Old National Bancorp (ONB) of Evansville, Ind., is taking advantage of Bank of America's cost-cutting efforts by snapping up some of the megabank's unwanted branches.
The parent company of Old National Bank announced Wednesday that it has reached an agreement to buy 24 Bank of America (BAC) branches in northern Indiana and southwest Michigan. This deal would be the first foray into Michigan for the $9.4 billion-asset Old National, which lends in Indiana, Illinois and Kentucky.
Old National would acquire $778.8 million in deposits and $7.7 million in small-business loan balances. It expects the deal to close in the third quarter, pending approval by the Office of the Comptroller of the Currency.
Old National has agreed to pay a deposit premium of 2.94% for the branches, Chief Executive Bob Jones told American Banker. He called it "a very fair premium when considering the market in the Midwest and the quality of the markets we're moving into."
There is no external financing in the deal, the capital requirements are minimal, and there will be no job losses, Jones said.
Four of the branches are in the Indiana cities of South Bend and Elkhart, while the twenty branches in Michigan are clustered near Kalamazoo, Battle Creek, Jackson and St. Joseph.
"We have talked about going into southwest Michigan for a while. We think the demographic profile and the economy look very similar to Indiana," Jones said. "We think our model is going to work very well in these markets."
With this sale, Bank of America continues to pare down its nationwide network of branches. B of A unloaded 21 branches in Maine and Iowa last year, and before Wednesday it had deals in place to sell an additional 38. The buyers in all the deals are community banks.