A pending merger between two banks with Columbus operations will require a separate sale of four branches in the city for the deal to be completed.

MainSource Financial Group, based in Greensburg, is being purchased by First Financial Bancorp, based in Cincinnati, Ohio, the companies announced July 25. The transaction, valued at $1 billion, is expected to close in the first quarter of this year.

Post-merger, the financial institution will have about $14 billion in assets.

However, federal regulations regarding monopolies and competition have made the divestiture of four Columbus operations and one in Greensburg a requirement for the merger to be completed, said Archie M. Brown Jr., chairman, president and CEO of MainSource.

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MainSource and First Financial reached a letter of agreement with the Department of Justice late Thursday that stipulates MainSource must sell the following branches:

Columbus downtown, 529 Washington St.

Columbus north, 1901 25th St.

Columbus west, 2310 W. Jonathan Moore Pike

Columbus drive-through, 803 Washington St.

Greensburg Plaza, 304 E. 10th St.

MainSource will retain its nearby branches in Hope and Edinburgh, which will be included in the First Financial merger, Brown said.

The Department of Justice-required sale of the five locations will include all deposits and loans, real estate and personal property associated with the branches.

About 25 employees will be affected, including about 20 in Columbus, and they will become employees of the bank that buys the branches, Brown said.

He and other MainSource leaders personally informed the Columbus employees Friday morning about the separate sale of the branches.

Brown described the notification as difficult and the agreed divestiture as bittersweet.

“We’re all proud of what we built in the market, and many employees were part of it when we started nine years ago, so there’s some sadness about it,” Brown said.

However, Brown said MainSource is doing what has to be done to make the merger go through.

The Department of Justice has rules about the concentration of deposits by one banking company in one market, Brown said. The banks knew this rule could possibly come into play, although they hoped it would not, Brown said.

The Department of Justice got involved in late 2017, he said.

“We had hoped for a better outcome in terms of not making any divestiture,” Brown said. “After working with (the Department of Justice), this is what we agreed to, to keep moving forward with the merger.”

The sale price between First Financial and MainSource won’t be affected, and the banks expect the merger to remain on track to be completed in the first quarter of this year, Brown said.

However, the Department of Justice requires a signed and approved deal with a buyer of the bank branches before the merger can be completed, he said.

“Time is of the essence,” Brown said.

After the merger, MainSource has 180 days to close the sale of the four branches and one drive-through, he said.

MainSource has begin work on marketing the branches to find a buyer that it and the Department of Justice considers suitable, Brown said.

‘Strategic fit’

Discussions of a merger began in late winter 2016, and took root when Brown and Claude E. Davis, CEO of First Financial, met for one of their periodic lunch meetings. They said they soon realized that combining forces made sense for their two companies’ needs and futures.

Davis said in July that as First Financial moved closer toward having $10 billion in assets, it faced a steeper financial and regulatory impact that would have cost the company about $15 million annually. However, as a merged company with about $14 billion in anticipated assets when the deal closes, the cost could be absorbed better, he said.

“It was a really good cultural fit and strategic fit,” Davis said in July.

First Financial shareholders would own 63 percent of the company, MainSource shareholders 37 percent after the merger.

Both banks announced Dec. 4 that each had received the needed shareholder approval of the merger.

Brown said in July that the merger also fit with the two banks’ strategic growth plans.

After entering the Columbus, Bloomington, Louisville, Indianapolis and Cincinnati markets, MainSource knew it needed to build a greater presence in metro markets, Brown said.

“This accelerates us five to 10 years,” Brown said in July.

The merger also was expected to reduce expenses in economies of scale through the closure of branches and a percent reduction in workforce.

Currently the banks have about 2,400 employees combined (1,500 from First Financial and 900 from MainSource) and 200 banking centers throughout Indiana, Ohio and Kentucky. The combined number will drop when the merger becomes effective.

First Financial and MainSource both have branches in central and southern Indiana. But with overlap existing in markets and some branches in close proximity, approximately one-fourth of the offices will close, the banks’ top executives said.

About 400 positions will be eliminated as well, Brown said in July, although most of that can be taken care of through attrition, such as retirements or people leaving for other jobs.

What's next

MainSource must find a buyer for four branches and one drive-through and have a signed and approved deal in order for its merger with First Financial to be completed. The banks have targeted finalizing the merger by the end of March.

Once the merger is complete, MainSource must close on its sale of the five locations within 180 days.

About the banks

First Financial Bancorp, based in Cincinnati, has 102 banking centers in Ohio, Kentucky and Indiana, including five in the Bartholomew County area:

  • 125 Third St., Columbus
  • 707 Creekview, Columbus
  • 3950 Jonathan Moore Pike, Columbus
  • 2531 Eastbrook Plaza in Columbus
  • 2070 N. State St., North Vernon.

MainSource Financial Group, based in Greensburg, operates 101 banking centers. Its Bartholomew County area offices are located at:

  • 1901 25th St., Columbus
  • 529 Washington St., Columbus
  • 803 Washington St., Columbus
  • 2310 W. Jonathan Moore Pike, Columbus
  • 8475 State Road 9, Hope
  • 3880 W. Presidential Way, Edinburgh
  • 102 Underwood Drive, Westport
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Kirk Johannesen is assistant managing editor of The Republic. He can be reached at johannesen@therepublic.com or (812) 379-5639.