Tower Financial, Old National Merger Enter Agreement
Evansville-based Old National Bancorp (NASDAQ: ONB) and Fort Wayne-based Tower Financial Corporation (NASDAQ: TOFC), jointly announced today the execution of a definitive agreement under which Old National will acquire Tower Financial Corporation through a stock and cash merger.
With nearly $680.9 million in total assets, and an additional $523.3 million in trust assets under management, Tower Financial Corporation is an Indiana bank holding company with Tower Bank & Trust Company (Tower Bank) as its wholly-owned subsidiary. Tower Bank currently operates six full-service banking centers in Fort Wayne and one in Warsaw, Ind., with total deposits of $581.6 million and $438.6 million in loans. Tower Bank is the largest independent bank headquartered in Fort Wayne, Ind.
Founded in Evansville in 1834, with $9.6 billion in assets and 176 branches, Old National is the largest financial services holding company headquartered in Indiana. This acquisition will strengthen Old National’s position to the third largest deposit holder in Indiana. Old National also has branches in Southern Illinois, Western Kentucky and Louisville, and Southwestern Michigan.
“We are absolutely thrilled about this partnership, which dramatically expands Old National’s presence in the attractive Fort Wayne market, and which will continue and strengthen Tower’s community banking commitment, while helping to solidify our standing as Indiana’s bank,” said Old National Bancorp President & CEO Bob Jones.
“Tower Bank has a well-earned reputation for excellence, as demonstrated by their recent Best Places to Work in Indiana designation, as well as a history of delivering outstanding client service. Tower clients will benefit from the additional services provided by working with a larger community bank, while continuing to receive continued excellent local service from the people they are accustomed to working with. We look forward to the opportunity to continue this legacy while earning the trust and continued business of Tower clients.”
Michael Cahill, Tower Financial Corporation president and CEO, added, “Tower is excited to be able to expand its abilities to meet the needs of our team members, customers, community, and shareholders through our partnership with Indiana’s largest financial institution. The fact that Old National was founded almost 180 years ago, along with its commitment to our state and our region, and its high level of business ethics, community banking and active community involvement made it the right partner for Tower.”
Under the terms of the merger agreement, which was unanimously approved by the boards of both companies, shareholders of Tower Financial Corporation will receive 1.20 shares of Old National Bancorp common stock and $6.75 in cash (fixed) for each share of Tower Financial common stock. Based upon the September 5, 2013, closing price of $13.52 per share of Old National common stock, the transaction is valued at approximately $107.7 million.
The transaction value is likely to change due to fluctuations in the price of Old National common stock. As provided in the merger agreement, the exchange ratio is subject to adjustment (calculated prior to closing) in the event shareholders’ equity of Tower Financial Corporation is below a specified amount.
The transaction is expected to close in the first quarter of 2014. The transaction remains subject to approval by federal and state regulatory authorities and Tower Financial Corporation shareholders as well as the satisfaction of other closing conditions provided in the merger agreement. The merger agreement also provides that Tower Bank, the bank subsidiary of Tower Financial Corporation, will be merged into Old National Bank, the bank subsidiary of Old National Bancorp.
Source: Old National Bancorp, Tower Financial Corp., Inside INdiana Business