With two pending deals in the Chicago market, Old Kent Financial Corp. is fast becoming a player in the Midwest's largest city.
In an interview Tuesday, chairman and chief executive officer David J. Wagner said the company plans to add to its holdings there.
"Chicago is relatively unconsolidated below the largest companies," he said. "That always represents an opportunity for a regional holding company."
If its deals for Oak Brook-based Pinnacle Banc Group and Aurora-based Merchants Bancorp close by early next year as expected, $15.9 billion-asset Old Kent would have about 50 branches in the Chicago area.
The Grand Rapids, Mich.-based company would also move from being the eight-largest bank in the market to No. 5, trailing Bank One Corp., ABN Amro Holding's LaSalle National Corp., Bank of Montreal's Harris Bankcorp, and Northern Trust Co.
Old Kent would have 2.65% of the Chicago market's deposits, according to Howe Barnes Investments of Chicago.
Mr. Wagner said he is not in a race to overtake Chicago's market leaders. Old Kent would have to double its deposits in Chicago to surpass Northern Trust.
"You can have literally hundreds of distribution points and still not be particularly strong in some areas," Mr. Wagner said. "Because of the size of the metro area, you try to become a factor in sub-markets."
Old Kent has been buying companies with branches primarily in the western and southwestern suburbs.
The Merchants deal, which was announced Friday and valued at $158 million, would give Old Kent a dozen branches in Kane County, one of the fastest-growing counties west of Chicago. The Pinnacle deal, which is scheduled to close next month, would give Old Kent 10 new locations in Chicago's Cook County and a handful of branches in west suburban Kane, DuPage, and McHenry counties.
Analysts said they approve of Old Kent's expansion strategy.
"They're not trying to be all things to all people," said Christopher Bamman, a bank analyst with Advest Group Inc. "They have a niche clientele that they like to go after, primarily the middle market."
"They're stringing together some strong community banks without overpaying," said Michael M. Moran, a bank analyst at Roney & Co. in Detroit.
If Old Kent wanted to build on its presence in the western suburbs, Clarendon Hills, Ill.-based MAF Bancorp or Old Second Bancorp of Aurora would be good choices, said Daniel Cardenas, an analyst with Howe Barnes.
Other analysts said they hope Old Kent is scouting for deals on Chicago's North Side and in the northern suburbs where its presence is somewhat sparse.
Bradley S. VanderPloeg of Everen Securities in Chicago said Lake Forest, Ill.-based Wintrust Financial would be a good fit for Old Kent. The $1.4 billion-asset company caters to high-income customers who live in the tony north Chicago suburbs.
Wintrust may be vulnerable to a takeover, Mr. VanderPloeg said. Its stock was trading Tuesday at a weak 11 times projected earnings for 2000. Shares in Old Kent, meanwhile, were trading at about 16.5 times next year's projected earnings.
Wintrust would be "very affordable," he said.
