First Merchants Corporation (FRME) and CFS Bancorp (CITZ) announced they have executed a definitive agreement whereby CFS will merge with and into First Merchants, and its wholly-owned bank subsidiary, Citizens Financial Bank, will merge with and into First Merchants Bank, NA. The merger agreement provides that shareholders of CFS will have the right to receive 0.65 shares of First Merchants common stock for each share of CFS common stock owned. Based on the closing price of First Merchants’ common stock on May 10, 2013 of $16.14, the transaction value is approximately $114.7M, with an implied price per share of CFS common stock of $10.49. The transaction is expected to be completed in the fourth quarter of 2013, subject to the affirmative vote of CFS and First Merchants shareholders, regulatory approvals, and other customary conditions. The combined company, doing business as First Merchants Bank expects to complete its integration during the first quarter of 2014. First Merchants and CFS will have combined assets of $5.4B and create the second largest financial holding company headquartered in Indiana. First Merchants said, “We expect this combination to be mutually beneficial to First Merchants and CFS’s shareholders. We anticipate earnings per share accretion in 2014 and beyond through identified operating efficiencies of approximately thirty percent resulting in tangible book value earnback of less than three years."