Old Kent Mortgage of Grand Rapids, Mich., a top Midwest originator, has put about 95 branches up for sale in preparation for its parent company's acquisition by Fifth Third Bancorp of Cincinnati.
The aim is to reduce the Old Kent unit's 32-state footprint to five midwestern states and to create a post-merger fleet of full-service branches.
The move - first reported on the Web site of National Mortgage News (an American Banker affiliate owned by Thomson Financial Media) - is intended to align the mortgage lender with the full-service strategy and midwestern focus of Fifth Third.
Though the branches are apparently for sale, an Old Kent spokeswoman said, "We are exploring all possible strategic alternatives for the offices in the 27 states that are outside our footprint defined with Fifth Third."
Fifth Third's strategy is to have face-to-face relationships with consumers and to operate full-service offices, offering customers products such as checking accounts and certificates of deposit in addition to mortgages, said the Old Kent spokeswoman. The Old Kent offices for sale offer only mortgages, she said. Old Kent now has about 140 mortgage-only brick-and-mortar branches.
After the acquisition of Old Kent Financial Corp., Fifth Third would operate in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, and Arizona, a Fifth Third spokeswoman said.
Fifth Third wants to have full-service branches to capitalize on cross-selling opportunities, the spokeswoman said.
According to Mortgage Industry Sourcebook, published by National Mortgage News, Old Kent was the 25th-biggest mortgage originator in 1999, with $12.2 billion of volume. Fifth Third was ranked 45th, with $4.8 billion.
The proposed merger has drawn fire from the consumer advocacy group Inner City Press/Community on the Move, which in January filed a protest with the Federal Reserve Board.
The 10-page protest claimed that Fifth Third disproportionately denied normal-rate credit to minority borrowers and that Old Kent targets high-interest loans at "the same communities and groups excluded by Fifth Third."
Inner City Press officials said that the merger proposal violates numerous antitrust precedents and would raise prices for consumers.
Fifth Third has reached a "definitive agreement" to buy Old Kent Financial but has not yet received regulatory or shareholder approval to do so. Nonetheless, the deal is expected to close by late spring, the Fifth Third spokeswoman said.
