Old National Bank continues to make acquisitions to expand in the Michigan market

Old National Bank is looking to expand its presence in Michigan, most likely through acquisitions.

More than a decade after entering the market, Evansville, Indiana-based Old National Bank is now looking to create greater scale and density in the state, according to President and CEO Jim Ryan.

“My long-term vision is really to have a much larger statewide presence, at least in the Lower Peninsula, and that will likely have to be done through inorganic means, so probably through acquisition in the future” Ryan he told Crain’s in an exclusive interview.

“I really think there are more opportunities for us there. “We are always looking for a great partner, especially in Michigan,” he said. “Michigan is one of those areas, and after talking to our investors, I feel like we’re just scratching the surface of what we could potentially do there.”

Stay up to date on all things West Michigan business. Sign up for our free newsletters today.

Old National Bank currently has 23 offices in Michigan and approximately $1.9 billion in deposits.

Ryan has some knowledge of the Michigan market. He is a Michigan native and graduate of Grand Valley State University who once worked at the former Old Kent Bank in Grand Rapids before moving to Old National.

“I still consider Michigan home,” he said.

Chasing a partner

Old National entered the Michigan market with the 2013 acquisition of a dozen Bank of America branches in southern and southwestern Michigan. A year later, the bank took control United Bancorp Inc. in Ann Arbor, and then in 2015 purchased the former Founders Bank in Grand Rapids.

Since then, Old National intended to expand its presence in Michigan through another acquisition, but the deal never came to fruition.

““It’s been pretty quiet since then, and we’ve been able to hire a lot of talent and grow organically, which has been great, but we’ve never found a large-scale partner to really bring a much larger presence to Grand Rapids or Michigan overall,” Ryan said.

More recently, Old National Bank entered the Detroit-area market a year ago, opening a commercial banking office in suburban Troy that now employs 10 people hired last year.

“Detroit is becoming a bit of a talent hub for us,” Ryan said. “We’ve been able to locate talent there that can actually support our entire footprint. This is a good opportunity for us.”

He said the Troy office could eventually be converted into a full-service location for Old National.

In Grand Rapids, Old National this spring hired Mike Chaffin as West Michigan market president and will oversee commercial banking throughout the region. Chaffin assumed the position after nearly 12 years with Fifth Third Bank, most recently as senior commercial director and senior vice president in Grand Rapids.

I’m looking for height

Ryan said Old National could grow with additional new office expansion, although it will take longer to achieve growth goals.

“There is always a trade-off between ‘build and buy,’ and we will continue to look for opportunities to build, (but) it is a little slower and takes a little more time,” he said. “If there are also partnerships, we can develop faster that way. This is truly a textbook.”

Old National Bank has 260 offices in seven Midwestern states: Indiana, Illinois, Minnesota, Wisconsin, Iowa, Kentucky and Michigan. At the end of the first quarter, parent Old National Bancorp (Nasdaq: ONB) had total assets of $49.5 billion, total deposits of $37.6 billion and total loans of $33.6 billion.

According to the FDIC’s Annual Deposit Summary as of June 30, 2023, Old National was ranked 17th out of 103 banks in Michigan with a 0.6% statewide deposit market share.

Striving for growth in Michigan, Ryan said Old National intends to initially focus on Grands Rapids, Kalamazoo and Detroit, where the bank already has an established presence.

“Our main focus is the lower half of the state,” he said. “I really think about branch networks, and we need greater scale and density. Scale and density are important in our business, so it makes sense to focus on where we are already and then build further.”

Bank offers are slow

Over the last few years, bank foreclosures have declined across the United States. The latest merger is proposed In April, a $510.3 million deal was announced in which Rosemont, Ill.-based Wintrust Financial (Nasdaq: WTFC) plans to acquire Macatawa Bank Corp. based in the Netherlands (Nasdaq: MCBC). The merger is expected to close in the second half of the year, pending regulatory and shareholder approval.

According to an annual M&A survey conducted by industry publication Bank Director’s, just 9% of respondents said their bank was “very likely” to make an acquisition by the end of 2024, while another 26% said it was “somewhat likely.” More than four in 10 executives surveyed said their bank would be “very unlikely” to acquire another bank.

More than half said the board and management are open to selling within the next five years if the price is right. Of the banks that would consider selling, almost two-thirds said a regional bank was their preferred buyer.

Ryan said that as Old National surveys the landscape for potential partners in Michigan, patience will be key.

“ The bank turns 190 this year, so we think very strongly about long-term investments in people, long-term investments and partnerships. So I’m patient,” he said. “Even if we don’t find the right partner, we will continue to build and invest in Michigan.”

More about Crain’s Grand Rapids business:

State health official praises Grand Rapids mental health crisis unit as ‘great model’

A logistics company is moving its headquarters to the former Kalamazoo County Road Commission site

A new company will help homeowners in Grand Rapids and Traverse City build additional housing units