Muncie, Indiana-based First Merchants Corp. will buy smaller in-state peer First Savings Financial for $241.3 million in stock, the banks said Thursday.
First Savings’ 16-branch network — with $2.4 billion in assets, $1.9 billion in loans and $1.7 billion in deposits — will grow First Merchants to 127 branches across Indiana, Michigan and Ohio.
The deal also gives First Merchants entry into the Louisville, Kentucky, market — of which First Savings’ hometown, Jeffersonville, Indiana, is a suburb.
Louisville is the 43rd-largest metropolitan statistical area in the country and the 12th-largest in the fast-growing Southeast – and Wall Street giant Bank of America opened its first Louisville outpost last year.
The proposed acquisition is “100% understandable if you want to make a go at a critical metro market in your footprint,” Hovde analyst Brendan Nosal wrote Friday in a note seen by American Banker.
The transaction is expected to close in the first quarter of 2026. The combined bank, under the First Merchants banner, would have $21 billion in assets , according to the lenders.
Under the deal, First Savings shareholders will receive 0.85 of a share of First Merchants common stock, tax free, for each share of First Savings they own.
The implied consideration for each such share is $33.60, based on First Merchants’ closing price from Wednesday of $39.53. First Merchants expects the earnings-per-share accretion to be 11% in 2027, with tangible book value to be earned back in three years.
“We view First Savings Bank as a meaningful addition to our Indiana deposit network,” First Merchants CEO Mark Hardwick said in a prepared statement.
“Its presence strengthens our southern Indiana growth potential,” he said, noting First Savings’ triple net lease financing, first lien home equity lines of credit and Small Business Administration lending verticals as potential areas of growth.
First Savings CEO Larry Myers will be named to First Merchants’ board of directors.
“For nearly 90 years, First Savings Bank has combined strong performance for our shareholders with a deep commitment to our community and the development of innovative business lines,” Myers said in a prepared statement. “By joining with First Merchants, we are ensuring that these values endure while opening the door to exciting new opportunities for customers, employees and investors.”
This is one of several smaller bank deals announced this week. Olympia, Washington-based Heritage Financial Corp. said Thursday it would buy Port Orchard, Washington-based Olympic Bancorp in an all-stock deal valued at $176.6 million. Quakertown, Pennsylvania-based QNB Corp. said Tuesday that it would buy Victory Bancorp, a smaller in-state peer, for nearly $41 million.
The banking sector has seen a rise in mergers and acquisitions as a result of policy shifts under the second Trump administration. More than 100 U.S. bank deals were announced this year as of Aug. 12, according to S&P Global Market Intelligence. July alone, with 26 deals announced, outpaced every month since June 2021.
