Indiana bank expands West Michigan holdings with $88.2M acquisition
An Evansville, Ind. financial services holding company is continuing its expansion strategy into Michigan with the pending $88.2-million acquisition of a Grand Rapids-based banking organization.
Founders Financial Corp., the bank holding company located in Grand Rapids, and Evansville-based Old National Bancorp jointly announced the stock-and-cash transaction in which Old National will acquire Founders Financial.
Anticipated to close within the first half of 2015, the merger agreement was unanimously approved by the boards of both companies and is subject to approval by Founders’ shareholders, regulatory approvals and customary closing conditions provided in the agreement. Old National’s acquisition of Founders Financial also includes the consolidation of Founders Bank & Trust, which is its wholly owned subsidiary.
Shareholders of the Grand Rapids-based company are expected to receive 3.25 shares of Old National common stock and $38 in cash for every share of Founders stock previously owned. Based on the closing price of Old National’s common stock of $13.87 per share on July 25, the agreement is valued at $83.08 per share of Founders common stock, which is a total of approximately $88.2 million.
The overall transaction value and exchange ratio is subject to change due to fluctuations in Old National’s common stock price and adjustments outlined in the merger agreement.
Bob Jones, president and chief executive officer at Old National, said the acquisition affirms the organization’s commitment to southwestern Michigan by providing a strong presence in Grand Rapids.
“Like Founders Bank & Trust, Old National Bank is focused on exceeding client expectations and strengthening the communities we serve,” Jones said. “We look forward to continuing the legacy to both clients and community that has become the Founders trademark."
Founders was advised by Donnelly Penman & Partners and Warner Norcross & Judd LLP in the merger agreement with Old National.
The Indiana company was advised by Sandler O’Neill + Partners LP and Krieg DeVault LLP.
With the announcement of the merger agreement, Old National and Founders Financial intend to donate a shared total of $15,000 to Challenge Scholars, an initiative of the Grand Rapids Community Foundation supporting and promoting higher education for students.
Laurie Beard, president and chief executive officer of Founders Financial Corp., said the community-focused bank chose Old National due to a shared focus on highly personalized client service and a commitment to community engagement.
“I’m excited to say we have found such a partner in Old National,” Beard said. “We look forward to enhancing our commitment to the Grand Rapids market through the strength of this new combination.”
Established in 1991, Founders Financial and its subsidiary Founders Bank & Trust are valued at nearly $466 million in total assets as of June 30. The organization operates throughout Kent County with four banking centers and provides personal, business and wealth management services.
After Old National Bank closes on the Ann Arbor-based United Bancorp Inc. on July 31, the Evansville organization will have roughly 36 branches in the state of Michigan. The Indiana financial services company was founded in 1834 and has roughly $10.4 billion in total assets as of June 30. Old National has locations in Indiana, Kentucky, Illinois and Michigan.
Laurie Beard, president and chief executive officer of Founders Financial, said the Grand Rapids company is looking forward to expanding its capabilities to meet and exceed the needs of its customers with Old National as a new partner.
“Of all the banks that were interested in partnering with us, their culture and values were clearly better aligned than anyone else, and we feel very strongly that we share the same customer focus and community focus, which has always been our big strength,” Beard said. “They have the same sense of community, and we will be able to do more support for the community in the coming years. A very proud day, a very exciting day. We’re looking forward to the future and very much looking forward to introducing Old National into the Grand Rapids market.”
As the two financial companies merge, there are no restructuring plans in terms of leadership or employee positions, according to Beard. As current president and CEO of Founders, Beard will assume the role of region president for Old National.
“As we move forward, we will determine other possible personnel situations, but for now, there will be no restructuring,” Beard said. “We will maintain the same branches, and if anything, we'll look to possibly expand in the future.”
Bob Jones, president and chief executive officer of Old National, said the financial services company has been interested in expanding further in West Michigan for some time and felt the two companies were strategically aligned in terms of cultures and people.
“Systems and balance sheets can all come together very easily, but what you really look for is if you can take similar cultures, great people and make one plus one equal three,” Jones said. “We are looking to help Laurie and her team grow, to continue to do things that they have been doing, maybe give them some new products, a larger balance sheet and the ability to really do some great things in the marketplace.
“West Michigan is such a vibrant, growing part of Michigan and really the Midwest. It is just an exciting day for all of us, and we are just very proud and humbled to be partnering with Laurie and her team. We really view this as a partnership. It is taking all the great things Laurie and her team have done, and our job is to support that and continue to let the things get even better here in West Michigan.”