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Sunday, 02 August 2015 22:00

Old National could add to GR presence in 12-18 months via M&A, expansion

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Bob Jones, Old National President and CEO. Bob Jones, Old National President and CEO. COURTESY PHOTO

After establishing a solid presence in the West Michigan market through acquisitions, Old National Bancorp Inc. wants to further build its franchise.

Expansion could come through additional acquisitions or new branch development — or a combination of the two — in the Grand Rapids, Kalamazoo and Ann Arbor areas as the Evansville, Ind.-based bank seeks to build on its entry into the Michigan market two years ago.

“We have built a foundation for the house we want to build in Michigan, but we still have a lot of room to build,” Old National President and CEO Bob Jones said in an interview with MiBiz during a recent visit to Grand Rapids.

“We clearly need to make some investments in the market in terms of new locations and expanding our distribution,” Jones said. “We’re in the three markets that we wanted to be in to begin with. Clearly, we’d like to be larger in all of those markets and we’d like to have more distribution, but it has to be done the right way.”

Old National (Nasdaq: ONB) first entered the Michigan market in mid-2013 with the acquisition of 24 former Bank of America offices, 20 of which are in Southwestern Michigan, and a $173.1-million deal for United Bancorp in Ann Arbor. The bank then moved into the Grand Rapids-area market this year with the $91.7 million acquisition of Founders Financial Corp. on Jan. 1. The two banks completed their integration at the end of April.

The deals in Michigan followed Old National’s strategy of using acquisitions in the last few years to transition its footprint from primarily rural, low-growth markets to mid-sized urban areas with higher growth potential.

Additional acquisitions in Michigan, a market that has seen a number of deals since 2013, could occur “if we get the right fit,” Jones said. Further moves in the Grand Rapids-area market, either through M&A or new branch development, could come as soon as a year to 18 months, he said.

Old National has nearly 200 offices across West Michigan, Indiana, southeastern Illinois and western Kentucky with total assets of more than $12.07 billion at the end of the second quarter. The corporation last week reported quarterly net income of $26.1 million, which compares to $18.8 million a year earlier.

The bank reported $6.86 billion in loans to end the second quarter, up $120.7 million from the first quarter. Of the new loans, $22.7 million came from the Kalamazoo market.

At the time of the merger, Founders Bank & Trust had total assets of $459.7 million and total deposits of $376.0 million, according to a financial report filed with the FDIC. The bank reported net income of $5.0 million for 2014.

Old National views the Grand Rapids area as a “growth market.” Since the merger with Founders, the bank has recorded what Jones calls an “unbelievable” volume in mortgage lending.

“So for us, this is an area that we look for very strong growth,” Jones said. “It’s an area where we’re going to continue investing.”

The latest move came in mid-July with the expansion of Old National’s capital markets bob jonesteam in Michigan. Martha Richardson and Chip Windisch — both formerly of InSite Capital LLC, a unit of The Bank of Holland that Chemical Financial Corp. acquired on June 1 in a $187.4 million deal — specialize in tax credits and incentive-based financing for community development projects.

Richardson joined Old National as senior vice president of capital markets and has more than 30 years of experience in commercial real estate, banking and development. Windisch joined the bank as vice president of capital markets.

The addition of the two new hires to cover the whole state provides the Michigan franchise of Old National with expertise in a new service area that became possible with the merger, said Laurie Beard, the former CEO of Founders Financial who now leads the Old National’s Grand Rapids market as regional president.

The merger also gave Founders Bank & Trust the ability to do larger deals, Beard said. Founders had an in-house commercial lending limit of $5 million. Old National has an in-house limit of $30 million.
In the initial months following the merger, the bank has begun to get a look at deals that it previously could not pursue with larger prospective commercial borrowers, although small business lending remains the primary focus and the source of most activity, Beard said.

“We’re getting looks at $15 million, $20 million deals that we never, ever would have been able to (before),” Beard said. “To do that in-house and be able to have looks and be invited into deals like that is a tremendous opportunity and one that we’re running with. As Old National Bank, we have a great opportunity to have a real strong presence here. We want to dominate the community banking market, and there’s no reason why that won’t happen.

“The future is extremely bright.”

Since the merger and despite “some bumps in the road,” Old National has retained a “vast majority” of the clients from Founders Bank & Trust and has avoided the kind of staff defections that can occur when a community bank gets acquired by a larger institution, Jones said.

“The fact that you can retain the vast, vast majority of your people plays well into being able to keep your clients because whenever you have a merger, there’s always people looking to steal your folks,” he said. “We’ve done a very good job retaining our people.”

Read 2577 times Last modified on Sunday, 09 August 2015 09:40

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