Curtain to fall on local lender: Acquisition of Indiana Bank & Trust set to wrap up
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Indiana Bank & Trust Co. branches will close Friday for the last time — and reopen as Old National Bank branches Monday.
Columbus-based IBT’s parent company, Indiana Community Bancorp, is being bought by Evansville-based Old National Bancorp. The companies reported in Securities and Exchange Commission filings that they have received regulatory approvals and expect the deal to be completed Friday.
IBT also said its shareholders will pocket a slightly bigger gain from the acquisition than previously announced: 1.9455 shares of Old National for each share of ICB they own, up 0.0455 shares.
Shares of ICB closed at $26.27 on Wednesday. Old National’s ended the day at $13.56.
ICB Chief Executive Officer John Keach said Wednesday his corporation in the past few months has focused on improving that ratio by trying to meet certain benchmarks related to a pool of loans Old National had said would not comply with its standards.
Keach said Old National essentially said if ICB got those loans off its books or improved their creditworthiness — for example by securing additional collateral — ICB shareholders would receive more compensation in the acquisition.
In some cases ICB discounted loans to get them off the books, Keach said. Discounting involved letting borrowers pay less on their loan than they owed. To get a $20 million loan off the books, for example, ICB could have told the borrower to pay back $19 million.
Getting rid of the loan meant more Old National shares for ICB shareholders — but the discounting also meant that ICB took a hit to its earnings.
“That’s why our earnings in the last six months have reflected these losses,” Keach said.
The corporation posted losses of $8.4 million in the first two quarters of the year.
Old National spokeswoman Kathy Schoettlin said, on Monday, Indiana Bank & Trust customers already will have received ATM and ATM debit cards and will be able to use the same pin numbers.
Most of the changes affecting consumers should happen automatically. If consumers have questions, they can call (888) 455-6420.
Schoettlin said most of the branch employees will remain with Old National.
Keach said he has a contract to stay with Old National for two years.
Mark Foster, chief investment officer of Columbus-based financial investment advisory firm Kirr, Marbach & Co., said the difficult part for Old National — systems integration, customer retention — has yet to be completed.
“The key will be how smoothly and seamlessly the transition takes place,” he said.
“(Old National) had done a number of acquisitions, so they should be pretty good at communication and making customers feel good about the ownership change,” Foster said. “Old National is a well-capitalized bank that is looking to grow its footprint in the state of Indiana, and I would expect they will seek to make additional acquisitions in the future.”
Old National, with about $9 billion in assets, is the largest financial services holding company based in Indiana. Indiana Community Bancorp has assets of about $1 billion.
The acquisition of ICB, following the failure of Irwin Union Bank in 2009, marks the end of Columbus-based banks.
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