Old National buying Indiana Community for $79M

Old National Bancorp. agreed to acquire Columbus-based Indiana Community Bancorp. for $79.2 million in stock, the companies announced Wednesday morning.

Evansville-based Old National will absorb the 20 branch locations Indiana Community operates, including three on the southern edge of Indianapolis. The company, which operates under the name Indiana Bank & Trust, has nearly $985 million in assets.

Indiana Community was hit last year by some sour Indianapolis real estate investments, which forced it to set aside $14.1 million for loan losses in its third quarter, compared with just $1.6 million in the same quarter the year before. The bank lost $5.8 million in the quarter.

Old National is the largest bank headquartered in Indiana, with $8.9 billion in assets and more than 180 branches. The acquisition of Indiana Community, which still requires the approval of shareholders and state and federal regulators, would help it broaden its geographic reach.

"It also allows Old National to expand our service area into a vibrant, growing region,” said Old National CEO Bob Jones in a prepared statement, “and enables Indiana Bank and Trust Co.'s loyal client base to continue doing business with a community-focused, Indiana-based financial institution with a very similar culture and values."

Indiana Community CEO John Keach said the merger with Old National would enhance the bank’s products and services, as well as rewarding shareholders.

The purchase price values Indiana Community at $22.80 per share—a 57 percent premium to the company’s closing price on Tuesday.

Indiana Community shares soared in Wednesday morning trading, rising by as much as 47 percent, to $21.34 apiece.

Old National stock fell 3.4 percent Wenesday morning, to $11.96 per share.

The banks said they expect the merger to close in the second quarter.

In 2008, Indiana Community had accepted $21.5 million in government funds through TARP, or the Troubled-Asset Relief Program, and issued an equivalent amount of preferred stock. Old National said it intends to redeem that preferred stock before completing its merger with Indiana Community.