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Sunday, 04 August 2013 22:00

Old National eyes future growth in Grand Rapids market

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Phil Harbert Phil Harbert COURTESY PHOTO

Bank completes acquisition of BofA branches, names Harbert as regional president

Old National Bank’s acquisition of 20 Bank of America offices brings a new competitor into the Southwest Michigan market, one that has plans for a larger footprint.

The Evansville, Ind.-based Old National Bancorp wants to grow and eventually move into the Grand Rapids area, a market that’s four times the size of the Kalamazoo sector. The bank plans to use its newly acquired position in the market to grow its Michigan footprint.

“Our interest in Michigan is keen, and we would like to have a presence even further north,” said Dan Doan, CEO of Old National’s Central Region that now includes Michigan. “We’d love to be in that market.”

How soon Old National Bank could make another move in Michigan is uncertain. For now, the primary focus is ensuring a “very smooth” integration of the former Bank of America offices.

“That is our focus now and will be for some time,” Doan said. “It’s hard to predict what may happen.”

Old National Bank closed in mid-July on the acquisition of 24 Bank of America offices; 20 in southwest Michigan and four in northern Indiana. The Michigan offices are in Adrian, Battle Creek, Benton Harbor, Blissfield, Brooklyn, Constantine, Jackson, Kalamazoo, Niles, Paw Paw, Portage and St. Joseph.

The 24 locations combined have about $575 million in deposits, much of which is through branches in the Kalamazoo-Portage area. The portfolio also included $5 million in loans.

Old National named Phil Harbert as president of the Michigan market. Harbert, a long-time local banker, previously spent 28 years with 1st Source Bank, which is headquartered in South Bend, Ind. He most recently was president of the Kalamazoo-area market for 1st Source for seven years.

President and CEO Bob Jones said he’s “absolutely thrilled” to have landed a veteran banker who is “well-connected in the market and has hit the ground running.” Harbert is presently recruiting to fill two commercial loan officer positions, two investment advisers, a wealth management adviser and a mortgage originator, Jones said.

“We’re very encouraged with Phil,” Jones said last week in a conference call with brokerage analysts to discuss Old National’s second quarter results. “We couldn’t have gone in a computer and designed a better person to be our leader in the Michigan market.”

The deal for Bank of America offices reflects Old National’s continued reach into “stronger markets with more economic activity” in its four-state footprint, Jones said. As part of that strategy, the bank is also presently consolidating 18 offices in Indiana in the third quarter.

“We’re very encouraged by our growth prospects” in Michigan and northern Indiana, Jones said. He noted that Old National is seeking to make additional acquisitions in Michigan and across its entire footprint.

“Our M&A pipeline remains very favorable,” Jones said.

Overall, with the Bank of America acquisitions, Old National Bank presently has nearly 190 offices in Indiana, Illinois, Kentucky and Michigan with assets of $9.7 billion. The bank last week reported net income of $28.5 million for the second quarter, versus $27.2 million a year earlier.

In the Kalamazoo area, the acquisition of the former Bank of America offices immediately positions Old National as the third-largest bank in the market in terms of deposits.

As of a year ago, Bank of America held a 9.33 percent share, or $311.7 million, of the $3.34 billion Kalamazoo-Portage area deposit market, according to the 2012 FDIC Summary of Deposits. PNC Bank leads the market with a 23.03 percent share, or $769.5 million. Fifth Third Bank was second at $758.6 billion, or a 22.71 percent market share.

In its home market in Evansville, Old National ranked as the top bank in 2012 with a 32.2 percent deposit market share, just ahead of Fifth Third’s 27.88 percent, according to the FDIC. Old National is also the fourth-largest bank in Indiana, behind JPMorgan Chase, PNC and Fifth Third.

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