First Financial Bancorp. in Cincinnati has agreed to buy Finward Bancorp in Munster, Ind.
The $22.4 billion-asset First Financial said in a press release that it will pay $208 million in stock for the $2 billion-asset Finward. The deal, which is expected to close in the fourth quarter, priced Finward at 140% of its tangible book value.
The acquisition “is expected to strategically expand First Financial’s ability to serve the consumers and businesses of the Chicagoland and Northwest Indiana markets,” Archie Brown, First Financial’s president and CEO, said in the release.
First Financial committed to donate $500,000 to its foundation for the benefit of organizations in Chicago and Northwest Indiana, adding to the $1 million it pledged when it entered the market earlier this year.
The transaction is expected to be about 5% accretive to First Financial’s earnings per share. It should take less than a year to earn back an estimated 0.4% dilution to First Financial’s tangible book value per share.
First Financial plans to cut 40% of Finward’s annual noninterest expenses. It expects to incur $36 million of pretax merger expenses. First Financial expects Finward to lose $400,000 of annual interchange fee revenue to do the Durbin Amendment.
Morgan Stanley and Squire Patton Boggs advised First Financial. Stephens and Barack Ferrazzano Kirschbaum & Nagelberg advised Finward.