Buying an Amcore Financial Inc. unit will give West Bancorp. Inc. of Des Moines an opportunity to diversify its institutional asset management offerings, West’s chief executive says.
Investors Management Group’s expertise in fixed-income investments will complement the equity expertise of West’s own VMF Capital, Thomas Stanberry said last week.
The deal was announced Oct. 24; the financial terms were not disclosed.
West Bancorp., which has assets of $1.22 billion, owns West Bank, which has 11 branches, all in Iowa. Amcore, which is based in Rockford, Ill., has $9.9 billion of assets and owns Amcore Bank.
Investors Management Group, based in West Des Moines, runs more than $3.8 billion in public pooled funds for municipalities in Iowa and elsewhere in the Midwest. (Public pooled funds are assets that government units have collected but not spent.) Its 29 employees also run Amcore’s $1.1 billion bond portfolio as well as a group of proprietary mutual funds, called the Vintage funds, with about $500 million of assets.
VMF, based in Cedar Rapids, Iowa, has about 25 employees and manages $900 million of assets. It specializes in domestic equity and provides portfolio management services to individuals, retirement plans, corporations, foundations, and endowments.
“We had been looking at building our fixed-income capabilities since we acquired VMF” in 2003, said Mr. Stanberry, who is also West Bancorp.’s president. Branching out into institutional asset management made sense for West because most its customers are commercial, he said.
“This was a financial solution that most of our customers had been asking for,” Mr. Stanberry said. “It’s an opportunity to expand our bank business and our money-management business.
The deal with Amcore is to close late this quarter. The company would become a West Bancorp. subsidiary.
Before buying VMF, West was a traditional community banking company; it generated most of its income from interest, Mr. Stanberry said. Buying VMF diversified the revenue stream by providing fee-based income, he said, and the pending deal will further diversify it.
West will consider any additional wealth management-related acquisition opportunities in West Bank’s market, he said.
The company’s noninterest income totaled $2.87 million in the third quarter, 4% more than a year earlier.
Jason Werner, an analyst for Howe Barnes Investments in Chicago, said buying Investors Management Group fits West’s focus on institutional asset management.
West, which is 112 years old, never bought a bank before Mr. Stanberry took the helm, in 2003. That July it made its first bank acquisition, buying Hawkeye State Bank of Iowa City for $35 million.
Mr. Stanberry said West contacted Amcore about buying Investors in the spring, when it learned that the unit was for sale.
Amcore had decided to sell more third-party investment products. Since early 2004, Investors has shed about $600 million of assets and 20 employees, partly because Amcore decided to replace three of the Vintage mutual funds with funds managed by Federated Investors.
