Mid Am Inc., said plans for its first significant nonbank acquisition are just the beginning of a strategy to diversify its business.
"It's pretty apparent that the industry is undergoing some rapid consolidation," said W. Granger Souder, Mid Am's senior vice president and general counsel. "Banks in the past have been able to rely on core lending and deposit taking. We've found that there's fantastic opportunities outside these core areas."
The Bowling Green, Ohio, company last week announced a definitive agreement to acquire International Credit Service, Toledo, Ohio, and its affiliate, CCB Services Inc., St. Petersburg, Fla.
The $6.4 million deal will snare companies specializing in check collection, check verification and credit card and commercial collection services.
Mid Am, which has $1.9 billion in assets, already is an aggressive acquirer of banks; two pending acquisitions will increase assets to about $2.5 billion.
However, the company is pursuing actively additional related nonbank businesses, such as finance, insurance or venture capital companies, Mr. Souder said.
"What some banks are trying to do is differentiate themselves by looking at synergistic lines of business," said Michael P. Durante, an analyst with McDonald & Co. Securities Inc., Cleveland. "It is a good strategy to diversify your earnings stream."
With its latest plans, Mid Am is going after a more fragmented industry that's less competitive, he said.
The main risk of nonbank businesses, according to Mr. Souder, is: "You're getting into a business line that you don't know anything about. That's why they seek companies with good management that will stick around."
Because both credit companies operate nationwide, Mid Am won't have the challenge of entering specific new markets.
Under the terms of the International Credit Service agreement, Mid Am will issue 400,000 shares of its common stock to International Credit Service's closely held ownership group, adjusted for stock dividends or splits declared and paid prior to closing.
The acquisition is expected to be completed in November 1994 subject to regulatory approvals, and is expected to have a slightly accretive effect on earnings per share this year and in the future.
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