Northwest Bancshares, Inc., (“Northwest”), (NASDAQ: NWBI) and MutualFirst Financial, Inc., (“MutualFirst”) (NASDAQ: MFSF) jointly announced the signing of a definitive merger agreement pursuant to which Northwest will acquire MutualFirst, the Muncie, Indiana-based holding company and parent of MutualBank, in an all-stock transaction valued at $39.89 per share (based on Northwest’s 15-day volume-weighted average closing stock price on Oct. 23, 2019), or approximately $346 million in the aggregate.

The transaction is immediately accretive to Northwest’s earnings per share, excluding merger costs, and increases its stand-alone earnings per share by over 10% on a run-rate basis. Further, it gives Northwest access to an attractive new region of prospective customers. The acquisition provides Northwest with an additional $2.1 billion in total assets, $1.6 billion in total deposits, $1.5 billion in loans and 39 banking locations, based upon financial information as of September 30, 2019.

David Heeter, President and Chief Executive Officer of MutualFirst, will be named Regional CEO and market leader for Northwest’s Indiana franchise after the merger is consummated and will report directly to Ronald J. Seiffert, President and Chief Executive Officer of Northwest. Mr. Heeter commented, “During our proud 130-year history, MutualBank has been committed to serving our clients and local communities. Through a consistent level of superior quality service, our dedicated staff has grown a loyal commercial and retail customer base. We are very excited about joining the Northwest team. Northwest has demonstrated a similar commitment to its clients, employees and the communities it serves, shares our core values and has an outstanding record of enhancing shareholder value.”

In addition to Mr. Heeter, leadership continuity will be preserved with Christopher L. Caldwell, Senior Vice President of commercial banking at MutualBank, leading the commercial lending team in the Indiana market for Northwest and Christopher D. Cook, current Chief Financial Officer of MutualFirst, transitioning to Chief Operations Officer in the Indiana market.

Mr. Seiffert stated, “Indiana is an attractive market with a business-friendly environment which we have targeted as part of our Mid-Atlantic and Midwest expansion plans. MutualFirst represents a unique and sizable opportunity that is highly accretive to both Northwest’s franchise value and shareholder value. Maintaining MutualFirst’s executive management team and the presence of similar cultures allows us to consistently serve the customer base with little to no disruption. We believe MutualBank’s customers and employees will embrace Northwest’s culture and values and appreciate the additional products and services of a larger community bank which should also create additional growth potential. Northwest will maintain a robust capital position following the merger, giving the combined company significant capital to pursue future acquisitions, pay attractive dividends and continue to grow organically, all of which enhance shareholder value.” Under the terms of the merger agreement, which has been approved unanimously by the boards of directors of both companies, shareholders of MutualFirst will be entitled to receive 2.4 shares of Northwest common stock for each common share of MutualFirst. The exchange ratio is fixed and the transaction is expected to qualify as a tax-free exchange for shareholders of MutualFirst. Based on Northwest’s 15-day volume-weighted average closing stock price ending on October 23, 2019, the deal is valued at $346 million, or $39.89 per share, which equates to a price to tangible book value ratio of 172% and a price to earnings ratio, after considering fully phased-in cost savings, of under 10x based on consensus estimates for MutualFirst’s 2020 EPS of $2.56 and cost savings of approximately 30%. The tangible book value dilution, including all restructuring costs, of approximately $0.33, or 3.5%, is expected to be earned back in approximately 2.8 years when including the impact of CECL and approximately 2.1 years excluding the impact of CECL. As part of the merger, one MutualFirst director will be added to Northwest’s bank and holding company boards. All of the directors and certain executive officers of MutualFirst have entered into voting agreements with Northwest pursuant to which they have agreed to vote their shares in favor of the transaction.

The merger is expected to be consummated and converted to Northwest in the second quarter of 2020, after satisfaction of customary closing conditions, including regulatory approvals and the approval of the shareholders of MutualFirst.

When the transaction is completed, the combination of the two banking companies will create a bank with approximately

$12.7 billion in total assets and $10.3 billion in deposits, providing banking services through 221 branch locations in four states.

B. Riley FBR, Inc. is serving as financial advisor and Luse Gorman, PC is serving as legal counsel to Northwest in this transaction.

Keefe, Bruyette & Woods, A Stifel Company is serving as financial advisor and Silver, Freedman, Taff & Tiernan LLP is serving as legal counsel to MutualFirst.