Under the terms of the merger agreement, each share of Two Rivers common stock was converted into the right to receive 1.225 shares of First Mid common stock, with cash paid in lieu of fractional shares. Based on First Mid's October 28, 2025 closing price of $36.80, the deal was announced at an implied aggregate value of approximately $94.1 million; the S-4 proxy statement/prospectus later recalculated the implied value at approximately $92.6 million using First Mid's October 29, 2025 closing price of $36.24 and the 2,086,645 Two Rivers shares outstanding as of the merger agreement date. At closing, First Mid issued approximately 2,539,879 shares of common stock to former Two Rivers shareholders. The investor presentation filed with the announcement disclosed valuation multiples of 104% of Two Rivers' tangible book value (as of September 30, 2025), an 80% pay-to-trade multiple, 8.5 times Two Rivers' estimated 2026 earnings per share, and 5.3 times 2026E EPS including fully phased-in cost savings.
First Mid disclosed expected pro forma ownership of approximately 90% First Mid shareholders and 10% former Two Rivers shareholders. First Mid projected approximately 12.3% accretion to 2027 estimated EPS (approximately 11.3% excluding CECL double-count), tangible book value dilution of approximately 4.3% (3.7% excluding CECL), and a tangible book value per share earnback period of 2.1 years (1.9 years excluding CECL). Pro forma combined metrics at closing were disclosed as approximately $9.0 billion in total assets, $6.7 billion in total loans, $7.3 billion in total deposits, a CET1 ratio of approximately 12.8%, tangible common equity to tangible assets of approximately 8.8%, 2027E return on average assets of approximately 1.30%, and 2027E return on average tangible common equity of approximately 15%. First Mid's own closing press release put the combined company at $9.1 billion in total assets following the transaction.
First Mid disclosed expected cost savings equal to approximately 27% of Two Rivers' noninterest expense base, with 50% phased in during 2026 and the full amount realized in subsequent years, alongside one-time pretax restructuring costs of $14.5 million. Revenue synergies were described as identified but not modeled into the financial projections. Purchase accounting marks disclosed in the investor presentation included an estimated $11.6 million pretax credit mark on Two Rivers' loan portfolio (1.3% of loans as of September 30, 2025, split 40% PCD and 60% non-PCD), a $38.3 million loan interest rate write-down accreted over five years, $16.2 million of available-for-sale securities AOCI accreted over seven years, a $1.9 million held-to-maturity securities write-down accreted over eight years, a core deposit intangible equal to 3.50% of non-time deposits amortized over 10 years, and a customer list intangible equal to 0.40% of assets under management amortized over 15 years.
Two Rivers, as of September 30, 2025, reported approximately $1.1 billion in total assets, $901 million in loans, $988 million in deposits, $116 million in wealth management assets under management, and 14 branches concentrated in Burlington, Fort Madison, Des Moines, Iowa City and Henry County, Iowa, where it held leading or top-five deposit market share in several markets. Two Rivers reported a return on average assets of 0.97%, a leverage ratio of 11.6%, core deposits equal to 93% of total deposits, loan loss reserves of 1.29% of loans, and trailing-twelve-month net charge-offs of 0.13% of average loans. As of year-end 2025, per First Mid's closing press release, Two Rivers held approximately $1.2 billion in assets, $883 million in loans and $1.0 billion in deposits.
The S-4 registration statement/proxy statement-prospectus, filed December 23, 2025, disclosed that the relationship between the two companies traced back to 2012 and that Two Rivers had worked with D.A. Davidson as its financial advisor for the prior decade, periodically modeling potential sale or merger scenarios including with First Mid. Formal deal discussions began June 4, 2025, when D.A. Davidson contacted First Mid CEO Joseph Dively about a confidentiality agreement; confidentiality agreements were executed June 10, 2025, and First Mid began due diligence via a data room on June 11, 2025. On July 22, 2025, First Mid's financial advisor Keefe, Bruyette & Woods delivered a non-binding indication of interest proposing an exchange ratio of 1.175 First Mid shares per Two Rivers share, implying an aggregate value of approximately $96 million based on First Mid's July 17, 2025 closing price of $39.08. On August 1, 2025, First Mid submitted a revised indication of interest raising the exchange ratio to 1.225 shares, which the Two Rivers board authorized management to pursue at an August 7, 2025 board meeting, with Dickinson, Bradshaw, Fowler & Hagen, P.C. and D.A. Davidson advising on legal and financial considerations. The indication of interest, executed August 8, 2025, included a 60-day exclusivity period for confirmatory and reverse diligence and merger agreement negotiation. The proxy does not describe a competitive sale process involving bidders other than First Mid.
D.A. Davidson rendered its fairness opinion to the Two Rivers board on October 29, 2025, opining that the 1.225 exchange ratio was fair, from a financial point of view, to Two Rivers shareholders, based on review of the draft merger agreement, public filings, management projections for both companies, comparable public company and precedent transaction data, and discounted cash flow analyses; the specific multiples and comparable companies used in those analyses were not captured from the summary reviewed. Keefe, Bruyette & Woods, Inc. served as exclusive financial advisor to First Mid, and ArentFox Schiff LLP served as First Mid's legal counsel. D.A. Davidson & Co. served as exclusive financial advisor to Two Rivers and rendered the fairness opinion; Barack Ferrazzano Kirschbaum & Nagelberg LLP and Dickinson, Bradshaw, Fowler & Hagen, P.C. served as Two Rivers' legal counsel.
Shareholders, directors and officers holding approximately 23.5% of Two Rivers' outstanding shares (490,148.5 shares) entered into a voting agreement committing to vote in favor of the merger. The merger agreement provided for a termination fee of $3,625,000 payable by Two Rivers to First Mid under specified circumstances, including termination following a breach of Two Rivers' no-solicitation covenant where a competing proposal was announced and later consummated, or termination by Two Rivers to accept a superior proposal. Required regulatory approvals included the Federal Reserve Board, the Iowa Division of Banking, and the Office of the Comptroller of the Currency for the subsequent bank-level merger, plus a post-approval antitrust waiting period and SEC effectiveness of the registration statement; the merger agreement set an outside termination date of August 31, 2026, and gave Two Rivers a right to terminate if First Mid's stock price fell below $29.15 and underperformed the Nasdaq Bank Index by more than 20%.
The transaction closed on February 28, 2026, with Two Rivers merging into First Mid's subsidiary Star Sub LLC. First Mid also assumed approximately $10.31 million in Two Rivers' junior subordinated debt securities due March 15, 2035, and approximately $20.07 million in outstanding loans owed to Bankers' Bank. Two Rivers' outstanding equity awards fully vested upon closing. First Mid's closing press release quoted CEO Joe Dively stating the company had "worked closely with the Two Rivers team over the last few months to ensure a smooth transition" and that First Mid would "welcome Two Rivers' customers and employees to First Mid." Systems conversion for Two Rivers' customers was scheduled for June 2026, with customers to be notified in advance of any account changes. Shane Zimmerman, Two Rivers Bank & Trust's President and CEO, was expected to join First Mid as an Executive Vice President, Divisional President, under retention arrangements for Two Rivers' leadership team disclosed in the investor presentation.