Cincinnati-based First Financial buying MainSource for $1B

Greensburg-based MainSource Financial Group will be acquired by Cincinnati-based First Financial Bancorp in an all-stock transaction valued at $1 billion, the companies announced late Tuesday.

Based on Tuesday's closing price for First Financial shares, MainSource stockholders will receive First Financial stock worth $38.99 for each of their shares. That works out to a 15 percent premium over MainSource's closing price Tuesday of $33.92.

The deal swells First Financial's assets from $8.7 billion to $13.3 billion.

The banks have overlapping footprints. Both operate in Ohio, Indiana and Kentucky, while MainSource also is in Illinois.

First Financial has 102 branches, while MainSource has 101. However, First Financial CEO Claude Davis said that because some MainSource branches and First Financial branches are near one another, the merged company expects to close 45 to 50 offices. First Financial has not yet identified which locations will close. 

MainSource CEO Archie Brown said normal staff turnover should allow First Financial to absorb the closings without laying off branch employees. “Attrition will get us right-sized,” Brown said.

The two companies estimate that the merger will close in the first quarter of 2018. It is expected to yield $43 million in annual savings through a combination of corporate staff reductions and systems and technology consolidation.

First Financial expanded across northwestern, eastern and southern Indiana through 11 acquisitions starting in the 1980s. The bank’s 2009 purchase of branches from failed Columbus-based Irwin Union Bank gave it three outposts in suburban Indianapolis. Two years later, it bought 22 Indiana branches from Flagstar bank.

First Financial and MainSource both have five branches in the Indianapolis market. In addition, both have five outposts in the Columbus market.

“This combination really takes us to a solid position in Indiana,” Davis said.

The combined company will have the No. 6 market share in Indiana, he said.

Once the merger is complete, Davis will move into a three-year term as executive chairman, while Brown will become president and chief executive officer. In 2021, Davis will become non-executive chairman.