Old National Bancorp (ONB) is taking its Ann Arbor, Mich., entrée with a side of humble pie.

The $9.7 billion-asset company from Evansville, Ind., announced Wednesday it would enter the home of the University of Michigan with an agreement to buy United Bancorp (UBMI), but during a conference call with analysts the conversation diverted a couple of times to Old National's pending acquisition of Tower Financial (TOFC).

That was because a rival bank, First Financial Bancorp (FFBC) in Cincinnati, on Monday announced that it had hired a team of commercial and mortgage lenders from Tower. Analysts wanted to know how Old National planned to avoid the same kind of defections from United.

"We learned our lessons and obviously we are going to do things a little differently every time," Bob Jones, president and chief executive of Old National, said during the call. "Maybe we needed a little kick in the butt, too, that says don't make yourself too complacent and don't think you're better than you are and make sure you keep these revenue drivers and you keep them happy because I don't want to have to go through this again."

The loss of talent following an acquisition is common, if not expected. Lenders are often either fearful of change or see their company's sale as an opportunity to get more money elsewhere. Other players in a given market often talk about their opportunity to take advantage of the disruption caused by somebody else's acquisition. However, losing five out of Tower's six commercial lenders in Fort Wayne, Ind., could be a big blow, analysts say.

"When you are going to do a strategically attractive deal, the most important thing you have to do is make sure you're keeping the guys that touch the relationships. You keep the people," says Peyton Green, an analyst at Sterne Agee & Leach. "Runoff is anticipated, but significant runoff — and I don't know that Old National will have that — is not anticipated."

Experts say it is crucial for all dealmakers to remember that lenders and other revenue producers are among the most important assets being acquired. That has always been true in M&A but has become more important lately. As deal prices begin to inch higher, the loss of key talent could turn an already generous offer into an incredibly expensive one.

Old National's deal for the $681 million-asset Tower is priced at 171% of its tangible book value, while its deal for the $919 million-asset United is priced at a 208% of its tangible book value.

"If you lose too many lenders, the question becomes what did you really buy?" said John Rodis, an analyst at FIG Partners, speaking in general terms.

Jones didn't return calls for comment, but in the conference call he said that perhaps the key to avoiding runoff with United is the retention of top management. Todd Clark, president of United, has agreed to stay with Old National and is set to be its regional CEO. Mike Cahill, Tower's CEO, conversely, is not staying with Old National.

"Todd has committed to stay on board so that helps us a lot," Jones said in the call. "Mike made the decision not to stay, and I think that created some angst in Fort Wayne."

Jones repeatedly said he was still comfortable with the acquisition and added that the company has received several resumes and has other opportunities to replace the lending team. (Tower first disclosed the team's departure in mid-December.) Since lenders often take their relationships with them, Jones says he is working with Tower's board to call on customers.

"I've been in touch with their chair, and he is doing all he can to make sure we don't lose relationships," Jones said, adding that the company may have to duke it out. "Everyone loves a good catfight occasionally."

Jones' assurances that the Tower deal was fine despite the loss of talent didn't stop some analysts from revisiting their forecasts for that transaction. Green reduced his projected earnings per share accretion from eight cents to four cents, reflecting the loss of $100 million in loans.

"They've traditionally not had a problem retaining people. They are going to think about it a little bit more now than they have," Green says.

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