Indiana-based bank expanding Michigan presence with $323 million deal

Level One Bancorp, Inc., Farmington Hills, Mich., will merge into First Merchants Corp., Muncie, Ind., next year in an approximately $323.5 million stock-and-cash transaction. 

The combined organization will operate under the First Merchants name and have $17.6 billion in combined assets and 122 banking offices in Indiana, Michigan, Ohio and Illinois. First Merchants will remain the second-largest financial holding company headquartered in Indiana and expand its presence in southeastern Michigan. 

“Like First Merchants, Level One Bank has a strong customer-focused history and a deep-rooted commitment to community banking,” said First Merchants CEO Mike Hardwick. “We are excited they have chosen to become the newest member of the First Merchants family.”

With $2.5 billion in assets, Level One is one of the largest community banks in Michigan and has 16 banking centers in southeast Michigan. The bank has $1.7 billion in total loans and $2.1 billion in total deposits, earning a 1.5 percent return on average assets and 16.3 percent return on tangible common equity for the quarter ending Sept. 30. First Merchants has $14.9 billion in assets and nearly $12.3 billion in deposits. 

“Our operating approach is focused on enhancing the financial wellness and prosperity of the communities we serve,” said First Merchants President Mike Stewart. “Consistent with our brand reputation, our service model reflects a genuine, relationship-oriented way of meeting the financial needs of businesses and consumers within the communities we serve.”

Level One Bancorp common shareholders will receive a 0.7167 share of First Merchants common stock in a tax-free exchange and $10.17 in cash for each share of Level One common stock owned — an approximately 75 percent stock/25 percent cash mix. Based on the $43.50 per share closing price of First Merchants common stock on Nov. 3, the implied merger consideration for each share of Level One common stock is $41.35. Also, each share of Level One’s 7.50 percent Non-Cumulative Perpetual Preferred Stock, Series B, outstanding immediately prior to the effective time of the merger, will be converted into the right to receive one share of a new series of preferred stock of First Merchants. This will allow such stockholders to have voting powers, special rights and preferences that are mainly identical to the Level One Series B preferred stock. First Merchants expects approximately 10.4 percent earnings per share accretion in 2023 (the first full year of combined operations) and a tangible book value earnback of nearly three years. 

The market executive team will include Level One Bank President Timothy Mackay, Chief Lending Officer and Corporate Secretary Gregory Wernette, and Risk Management Officer Eva Scurlock. Chairman and CEO Patrick Fehring, Chief Human Resources Officer Lani Barrett, and Chief Financial Officer David Walker will retire following the merger. 

“Our partnership with First Merchants will provide tremendous benefits to our customers, shareholders and communities as we look forward to continuing the legacy of exceptional customer service, local responsiveness and strong community engagement that has defined Level One Bank since it was founded in 2007,” Fehring said. 

 “This partnership brings together two organizations with very similar cultures and a go-to-market strategy that allows us to build upon our strong commercial banking performance while also leveraging the momentum and growth we have developed in consumer banking and residential mortgage lending in recent years,” Mackay added.