MutualFirst to acquire Universal Bancorp

The merger of Muncie, Ind.-based MutualFirst and Bloomfield, Ind.-based Universal would create an institution with $2 billion in assets and a network of 40 locations.

MutualFirst Financial, Inc., of Muncie, Ind., will be expanding into central and southern Indiana by acquiring Universal Bancorp, the holding company for BloomBank, Bloomfield, Ind.

Announced October 4, the acquisition is expected to be completed in the first quarter of 2018. Then BloomBank will merge, convert and integrate into MutualBank, the subsidiary bank of MutualFirst. The resulting institution will have about $2 billion in assets and a network of 40 locations. Currently, MutualBank has 27 locations in eight Indiana counties. BloomBank has 13 offices in Greene, Jackson, Lawrence and Knox counties, where MutualBank does not yet have a branch presence.

MutualFirst will pay an estimated $65.6 million in cash and common shares of MutualFirst under the terms of the agreement. BloomBank, founded in 1873, has been operated by five generations of the Barkley-Haig family. According to information released by MutualFirst, “significant BloomBank insider ownership will remain invested in MFSF” with BloomBank stockholders representing 14 percent of MutualFirst stock.

BloomBank has “attractive core deposits in stable markets” to the tune of $324 million with $398 million in assets and $269 million in loans. It ranks seventh with 4.9 percent market share in the Indianapolis and Bloomington areas, and is the second largest community bank behind German American Bancorp in Jasper.

MutualFirst expects the merger to be accretive to its earnings per share by 13 percent in 2019 and accretive to tangible book value in 2.2 years or less. Cost savings is expected to come from reducing operational redundancies, not branch closures.

“We are pleased to join with a partner like MutualFirst that shares our commitment to community banking,” said William McNeely, Universal president. “The larger size of the combined company will benefit our customers and communities with a broader array of products and services. We are very pleased to find a partner who we think is a mirror image of BloomBank in their commitment to community, customers and staff.”

“We view MutualFirst as a larger version of BloomBank, with a continued strong commitment to the communities we serve, our customers, and our dedicated employees,” said Mark Barkley, BloomBank chairman. “It is a natural evolvement to move forward with a strong partner with increased opportunities for all.”

David Heeter
David Heeter

“Merging with Universal is a very beneficial transaction that will enable us to increase the value of the franchise for the benefit of our shareholders. We will continue to pursue all strategies available to maintain and improve financial performance in order to maximize shareholder value,” said Dave Heeter, president and CEO of $1.6 billion MutualFirst.

After the merger, the MutualFirst board will take on two directors from Universal for a total of 14 board members. “Key management retention and role of Universal board” will remain at the community level, MutualFirst said in its investor information regarding the acquisition.

Both boards of directors have approved the agreement. The merger is still subject to regulatory and shareholder approval.