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Sunday, 03 August 2014 22:00

Founders Bank acquisition to provide Old National a platform for growth in West Michigan

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The planned acquisition of Founders Bank & Trust gives Old National Bancorp a solid footing in the Grand Rapids-area market to pursue new business.

The $88.2 million cash-and-stock transaction, expected to close in the first half of 2015 pending regulatory approval and the endorsement of Founder’s shareholders, follows the Evansville, Ind.-based Old National’s strategy of pursuing acquisitions in the Midwest to expand into higher growth, larger markets. The deal for the Grand Rapids-based Founders Financial Corp. comes after two prior transactions in Michigan for Old National.

In acquiring the privately held Founders Bank & Trust, Old National (Nasdaq: ONB) gains entry to what CEO Bob Jones considers as a “very strong” market with a bank that has “a lot of good upside.” He cited Founders’ strong management team that put up 78 profitable quarters and will remain intact with a considerably larger commercial lending limit.

“This is a perfect complement to our Michigan strategy. It completes the foundation from which we can build our franchise in Michigan,” Jones said. “We’re going to be opportunistic in looking for ways to grow up here.”

In a conference call, Jones noted that a number of Old National executives once worked for the former Old Kent Bank. He sees Old National carving out a role in the Grand Rapids market that mirrors Old Kent’s prior to its sale to Fifth Third Bancorp more than a decade ago.

“We think Grand Rapids is a great market,” Jones said. “There’s a lot of opportunity for us to come in and kind of replicate what Old Kent did.”

Old National has offices in Indiana, Michigan, Kentucky and Illinois and more than $10.4 billion in assets.

The bank entered Michigan a year ago by buying 20 former Bank of America offices in the southern Lower Peninsula. In a subsequent deal, Old National closed last week on the $173.1 million acquisition of United Bancorp in Ann Arbor, doubling its presence in Michigan to 36 offices.

The 23-year-old Founders Bank & Trust, with four offices in Kent County, had $465.5 million in assets and $378 million in loans as of June 30.

Old National over time wants to add offices in the market, although planning for that won’t come until after the deal closes, said Jim Ryan, executive vice president of corporate development at Old National. The immediate focus is on executing the merger, he said.

“We have a lot of work to do, but as soon as we get through that work, we’ll be focusing in on how do we add more offices and more products and services” in Grand Rapids, such as insurance and wealth management, Ryan said.

The deal came together after Founders Bank came across “quite a few banks’ radar” and received increased interest about selling, President and CEO Laurie Beard said. Directors decided to hold a competitive bidding process that was won by Old National, which retains decision-making with executives at the local level and has “values, culture and vision perfectly aligned with Founder’s Bank,” she said.

“It was a great fit all the way around,” Beard said. “We couldn’t imagine a better partner.”

Beard emphasized that after the merger, Founders “is not going to change the way we do business.”

“They want to do what we’ve been doing, just do more of it,” she said.

Read 3009 times Last modified on Sunday, 03 August 2014 15:30

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