into Tennessee by announcing plans to acquire a $228 million-asset bank for $63.2 million.
The all-stock deal for Heritage Financial Services Inc. of Clarksville, Tenn., comes on the heels of Old National's announcement in late July of plans for its largest acquisition -- a $212.4 million deal for $784 million-asset ANB Corp. of Muncie, Ind.
Both deals are scheduled to close in early 2000. Combined, ANB and Heritage would push Old National's total assets to $7.9 billion.
"While it's (Heritage) a little smaller bank than we have been actively looking for, it will give us a good opportunity to get into a high-growth market," said John Poelker, Old National's chief financial officer. In recent years, he said, Clarksville has attracted more than 10 large manufacturers, including a printing company and a tile maker, to a new industrial park.
Heritage has performed strongly since its formation 10 years ago, Mr. Poelker said. The bank has generated annual loan growth between 15% and 20% and now ranks No. 3 in Clarksville market share.
The Heritage deal follows Old National's acquisition strategy of searching for solid banks within a couple hundred miles of its southwestern Indiana headquarters. Heritage will be the 40th acquisition that Old National has made since 1985.
"They don't run all over town to do deals," said Michael Moran, an analyst with Roney & Co. in Detroit. "They're opportunistic in making deals that might extend their market reach a little as with this one," he said, pointing out that Clarksville is near other Old National properties in Kentucky and Indiana.
Each Heritage share would be exchanged for 3.15 shares of Old National. Midday Friday, Old National's stock was trading at $29.875 per share, down 6.25 cents since Thursday's close.
Heritage's stock is unlisted. The deal values Heritage at 3.75 times its book value.