Two Midwestern banks announced separate acquisitions Friday to expand their footholds in key markets.

In the larger of the two deals, Old National Bancorp of Evansville, Ind., said it would acquire ANB Corp. of Muncie, Ind., in a $212.4 million stock swap.

The merger would create Indiana's largest banking company, with $7.7 billion of assets and 143 branches. Old National also operates nearly 50 branches in Illinois and Kentucky.

In the other deal, Old Kent Financial Corp. of Grand Rapids, Mich., announced it was buying Merchants Bancorp in Aurora, Ill., for $189 million in stock. Both deals are expected to close early next year.

The acquisition would boost Old Kent's assets to nearly $18 billion and comes on the heels of the company's July 9 purchase of $900 million-asset CFSB Bancorp in Lansing, Mich.

The company also has another pending acquisition of Pinnacle Banc Group Inc., a $1 billion-asset company based in Oak Brook, Ill.

"They should change their name from Old Kent to Clark Kent because this company is really just Superman in disguise," said Anthony Polini, an analyst with Advest Group Inc. in New York.

"This is just another fantastic deal that they should be able to derive real benefits from."

Combined with its other holdings in the Chicago area, this deal for Merchants would improve Old Kent's deposit share to sixth in the state.

Old Kent also expects annual pre-cost tax savings of $9 million, which is about 30% of Merchants' expense base.

"That's well in line with what they can achieve in the Illinois market given their other acquisitions there," said Michael Moran, an analyst with Roney & Co. in Detroit.

Mr. Moran said he expects his company to increase Old Kent's per-share earnings estimates by as much as 5 cents in 2000, from its current $2.55 per share.

Mr. Polini anticipated that his company would raise its 2000 earnings estimate by "a few pennies" from the current $2.57 per share.

Merchants Bancorp has $921 million of assets. Old Kent has $17 billion of assets and operates 246 banking offices in Michigan, Illinois, and Indiana.

Old National's deal for ANB comes just weeks after its longtime Evansville rival, CNB Bancshares, said it was selling to Fifth Third Bancorp of Cincinnati for $2.1 billion.

CNB is currently the largest banking company based in the Hoosier State.

"CNB was a tough competitor," said Ann Burnworth, assistant vice president of $7 billion-asset Old National. "We expect Fifth Third to be just as good, if not a tougher competitor."

Analysts acknowledged that Fifth Third's move into the market played a role in spurring Old National's move. Fifth Third has made no secret of its plans to get even larger in Indiana.

"Fifth Third is looking to gobble up a lot of market share in Indiana," Mr. Moran said.

Old National expects to generate cost savings that will be 20% of ANB's projected operating expenses in 2000. William Batcheller, director for research for NatCity Investments in Cleveland, called that estimate "conservative."

"Old National has had a good record on integration after acquisitions," Mr. Batcheller said. "Clearly this is a friendly transaction and the ANB management will be helping with the transition. Plus it's in-state and that will set the stage for helping them retain customers."

Old National chairman Jim Risinger said, "We expect ANB to join us without a hitch, just as 38 other financial institutions have done since we embarked on the merger trail in 1985."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.