Indiana. The Corporation is comprised of
First Merchants Bank, N.A., which also operates as Lafayette Bank
& Trust, Commerce National Bank, and First Merchants Trust
Company as divisions of First Merchants Bank, N.A. First Merchants
Corporation also operates First Merchants Insurance Group, a
full-service property casualty, personal lines, and healthcare
insurance agency.
First Merchants Corporation’s common stock is traded on the
NASDAQ Global Select Market System under the symbol FRME.
Quotations are carried in daily newspapers and can be found on the
company’s Internet web page (http://www.firstmerchants.com).
FIRST MERCHANTS and the Shield Logo are federally registered
trademarks of First Merchants Corporation.
First Merchants CorporationDavid Ortega, First Vice
President/Director of Investor Relations,
765-378-8937http://www.firstmerchants.com/orCommunity Bancshares,
Inc.Charles L. Crow, Chairman and Chief Executive Officer,
317-773-0800
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