Hamilton, Ohio-based First Financial Bancorp announced Thursday that it has a deal to buy Sand Ridge Financial Corp. of Highland, Ind., for $141 million of stock.
The deal-First Financial's largest to date-would boost its assets to $3.3 billion and expand its presence into Lake County, a fast-growing area in northwest Indiana, about 20 miles southeast of Chicago.
Stanley N. Pontius, president and chief executive officer of First Financial, said his company wanted to buy a large bank in a high-growth market outside First Financial's territory.
"Lake County is very similar to the bedroom communities we serve in suburban Cincinnati," he said. "They fit us like a glove."
First Financial would swap 85.25 shares of its stock for each outstanding share of Sand Ridge, the $527 million-asset parent of Sand Ridge Bank. The purchase price is 3.1 times Sand Ridge's book value and 23.5 times earnings.
Sand Ridge is a closely held company with three stand-alone branches and two supermarket branches. Bruce E. Leep, the company's chairman and chief executive officer, and his family are the largest shareholders. The Leeps would own about 7% of First Financial's shares, and Mr. Leep would sit on the company's board.
The deal ends a relatively dry spell in acquisitions by First Financial. The company has bought 12 banks in Indiana, Ohio, and Michigan since 1991 but none in the last 12 months.
Timothy W. Willi, a bank analyst at A.G. Edwards in St. Louis, applauded the announcement. Mr. Willi said he was worried that First Financial was falling behind in the acquisition game after several other Ohio companies, such as Sky Financial of Bowling Green and FirstMerit Corp. of Akron, announced large acquisitions in recent months.
"I was starting to have some concerns that First Financial was going to be left without a chair when the music stops," he said.
Mr. Willi said the deal would not alter his company's earnings expectations.
"It's a good, solid deal that fits with First Financial very well," he said. "They will be very focused on putting this together and keeping the Street happy."
First Financial will continue searching for acquisition targets in 1999, Mr. Pontius said, as some smaller banks elect to sell before 2000. He also said he thinks community bank prices have topped out.
"We think we're going to see more opportunities next year," he said.
Hovde Financial Inc. of Chicago represented Sand Ridge, and the Cincinnati law firm Frost & Jacobs represented First Financial.