Under the terms of the merger agreement, each share of First Illinois common stock will be converted into the right to elect either 0.5727 shares of First Financial common stock or $44.35 in cash, with the overall consideration mix fixed at 70% stock and 30% cash. Based on First Financial's closing stock price of $79.07 on August 26, 2026, the implied per-share purchase price is $45.00, and the deal values First Illinois at approximately 135% of tangible book value and 13.0 times last-twelve-months earnings, or 7.4 times 2028 estimated earnings including fully phased-in cost savings. The investor presentation also discloses a 5.3% premium to First Illinois' core deposits and a pay-to-trade ratio (the transaction TBV multiple divided by First Financial's standalone TBV multiple) of 80%. The merger consideration is subject to downward adjustment, dollar-for-dollar, if First Illinois' adjusted consolidated shareholders' equity at closing falls below $82,437,826, subject to certain exclusions for transaction expenses and other specified items. Outstanding First Illinois stock options will be cashed out based on the $44.35 per-share value less the exercise price, unvested restricted stock will vest and convert into merger consideration, and outstanding stock appreciation rights will be cashed out per their award terms.
At closing, First Financial shareholders are expected to own approximately 92% of the combined company and former First Illinois shareholders approximately 8%, based on 2,424,590 First Illinois shares outstanding (inclusive of restricted stock) and 166,840 options with a weighted average strike price of $31.02. The combined company is expected to have approximately $6.9 billion in total assets, $4.9 billion in gross loans, and $5.5 billion in total deposits, operating 95 branches across Illinois, Indiana, Kentucky, Tennessee and Georgia. Hickory Point Bank, founded in 1979 and previously owned by Archer-Daniels-Midland from 1986 to 2011, operates 8 branches in Decatur, Champaign-Urbana and Springfield, Illinois, and reported approximately $717 million in total assets, $438 million in gross loans, $624 million in deposits, $82.4 million in tangible common equity, and $8.5 million in LTM net income (1.18% LTM ROAA) as of June 30, 2026, with a 1.27% cost of deposits and 70% loan-to-deposit ratio.
First Financial disclosed anticipated cost savings equal to 34% of First Illinois' noninterest expense base, with 75% phased in during 2027 and 100% realized thereafter. The company estimated pre-tax transaction/merger expenses of $10.8 million, fully reflected in the pro forma tangible book value estimate at closing. Purchase accounting marks disclosed include a loan credit mark of 1.39% of gross loans ($6.1 million), an interest rate mark on loans of 2.32% of gross loans ($10.1 million) amortized over 3.0 years on a straight-line basis, a $2.4 million mark on First Illinois' held-to-maturity securities amortized over 2.1 years straight-line, and a core deposit intangible of 3.00% amortized over 10 years using the sum-of-years-digits method, along with additional marks on fixed assets, AOCI, time deposits and FHLB borrowings.
On financial impact, First Financial expects the deal to be approximately 6% accretive to earnings per share in 2027 and approximately 7% accretive in 2028 (fully phased in), with tangible book value dilution of 3.2% at closing and an earnback period of 2.3 years. Pro forma capital ratios at closing are estimated at 9.1% tangible common equity to tangible assets, 12.9% common equity tier 1, 13.8% total risk-based capital, and 10.4% tier 1 leverage. The presentation also cites an estimated internal rate of return above 20% and a projected 2028 pro forma ROAA of 1.52%. First Financial characterized the deal as financially attractive, noting a short-duration balance sheet that limits purchase accounting impact, and separately cited a track record of prior bank acquisitions (HopFed Bancorp in 2019, Hancock Bancorp in 2021, Simply Bank in 2024, and CedarStone Financial in March 2026).
Norman D. Lowery, First Financial's President and CEO, said: "We are pleased to expand our footprint in Illinois through the addition of Hickory Point Bank, an exceptional community banking franchise with strong customer relationships across central Illinois. Hickory Point Bank brings an attractive core deposit franchise and strong balance sheet liquidity that will enhance our funding profile and support continued growth." Anthony G. Nestler, President of First Illinois and President and CEO of Hickory Point Bank, added: "We are pleased to be joining an organization that shares Hickory Point Bank's commitment to relationship-focused community banking. This combination will provide our customers and employees with access to additional resources and capabilities while delivering meaningful value to our stockholders."
Raymond James & Associates, Inc. served as financial advisor to First Financial and rendered a fairness opinion to its board of directors; Piper Sandler & Co. served as financial advisor to First Illinois and rendered a fairness opinion to its board. Amundsen Davis, LLC served as legal counsel to First Financial, and Barack Ferrazzano Kirschbaum & Nagelberg LLP served as legal counsel to First Illinois.
The merger agreement was unanimously approved by both companies' boards of directors, and each director of First Illinois has signed a voting agreement to vote his or her shares in favor of the deal. Completion is subject to customary closing conditions, including approval by First Illinois shareholders and receipt of required regulatory approvals; First Financial expects the transaction to close in the fourth quarter of 2026. The agreement includes customary non-solicitation provisions limiting First Illinois from pursuing alternative acquisition proposals, and provides for a termination fee of $4.4 million payable by First Illinois under certain circumstances. First Financial has indicated it will file a Form S-4 registration statement that will include a proxy statement for First Illinois shareholders and a prospectus for First Financial shares; as of the most recent filings reviewed, that S-4 had not yet been filed with the SEC, so details such as a shareholder vote date, full merger agreement text beyond the 8-K summary, and background-of-the-merger negotiation history are not yet available. The specific regulatory approvals required (for example from the Federal Reserve, OCC, or state banking regulators) and their status are not detailed in the filings reviewed.