Premier Financial Corp. of Wauconda, Ill., for $394 million of stock.

The deal, whose price equals 2.12 times Grand Premier's book value, would consolidate Old Kent's fifth-place position in Chicago-area deposits. Its Illinois rank would rise one notch, to No. 5.

"This will augment Old Kent's growing presence in Chicagoland, enabling the corporation to broaden its customer service capabilities through additional locations and achieve greater economies of scale," said David J. Wagner, chairman and chief executive officer.

In the past year the Grand Rapids, Mich.-based company has struck one other deal and closed two in the Chicago area. As of June 30, Grand Premier had assets of $1.6 billion and Old Kent $15.9 billion.

"This acquisition is in line with Kent's strategy of cobbling together a good franchise" in suburban Chicago, said Jason Goldberg, a bank analyst at Salomon Smith Barney. "The Chicago area is pretty fragmented, with smaller community banks outside Chicago. That's where you want to be as an entry."

Old Kent's previous acquisitions were companies with branches primarily in the western and southwestern suburbs. With its deal for Grand Premier, Old Kent would expand into the northern suburbs too, including Niles, Northbrook, and Waukegan. "This fills in a geographical gap," said Albert Potas, Old Kent's head of investor relations.

The $394 million price tag for Grand Premier is reasonable, analysts said. The sum is in line with recent transactions of similar size, Mr. Goldberg said.

Old Kent expects to complete the transaction early next year and said it believes the purchase would add to earnings in 2000. Old Kent anticipates $30 million of one-time merger-related charges.

The company said it expects annual pre-tax cost savings of $15 million, or about 30% of Grand Premier's expense base.

The merger is structured as a pooling of interests. Grand Premier stockholders will receive 0.4231 share of Old Kent for each Grand Premier share.

On Friday, Old Kent stock closed down 43.75 cents to $38.9375, while Grand Premier shares ended the day at $15.75, up 75 cents.

Analysts said Grand Premier is a well-run bank and that its strength in corporate lending balances the retail focus of Old Kent's prior two Illinois transactions: Pinnacle Banc Group of Oak Brook and Merchants Bancorp of Aurora.

"They're buying a good company," said Joseph Roberto of Keefe, Bruyette & Woods Inc. "They (Old Kent) aren't fixer-uppers."

Old Kent focuses on providing multiple services to all kinds of individual customers and serving small and medium-size companies on the business side. "That strategy has served us very well over the years," said Mr. Potas.

In July, Old Kent agreed to buy Merchants Bancorp for about $188 million. Earlier this month, it completed its purchase of Pinnacle Banc for $235 million.

Old Kent may buy more banks in the Chicago area, Mr. Potas said. "We would love to have the opportunity to consider expanding more around Chicago," he said.

After its mergers close, Old Kent will have 79 branches in the Chicago area, with only five of them in Chicago itself. Analysts said the company is wise to focus on the suburbs. That strategy allows Old Kent to sidestep its bigger Chicago-based competitors. And "these suburbs are booming, with new houses and stores opening," said Mr. Goldberg.

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