Northwest Bancshares, Inc. (NasdaqGS:NWBI) agreed to acquire MutualFirst Financial, Inc. (NasdaqGM:MFSF) for approximately $360 million on October 29, 2019. Under the terms of the merger agreement, each share of common stock of MutualFirst Financial will be converted into the right to receive 2.4 shares of the Northwest. Northwest Bancshares will acquire MutualFirst in an all-stock transaction valued at $39.89 per share. All outstanding MutualFirst Financial stock options will be exchanged for an amount of cash equal to the positive difference between $39.89 and the exercise price per share of such MutualFirst Financial stock option multiplied by the number of shares subject to such MutualFirst Financial stock option. The exchange ratio is fixed and the transaction is expected to qualify as a tax free exchange for the shareholders of MutualFirst. Immediately thereafter, MutualBank, the wholly owned subsidiary of MutualFirst Financial, will merge with and into Northwest Bank, the wholly owned subsidiary of Northwest Bancshares, with Northwest Bank as the surviving entity. The merger agreement may be terminated by mutual consent of Northwest Bancshares and MutualFirst Financial at any time prior to the completion of the merger. Under certain circumstances described in the merger agreement, in connection with the termination of the merger agreement, MutualFirst Financial will owe Northwest Bancshares an $11 million termination fee.

Pursuant to the merger agreement, one current Director of MutualFirst Financial will be appointed to the Boards of Directors of Northwest Bancshares and Northwest Bank. Upon closing, David W. Heeter will be named as Regional Chief Executive Officer and Market Leader for Northwest's Indiana franchise and will report to Ronald J. Seiffert. In addition to David W. Heeter, leadership continuity will be preserved with Christopher L. Caldwell, Senior Vice President of Commercial Banking at MutualBank and Christopher D. Cook, current Chief Financial Officer of MutualFirst will be transitioning to Chief Operations Officer in the Indiana Market. Completion of the transaction is subject to customary closing conditions, including the receipt of required regulatory approvals, approval of Federal Deposit Insurance Corp, the expiration of all statutory waiting periods, effectiveness of the registration statement, authorization for listing on the Nasdaq Global Select Market of the shares of Northwest Bancshares common stock to be issued in the merger, MutualFirst Financial shall have dissolved or sold Mutual Risk Advisors, receipt by Northwest Bancshares and MutualFirst Financial of an opinion from their respective legal counsel to the effect that the merger will be treated for federal income tax purposes as a reorganization, receipt by Northwest Bancshares and MutualFirst Financial of an opinion from their respective legal counsel to the effect that the Merger will be treated for federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code and the approval of stockholders of MutualFirst Financial.

The transaction has been unanimously approved by the Boards of Directors of Northwest and MutualFirst Financial. A special meeting of the stockholders of MutualFirst will be held on March 6, 2020. On March 6, 2020, stockholders of MutualFirst approved the transaction. As per filing on March 30, 2020, Northwest received all regulatory approvals and non-objections required to complete the merger. The transaction is expected to close in second quarter of 2020. As of October 30, 2019, the transaction is expected to close in April, 2020. As per amended filing, the transaction is expected to close on or about April 24, 2020. The transaction is immediately accretive to Northwest's earnings per share, excluding merger costs, and increases its standalone earnings per share by over 10% on a run-rate basis. The expected returns and earnback periods are financial compelling to just over 6% earnings per share accretion in 2020, excluding one-time costs and over 10% in 2021, resulting in an earnback period of 2.1 years when excluding the impact of Current Expected Credit Losses and just under 3 years when taking into consideration the impact of Current Expected Credit Losses.

B. Riley FBR, Inc. is serving as financial advisor and Eric Luse, Marc P. Levy, Ned Quint and Beverly White of Luse Gorman, PC is serving as legal counsel to Northwest in this transaction. Patrick Koster, Harold Hanley, Eric Kalinowski and Jim Crotty of Keefe, Bruyette, & Woods are serving as financial advisors and James S. Fleischer and Martin L. Meyrowitz of Silver, Freedman, Taff & Tiernan LLP is serving as legal counsel to MutualFirst. Keefe, Bruyette, & Woods, Inc. has provided the fairness opinion to the board of directors of MutualFirst. Regan & Associates, Inc. acted as proxy solicitor to Northwest and will receive a fee of $0.018 million. MutualFirst Financial agreed to pay Keefe, Bruyette a total cash fee equal to 1.2% of the aggregate merger consideration, $600,000 of which became payable to Keefe, Bruyette with the rendering of its opinion, and the balance of which is contingent upon the closing of the merger.