BANKING & FINANCE: ‘High-powered’ Fifth Third to acquire Old Kent Bank
TRAVERSE CITY – Old Kent signage goes. Staff says.
That’s basically how the merger between Fifth Third Bancorp and Old Kent of Grand Rapids will impact Old Kent’s northwestern Michigan branches in Traverse City, Elk Rapids, Interlochen, Glen Arbor, Suttons Bay and Kingsley.
Old Kent Bank president John Pelizzari said he doesn’t expect any personnel changes when the merger becomes official in about six months.
“Over the years many of our backroom functions have been consolidated downstate, so there’s not much left to consolidate,” he said, adding that he, too, expects to keep his job.
On Nov. 20, the banks announced they had signed a definitive agreement to merge. Traverse City will become one of Fifth Third’s main Michigan banks, in addition to Grand Rapids and Detroit. That, Pelizzari says, makes quite a statement.
“What it shows is a great commitment to the market–and our place in the market,” he said.
As for products and services, those will be essentially the same, he said. But technologically speaking, Old Kent customers can expect a greater focus on the dot-com end of business.
“For those of our customers who are more technology-oriented, you’ll probably see technology platforms for Internet services, because (Fifth Third is) bigger and has greater access to technology,” Pelizzari said. What I expect to see happen is a product array that will improve, especially the technology base.”
Old Kent is a financial holding company with a 41-year history of consecutive annual increases in earnings per share and dividends. With assets of $22.5 billion, it operates over 300 banking offices in Michigan, Illinois and Indiana, as well as Old Kent Mortgage Co.
The combined company will have $69.1 billion in assets, $43.8 billion in deposits and over 980 banking locations, primarily in Ohio, Kentucky, Indiana, Michigan and Illinois. Fifth Third will become the second-largest banking franchise, based on deposits, in these Midwestern states.
“Old Kent’s financial strength, stable credit quality and concentration in attractive Midwestern cities provides the best platform for us to proceed with our Michigan and Chicago expansion strategies,” said Fifth Third President & CEO George Schaefer Jr. “Having successfully completed the integration of CNB Bancshares earlier this year, in August we announced our intent to acquire Ottawa Financial Corp. in Holland. The Old Kent and Ottawa transactions are consistent with our steady growth pattern and position us for continued growth and service to Chicago and Michigan-area customers.”
Fifth Third will exchange, on a tax-free basis, 0.74 shares of its common stock for each share of Old Kent common stock. Based on Fifth Third’s Nov. 17 closing price of $48.06, the transaction is valued at approximately $4.9 billion.
“Fifth Third has a tremendous reputation for customer service. They’re a high-powered bank,” Pelizzari concluded. BN