Warren, Pennsylvania-based Northwest Bancshares Inc. plans to acquire Muncie-based MutualFirst Financial Inc. in an all-stock transaction valued at close to $346 million.

Northwest is the holding company for Northwest Bank and MutualFirst is the holding company for MutualBank, which has a branch in Fort Wayne. With 39 banking locations, MutualBank brings Northwest access to what it described in an announcement as “an attractive new region of prospective customers.”

The deal’s value is based on Northwest’s 15-day, volume-weighted average closing stock price of $39.89 on Oct. 23. For each of their shares, MutualFirst shareholders will receive in a tax-free exchange 2.4 shares of Northwest stock.

David Heeter, MutualFirst’s president and chief executive officer, will become regional CEO and market leader for Northwest’s Indiana operations and report directly to Ronald Seiffert, Northwest’s president and CEO.

“During our proud, 130-year history, MutualBank has been committed to serving our clients and local communities,” Heeter said in the announcement. “Through a consistent level of superior quality service, our dedicated staff has grown a loyal commercial and retail customer base.

“We are very excited about joining the Northwest team. Northwest has demonstrated a similar commitment to its clients, employees and the communities it serves, shares our core values and has an outstanding record of enhancing shareholder value.”

MutualBank reported third quarter earnings of $6.1 million, or 71 cents per share, up from $5.4 million, or 62 cents per share, for the same period last year.

Its acquisition is expected to increase Northwest’s earnings per share 10% and provide it with an additional $2.1 billion in assets, $1.6 billion in deposits and $1.5 billion in loans.

“Indiana is an attractive market with a business-friendly environment which we have targeted as part of our Mid-Atlantic and Midwest expansion plans. MutualFirst represents a unique and sizable opportunity that is highly accretive to both Northwest’s franchise value and shareholder value,” Seiffert said in the announcement.

“Maintaining MutualFirst’s executive management team and the presence of similar cultures allows us to consistently serve the customer base with little to no disruption. We believe MutualBank’s customers and employees will embrace Northwest’s culture and values and appreciate the additional products and services of a larger community bank,” he said.

“Northwest will maintain a robust capital position following the merger, giving the combined company significant capital to pursue future acquisitions, pay attractive dividends and continue to grow organically, all of which enhance shareholder value.”

The boards of both companies have approved the transaction with expectations that it will close, with the necessary regulatory approvals, during the second quarter of next year.

Lakeland Financial earnings increase 4%

Lakeland Financial Corp. earnings rose 4% during the third quarter on 4% net interest income growth, a 1% increase in noninterest income and a lower loan loss provision.

The Warsaw-based holding company for Lake City Bank reported third quarter earnings of $21.5 million, or 83 cents per share, up from $20.6 million, or 80 cents per share, for the same period last year. Its loan loss provision fell to $1 million from $1.1 million.

“The Lake City bank team is proud of its continued growth in 2019. We experienced growth in every business unit and remain committed to our strategic growth in our Indiana markets,” David Findlay, president and CEO, said in the company’s quarterly earnings report.

“As the financial services sector continues to experience innovation in technology, we continue to invest in our people, infrastructure and technology to drive innovation for our customers.”

Lakeland’s third quarter net interest income rose to $39.5 million from $37.9 million a year earlier as its noninterest income grew to $10.8 million from $10.6 million.

“We are pleased with our net interest margin expansion this quarter despite the two federal fund rate decreases enacted by the Federal Reserve Bank,” Findlay said.

“We implemented timely deposit rate reductions to offset the loan repricing effect of lower rates,” he said.

“In addition, our net interest margin has benefited from continued growth in our commercial checking accounts which have increased by 16% year over year. Commercial deposits now account for 31% of total deposits, up from 26% a year ago.”

Lakeland’s board approved a third quarter dividend of 30 cents per share payable Nov. 5 to shareholders of record on Oct. 25.

Acquisition hits First Merchants earnings

A higher loan loss provision and one-time charges of $11.2 million, or 17 cents per share, related to the September closing of its Monroe Bank & Trust acquisition reduced First Merchants Corp.‘s third quarter earnings 11% from the same period last year.

The Muncie-based holding company for First Merchants Bank reported third quarter earnings of $36.8 million, or 71 cents per share, down from $41.1 million, or 83 cents per share. Its loan loss provision grew to $600,000 from $500,000.

“First Merchants posted strong financial results as our local economies continue to flourish and our clients look to our bank for growth solutions. The signature event for the quarter was the legal closing of the Monroe Bank & Trust transaction,” Michael Rechin, president and CEO, said in the company’s quarterly earnings report.

“The merger extends our franchise with a community bank that enjoys a dominant market share position. Our plan to operationally integrate Monroe Bank & Trust into First Merchants next month will accelerate our marketplace momentum into 2020 to include a reduction in our overall funding costs.”

The company’s third quarter net interest income rose 5% to $88.3 million from $85.1 million a year earlier as its other income grew 13% to $22.1 million from $19.5 million.

Old National Bancorp earnings grow 36%

Old National Bancorp‘s third quarter earnings rose 36% on 17% increases in net interest income and noninterest income compared with the same period last year.

The Evansville-based holding company for Old National Bank reported third quarter earnings of $69.8 million, or 41 cents per share, up from $51.3 million, or 34 cents per share, for the year-ago period. Its $1.4 million loan loss provision was up from $750,000.

Excluding $1.3 million of merger integration costs and netting out debt securities gains, its adjusted earnings for the quarter ended Sept. 30 was $70.5 million, or 41 cents per share.

“For the 2nd straight quarter, Old National combined record net income with record loan production, defense of our net interest margin, good fee income and excellent credit metrics, all of which allowed us to continue to generate positive operating leverage,” CEO Jim Ryan said in a quarterly earnings report.

“While loan prepayments and lower line utilization impacted overall balance sheet growth, activity levels were robust. Our granular loan portfolio and low-risk profile again led to low credit costs, and Old National remains on a path to high-performance.”

Old National’s third quarter net interest income grew to $153.1 million from $130.1 million a year earlier as its noninterest income rose to $54 million from $46 million.

Veteran reporter Doug LeDuc joined Business Weekly in 2006 and primarily covers banking and finance and technology. You can send information for his weekly column to dleduc@kpcmedia.com or call 260-426-2640, ext. 3309.

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