MutualFirst in Indiana to Buy First Bank of Berne's Trust Business

MutualFirst Financial in Muncie, Ind., which is under pressure from an activist investor to sell itself, has agreed to buy the trust business of First Bank of Berne in Indiana.

The $1.4 billion-asset MutualFirst did not disclose financial terms of the acquisition. The purchase would increase the assets under management in MutualFirst's trust business to about $600 million, Chief Executive Dave Heeter said in an interview. It's anticipated to close by the end of the third quarter, he said.

Kent Liechty, president of the $551 million-asset First Bank of Berne, did not return a call seeking comment.

Ancora Advisors in Cleveland said in a May regulatory filing that it would press MutualFirst to sell itself, as it would benefit MutualFirst's shareholders to merge "with a larger, more well capitalized partner."

On Tuesday, Heeter said he had not discussed the planned acquisition with Ancora, but that the deal "gives us the ability to enhance earnings, without investing additional capital. What the market is expecting from us is to grow earnings."

Ancora isn't objecting. The First Bank of Berne trust business acquisition appears to be "fairly small and Dave's done a fairly effective job in the past of buying trust assets," Jim Chadwick, a director at Ancora, said in an interview Tuesday.

MutualFirst in June 2014 acquired the trust business of the $1.3 billion-asset First Farmers Bank & Trust in Converse, Ind.

"We like those businesses, as long as the acquisition is structured correctly," Chadwick said. "If Dave was buying the whole bank, we'd be having a different conversation, depending on what he was paying for it."