First Merchants, iAB to Merge

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Muncie-based First Merchants Corp. (Nasdaq: FRME) has announced plans to merge with Fort Wayne-based Independent Alliance Banks Inc. If the deal is approved by shareholders, 16 iAB Financial Bank locations will merge into First Merchants Bank.

First Merchants says, if the deal is approved, the combined company will have assets of $8.3 billion and will be the second-largest financial holding company headquartered in Indiana. It will have 122 bank branches in 31 Indiana counties and two counties in both Illinois and Ohio.

The merger agreement says IAB shareholders will receive 1.6530 shares of First Merchants common stock for each share of IAB common stock owned. First Merchants says the transaction value of the outstanding shares of IAB common stock not already owned by First Merchants is $251.3 million.

"Like First Merchants, iAB has a long history and a deep-rooted commitment to community banking and we are excited for it to become the newest member of the First Merchants family," said Michael Rechin, chief executive officer of First Merchants. "The iAB franchise is a logical geographic extension for us given the less than 20-mile proximity of our nearest banking center locations. iAB Financial Bank’s markets in Northeast Indiana, and specifically Fort Wayne, offer outstanding growth opportunities for First Merchants in Indiana’s second largest market."

iAB Financial Bank CEO Michael Marhenke and Chief Operating Officer William Thatcher will serve as market executives for First Merchants. Marhenke will be responsible for day-to-day management operations and Thatcher will serve as regional president, reporting to Marhenke. The bank did not immediately say if any other jobs would be affected.

The merger is expected to close in the third quarter, pending regulatory and shareholder approvals. If the approvals are received, the integration of IAB into First Merchants is expected to be complete in the fourth quarter.