26 JULY / AUGUST 2021 Stock Analysis Review as of May 31, 2021 INDIANA BANK & THRIFT STOCK UPDATE Michael A. Renninger Principal Renninger & Associates LLC mrenninger@ renningerllc.com Renninger & Associates LLC is a Diamond Associate Member of the Indiana Bankers Association. Securities offered through Ausdal Financial Partners Inc. Member FINRA/SIPC. 5187 Utica Ridge Road, Davenport IA 52807 563-326-2064. Renninger & Associates and Ausdal Financial Partners Inc. are separately owned and operated. Indiana Statistics Click on the hand icon in HB Digital to access statistics through May 31, April 30 and March 31, 2021, or visit: indiana.bank/bank-thriftstock-update. The Size, Pricing and Profitability Reports for Indiana Banks and Thrifts as of May 31, April 30 and March 31, 2021, are available by clicking on the icon on this page in HB Digital or by visiting the designated website location. These reports present the stock price changes for the 30 Indiana banks and thrifts that are traded on the NASDAQ and Over-The-Counter markets over the prior two years, one year and year-to-date, in addition to pricing and performance metrics. Selected banks headquartered outside Indiana, four broad market indices, and five bank and thrift indices are also tracked. All nine indices have improved on a year-to-date basis since the last report as of March 31, with the broad indices improving an average of 10.8% YTD and the bank indices improving an average of 31.3% YTD. All nine indices have set all-time highs over the last two months. There has been significant recent merger-and-acquisition activity involving Indiana banks. Most notably, Evansville-based Old National Bancorp announced on June 1 that it is merging with Chicago-based First Midwest Bancorp in a 56%/44% merger of equals (MOE) transaction. First Midwest shareholders will receive ONB stock worth $2.5 billion, which represents 165% of its tangible book value and 14.9 times earnings. As Indiana’s largest bank with $23.7 billion in assets as of March 31, ONB will have $45 billion in assets. By comparison, Muncie-based First Merchants Corporation has $14.6 billion in assets, and all other Indiana-based banks are under $10 billion in assets. Strategically, the transformative transaction makes sense. First Midwest’s 108 branches are tightly clustered in the greater Chicago area, which is geographically central to Old National’s 166-branch footprint with virtually no overlap. As is typical in MOE transactions, the management teams and boards of directors will blend, and the anticipated savings of 11% of combined noninterest expense is less than the cost savings normally expected in a conventional acquisition transaction. In a break from tradition, however, ONB expects to maintain dual headquarters. Another significant transaction resulted from the merger of two out-of-state banks. Michigan Citybased Horizon Bancorp announced on May 25 that it will acquire 14 Michigan branches from Huntington Bancshares and TCF Financial Corp. Horizon will pay a 1.75% premium for $976 million in deposits and pay a 3.5% discount for $278 million in loans. This transaction represents significant growth for Horizon in terms of assets (currently $6 billion), number of branches (currently 75), and Michigan branches (currently 15). Columbus, Ohio-based Huntington Bancshares ($126 billion in assets) completed its acquisition of Detroit-based TCF ($49 billion in assets) on June 9, after regulators approved the transaction subject to the branch divestiture. The divestiture was necessitated by deposit concentration issues. With combined assets of $175 billion, Huntington will contend with Cleveland, Ohio-based Keycorp to be the 10th largest publicly traded U.S.-based bank. In other acquisition news, Farmers & Merchants Bancorp of Archbold, Ohio, completed its acquisition of Ossian Financial Services Inc. (Ossian State Bank) on April 30. Farmers & Merchants paid $20 million in cash, which represents 170% of tangible book value and 18.5 times earnings. HB
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