Two Indiana banking companies that had planned to merge have terminated the deal, because the Federal Reserve Board has to yet review their application.
Heartland Bancshares Inc. of Franklin announced plans in September to buy Blue River Bancshares in Shelbyville for $19 million of stock. Blue River's $121 million-asset Shelby County Bank would have been melded into the $186 million-asset Heartland Community Bank. Blue River's chairman and chief executive, Russell Breeden, would have held those same titles at the holding company.
But in an interview Friday, Mr. Breeden said it became clear from correspondence with the Fed that the application would not be approved by June 30 - the deadline the two companies had set for closing the deal - because Shelby County's next examination would not be conducted until September. (The thrift is regulated by the Office of Thrift Supervision.)
Heartland's board decided to terminate the agreement rather than extend the deadline, he said.
Mr. Breeden said he is "disappointed" the two companies did not work out an agreement. He also said he could not speculate on whether they would return to the negotiating table.
Blue River, a two-branch thrift holding company founded in 1997, operates in southern Indiana and northern Kentucky. Its Kentucky subsidiary, the $88 million-asset Paramount Bank, would have remained independent after Heartland bought Blue River.
Heartland, also founded in 1997, is a commercial bank holding company with four branches in Johnson County, Ind.
Trading volume in both companies' stocks was heavy in response to the news that the deal had been called off.
Heartland's stock, traded over the counter, was down 3% late Friday, to $12.60, and its volume was five times its daily average. Blue River's stock rose nearly 2%, to $5.31.
