Business Services Industry

Blue River Bancshares, Inc. and Heartland Bancshares, Inc. Jointly Announce a Strategic Alliance

Business Wire, Sept 1, 2004

SHELBYVILLE, Ind. & FRANKLIN, Ind. -- Blue River Bancshares, Inc. (Nasdaq:BRBI), the holding company of Shelby County Bank, headquartered in Shelbyville, Indiana ("Blue River") and Heartland Bancshares, Inc. (OTCBB:HRTB), the holding company of Heartland Community Bank, headquartered in Franklin, Indiana ("Heartland") today jointly announced that they have signed a definitive agreement to merge their companies as part of a strategic alliance. After the merger of Blue River and Heartland, the resulting company will be named Heartland Bancshares, Inc. Shelby County Bank and Heartland Community Bank also will merge their operations. Heartland Community Bank, a commercial bank, will be the resulting entity and will continue to conduct business under the name "Heartland Community Bank".

Blue River's Chairman and CEO Russ Breeden will continue as Chairman, President and CEO of the new Heartland Bancshares, and Heartland's President and CEO Steve Bechman will continue as Heartland Community Bank's President and CEO and as Executive Vice President of the new Heartland Bancshares. Randy Collier of Shelby County Bank will serve as Executive Vice President, Secretary and Chief Credit Officer of the new Heartland Bancshares, and Jeffery Joyce of Heartland will serve as Chief Financial Officer of the new Heartland Bancshares. The Board of Directors of the new Heartland Bancshares will consist of five designees from Heartland and four from Blue River.

The agreement provides for a stock-for-stock merger in which 2.54 shares of Blue River common stock will be exchanged, on a tax-free basis, for each share of Heartland common stock. Based on the closing price of Blue River's common stock of $5.39 on August 31, 2004, the transaction would have a value as of that date of approximately $13.69 for each share of Heartland common stock, and an aggregate transaction value to Heartland shareholders (assuming no change in the number of Heartland's shares issued and outstanding) of approximately $19.1 million as of that date. Upon the closing of the transaction, Blue River will issue approximately 3,541,196 shares of its common stock. Total common shares outstanding after the exchange is expected to be approximately 6,947,346 shares.

The merger is subject to approval by the shareholders of Blue River and Heartland as well as federal and state regulatory authorities and other conditions customary for transactions of this nature. The directors of Blue River and Heartland have agreed to vote their respective shares in favor of the merger. The parties anticipate closing the transaction as early as the first quarter of 2005.

Howe Barnes Investments, Inc., Chicago, Illinois, is acting as financial advisor to Blue River and Donnelly Penman & Partners, Grosse Pointe, Michigan, is acting as financial advisor to Heartland.

Blue River, formed in 1997, is a savings and loan holding company located in Shelbyville, Indiana. Its principal subsidiaries, Shelby County Bank and Unified Banking Company, provide financial services to south central Indiana through Shelby County Bank's four full service branches in Shelbyville, Morristown, and St. Paul, Indiana and to the city of Lexington, and Fayette County, Kentucky through Unified's one office located in Lexington, Kentucky. Blue River had consolidated total assets of approximately $205 million at June 30, 2004.

Heartland, formed in 1997, is a one-bank holding company headquartered in Franklin, Indiana. Its commercial bank subsidiary, Heartland Community Bank commenced banking operations in December of 1997 and has banking offices in Franklin, Greenwood and Bargersville, Indiana. Heartland had total assets of approximately $180 million at June 30, 2004.

The combined company will be positioned to achieve growth in earnings and increase shareholder value through its greater scale, broader management resources, and enhanced efficiencies and competitiveness. At June 30, 2004, the new Heartland Bancshares would have had combined total assets of approximately $390 million, total loans of approximately $268 million and total deposits of approximately $313 million.

Russell Breeden, III, Chairman and Chief Executive Officer of Blue River, said "This merger is a terrific transaction for both institutions. The strengths of Blue River fill needs of Heartland and the strengths of Heartland fill needs of Blue River. Our clients and communities should expect increased community support and enhanced products or services delivered by familiar faces, in an efficient and technologically advanced manner. Our employees will have increased opportunity for career development and personal growth, even though there will be some reduction in the number of full time staff. Our shareholders should expect financial results and long term value, which exceed what either company could achieve on their own. This is another important step as we build a holding company of premier community based financial institutions."

Steve Bechman, President of Heartland Community Bank, said "This alliance allows us to blend the heritage of Shelby County Bank with the entrepreneurial spirit of Heartland Community Bank. The founders and staff of Heartland Community Bank have always been committed to providing excellent customer service and being actively involved in the community. Shelby County Bank has the same attributes, which is what made it attractive to us. We look forward to this combination and the benefits it will provide to our customers, employees, and shareholders."


 

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