First Merchants to buy Level One in Michigan

First Merchants in Muncie, Ind., has agreed to buy Level One Bancorp in Farmington Hills, Mich.

The $15.1 billion-asset First Merchants said in a press release Thursday that it will pay $323.5 million in cash and stock for the $2.5 billion-asset Level One. The deal, which is expected to close in the first half of 2022, priced Level One at 188% of its tangible book value.

Level One has 16 branches, $1.7 billion of loans and $2.1 billion of deposits. 

First Merchants said it expects the deal to be 10.4% accretive to its 2023 earnings per share. It should take less than three years to earn back an estimated 4.3% dilution to First Merchants’ tangible book value.

First Merchants plans to cut 30% of Level One's annual noninterest expenses. It expects to incur $23.5 million of merger-related expenses.

“Like First Merchants, Level One Bank has a strong customer-focused history and a deep-rooted commitment to community banking,” Mark Hardwick, First Merchants’ CEO, said in the release.

Level One will appoint one director to join First Merchants' board.

Several Level One executives, including President Timothy Mackay and Chief Lending Officer Gregory Wernette, will join First Merchants. Patrick Fehring, Level One’s chairman and CEO, plans to retire. Stephens and Dentons Bingham Greenebaum advised First Merchants.

Piper Sandler and Barack Ferrazzano advised Level One.