Investors wanting a stake in Old National Bancorp can now write a check to the banking company rather than a broker.
Old National, Evansville, Ind., on April 17 started a stock purchase plan by which investors can buy up to $50,000 of stock a year directly from the bank.
There are a variety of goals for the program, not the least of which is to widen the $5.4 billion-asset bank's shareholder base to make it a more difficult takeover candidate, said John C. Claybon, vice president of investments and investor relations.
"Old National always has been very committed to maintaining a broad shareholder base," Mr. Claybon said. "By having a broad ownership of a company you don't have a single shareholder that controls your destiny."
Old National is the type of middle-tier institution that ex-perts predict will fall to consolidation, so it's no wonder that it is trying to create more of a market for its stock.
Indeed, it fits into a national trend of small banks trying to make their stock more liquid through such strategies as buybacks or employee stock option plans. Several panels at the recent Independent Bankers Association of America convention in Phoenix were devoted to this topic.
Old National has registered $18.9 million of stock to be sold through the plan. While shares will still be available through traditional intermediaries, it is pitching the direct-purchase plan as a less expensive way of buying and selling its stock.
Currently no investor controls 5% or more of the company's outstanding shares, which total $26.8 million, Mr. Claybon said.
Through the plan, investors pony up an initial investment ranging between $500 and $5,000. Subsequent purchases must be at least $50.
Investors who can't fork over $500 immediately can enroll for as little as $50 if they let the bank deduct subsequent stock purchases from their accounts.
Jeffrey L. Davis, a banking analyst for Natcity Investments Inc. in Indianapolis, said the stock offer is a means of strengthening relationships with shareholders.
"It seems like one more step in establishing a solid shareholder base, one that isn't going to leave at the whims of the market," he said.
Noting that the stock has a low liquidity because investors tend to sit on it, Mr. Davis has given Old National a "long-term buy" rating.
Old National could use proceeds from the sale to develop its newly created finance and insurance subsidiaries, Mr. Claybon said. It also may use the money raised to repurchase shares, thus recycling the company's stock and increasing its liquidity.
