Indiana’s German American Bank to acquire Ohio’s Heartland

Dive Brief:

Jasper, Indiana-based German American Bancorp will acquire Whitehall, Ohio-based Heartland BancCorp in an all-stock transaction valued at $330.2 million, the banks announced Monday.
The merger will give German American entry to Ohio for the first time. The combined bank will count about $8.1 billion in assets and an approximately 95-branch network, the banks said in a news release.
The deal is expected to close in the first quarter of 2025, pending regulatory approval.

Dive Insight:

Heartland, which has 20 locations in central Ohio and the Cincinnati area, had about $1.9 billion in assets, $1.5 billion in loans and $1.6 billion in deposits, as of the end of June. Making an acquisition or being acquired became necessary for the bank to keep up with the level of growth in the Columbus area, CEO G. Scott McComb told The Columbus Dispatch.

“All these things happening in Columbus, our balance sheet needed to be bigger,” McComb told the newspaper. “We’re out there competing with the big guys.”

The lender considered scooping up a peer or smaller bank, but found a dearth of options, the CEO told the Dispatch. When it came to a would-be acquirer, Heartland’s ideal checklist included a publicly traded bank that had the same family culture, performed similarly or better to Heartland, offered complementary services and products, and served a different region than Heartland.

German American has 74 locations spread across southern Indiana and Kentucky.

German American CEO D. Neil Dauby underscored the opportunity the tie-up presents the lender, providing an entrance into the “vibrant and fastest-growing markets” of Columbus and Cincinnati. Heartland will operate under a co-branded name within the Ohio markets, the companies said.

McComb will join German American’s board of directors. Members of Heartland’s executive and senior leadership teams are expected to remain with the combined company as regional management, the release said.

However, of Heartland’s 300 employees, there are likely to be some cuts, McComb told the Dispatch. It’s possible, over time, the bank will add employees to accommodate the lender’s or the region’s growth, he added.

Under the terms of the deal, Heartland shareholders will receive 3.9 shares of German American stock for each share of Heartland stock they own, the release said. Each share of Heartland stock is valued at $155.37, compared to its closing price of $91.95 Monday.

German American anticipates cost savings equal to about 30% of Heartland’s non-interest expense, with 75% of that occurring in 2025, according to a presentation on the proposed deal. In June, German American announced it’s selling its insurance brokerage to Hilb Group for $40 million.