Mercantile to purchase First National Bank of Iowa City

Mercantile Bancorporation, a $32 billion St. Louis-based holding company, is purchasing First Financial Bancorporation of Iowa City. The $550 million one-bank holding company owns the First National Bank Iowa, which operates in 10 locations along the Iowa City/Cedar Rapids corridor.

First Financial's merger with Mercantile will substantially strengthen Mercantile's market share in Iowa, moving it to the unrivaled No. 2 position in the state. In addition, First Financial operates one of the largest trust departments in Iowa, with nearly $780 million in assets.

"The merger with First Financial, in conjunction with the recently announced Financial Services Corporation of Rock Island, Ill., merger, complements Mercantile's existing franchises in east and east/central Iowa," said W. Randolph Adams, senior executive vice president and chief administrative officer of Mercantile Bancorp. "We now have a prominent Iowa market presence, reaching from the Mississippi River to the state's western border." (See Illinois News in this edition for information on Mercantile's purchase of Financial Services Corp.)

"The opportunity to affiliate with Mercantile provides us with an exceptional financial partner who shares our same community banking philosophy," said Robert M. Sierk, president and CEO of First Financial Bancorp. "Since Mercantile entered the Iowa market in 1993, we have watched their growth and progress, as well as their commitment to the communities they serve." Following the merger, Sierk will serve as chief executive officer for the organization's Iowa City banking franchise.

Based upon Mercantile's closing stock price of $52.8125 on May 7, 1998, the transaction is valued at approximately $169 million. First Financial Bancorp shareholders will receive 0.88 shares of Mercantile common stock for each share of First Financial Bancorp common stock.

As part of the agreement, First Financial granted Mercantile an option to acquire 19.9 percent of its issued and outstanding shares of common stock, exercisable under certain circumstances. In addition, Mercantile may repurchase up to 10 percent of the shares issued in the transaction.

Copyright NFR Communications Inc May 23, 1998
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