In a significant development within the financial services sector, First Merchants Corporation (NASDAQ: FRME) and First Savings Financial Group, Inc. (NASDAQ: FSFG) have entered into a definitive merger agreement dated September 24, 2025. This strategic merger aims to bolster the capabilities and market reach of both companies, resulting in a combined organization with a robust asset base of approximately $21.1 billion, including $15.2 billion in loans and $16.5 billion in deposits. The merger will also expand the footprint of the combined entity to 127 full-service branch locations across Indiana, Ohio, and Michigan.
Under the terms of the merger, each share of First Savings common stock will be converted into the right to receive 0.85 shares of First Merchants common stock, with cash paid for any fractional shares. This exchange ratio is adjustable for stock splits and dividends, ensuring equity for shareholders throughout the transition. As of September 24, 2025, the closing price of First Merchants stock was $39.53, implying an approximate value of $33.60 per share of First Savings based on the agreed exchange ratio.
The merger is anticipated to qualify as a reorganization under Section 368(a) of the Internal Revenue Code, meaning shareholders of First Savings will not recognize a gain or loss upon the exchange of their shares for First Merchants stock, except in cases involving cash for fractional shares or canceled stock options.
First Merchants and First Savings believe that the merger will deliver significant strategic benefits, including enhanced operational efficiencies, increased economies of scale, and a stronger competitive position in the regional banking landscape. The integration is expected to yield cost savings and revenue synergies, thereby improving the overall value proposition for shareholders.
The proposed merger is pending approval from First Savings shareholders, who will vote on the merger proposal at a special meeting to be scheduled soon. A majority vote is required to proceed with the transaction. The management teams of both companies are advocating strongly for the merger, with the Board of Directors of First Savings unanimously recommending a vote in favor of the proposal.
Once shareholder approval is obtained, the companies will also need to navigate through regulatory approvals to finalize the merger. The timeline for closing the deal is contingent upon meeting these conditions, but both organizations are committed to expediting the process as much as possible.
Overall, this merger represents a strategic move for both First Merchants and First Savings, promising to create a more formidable entity capable of addressing the financial needs of customers across a broader geographic area. Stakeholders, including shareholders and employees, can anticipate a range of potential impacts as the merger progresses, including shifts in stock valuations and operational adjustments as the companies work towards a seamless integration.