KALAMAZOO — An Indiana bank’s entry into the Southwest Michigan market through the acquisition of 20 Bank of America offices follows an ongoing expansion strategy and may serve as a “stepping stone” for more moves in the future.
The Evansville-based Old National Bancorp wants to make further acquisitions in Michigan to grow its presence in a market that President and CEO Bob Jones views as holding high growth potential.
“We view this (the Bank of America office acquisitions) as a good stepping stone to this part of the world,” Jones said. “We want to continue to invest and add people and add services and grow organically, and if we can find other partners to partner with and grow through acquisition, we’d love to do that as well.”
Among the next possible targets for Old National are moves up the Lake Michigan shoreline and entering the Grand Rapids area, Jones said. Another deal in Michigan could come as soon as mid-year “if we find a willing partner.”
“The only thing that hamstrings us is finding the right partner with a similar culture and a similar commitment,” he said.
The deal for now represents “a logical extension of our footprint” in northern Indiana and furthers Old National’s transformation that began eight years ago when Jones became CEO.
Old National since 2004 has made four acquisitions that took the bank into higher-growth markets, plus a series of branch consolidations and divestitures in slow-growth markets. As the state’s economy rebounds well from the recession, Old National views Southern Michigan as a potential high-growth market.
Jones has familiarity with the region. A Detroit-area native, he ran McDonald Investments in Grand Rapids prior to joining Old National eight years ago. He considers the Grand Rapids area “one of the gems of the Midwest.”
The Southwest Michigan locations are part of a larger $32 million to $35 million deal for Old National Bancorp to acquire 24 Bank of America offices, four of which are in northern Indiana. The offices collectively have deposits totaling $778.8 million, $645 million of which is from the 20 southern Michigan offices.
Acquiring the Bank of American branches gives Old National a solid market position in Southwest Michigan.
Bank of America ranked third out of 21 banks in the Kalamazoo area last year with an 11.1 percent deposit market share through eight offices, and was fourth out of 13 banks in the Battle Creek area with three locations, according to the FDIC’s 2012 Summary of Deposits.
“We think it’s a great way to enter the market,” Jones said of the deal with Bank of America. “We actually have been interested in Southwest Michigan for some time.”
The bank intends to boost commercial banking, mortgage, investment, and wealth-management teams in the Michigan markets, Jones said. He expects the transaction, which is pending federal regulatory approval, to close in the third quarter of 2013. The deal excludes Bank of America’s trust accounts, mortgages and credit cards held by customers.
Old National Bancorp is the largest financial services company based in Indiana with 200 offices and assets of $9.4 billion. The bank had total deposits of $7.22 billion as of the third quarter and total loans of $5.24 billion, about half of which were commercial and commercial real estate loans.
Jones doesn’t count on automatically retaining Bank of America’s retail and commercial customers once the transaction closes. Old National needs to earn the business, he said.
“You have to work very, very hard to earn people’s trust and business,” Jones said.
Part of that includes becoming involved in each community where the bank does business, including supporting local economic development efforts.
“I’ve often said we have a moral responsibility to give back to the markets we’re in,” Jones said. “We’re only as strong as the markets we serve, and if we don’t take that moral responsibility seriously, then we’re doing ourselves a disservice.”