Consistent with its inorganic growth strategy, Evansville,
Old National Bancorp
) recently entered into a definitive merger agreement with
LSB Financial Corp.
). On completion of the deal, Lafayette, IN-based LSB Financial
will merge into Old National Bancorp and will cease to exist
As part of the merger, shareholders of LSB Financial will receive
$10.63 in cash and 2.269 shares of Old National Bancorp for each
share held in LSB Financial. Hence, considering Old National
Bancorp's closing price of $13.68 on Jun 3, the cash and stock deal
is worth approximately $66.7 million. However, the amount might
vary depending upon the company's stock price movement.
Moreover, per the terms of the agreement, the stock exchange ratio
can also be modified if the investors' holding in LSB Financial is
lower than a stipulated amount. Further, the deal still awaits
regulatory approval and the consent of LSB Financial's shareholders
and is expected to close by fourth-quarter 2014.
Stock price of Old National Bancorp dipped by 0.4% following the
news relaese on Wednesday. This could be due to the prevalent
overall subdued market conditions. However, over the time the stock
price might show improvement as the deal is beneficial for the
The acquisition of LSB Financial with assets worth $366 million
and deposits more than $312 million, will more than double the
foothold of Old National Bancorp in the lucrative Lafayette market.
Moreover, as disclosed by the latter, the deal is expected to be
immediately accretive earnings by $7.5 million or 3 cents per share
Further, the deal seems to be profitable for the shareholders of
LSB Financial. This was reflected by the overwhelming market
reaction following the news of acquisition. The stock price of the
company shot up by 42.8% and closed at $40.30 on Wednesday.
Old National Bancorp has been growing through acquisitions for
quite sometime. In Jan 2014, the company had announced a definitive
merger agreement with United Bancorp, Inc. Moreover, in Dec 2013,
Old National Insurance - Old National Bancorp's wholly owned
subsidiary, acquired the insurance accounts serviced by the
Evansville branch of Wells Fargo Insurance, which is a division of
Wells Fargo & Company
Earlier, in Jul 2013, Old National Bancorp completed the
integration of 24 branches of
Bank of America Corporation
) located in Northern Indiana and Southwestern Michigan.
Old National Bancorp's capital ratios remain well above the minimum
regulatory requirements. As of Mar 31, 2014, Tier 1 risk-based
capital ratio was 14.8%. Total risk-based capital ratio was 15.7%
and Tier 1 Leverage Capital Ratio was 9.3%.
Moreover the company boasts of an impressive earnings history as
well. It has beaten the Zacks Consensus Estimate in the trailing
three out of four quarters, while maintaining an average beat of
11.1%. Driven by its earnings power and steady capital position,
the company is well positioned to grow through meaningful
acquisitions going forward.
Old National Bancorp presently holds a Zacks Rank #3 (Hold).
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