Old National in Indiana to Buy United in Michigan for $173M

Old National Bancorp (ONB) in Evansville, Ind., has agreed to buy United Bancorp (UBMI) in Ann Arbor, Mich.

The $9.7 billion-asset Old National will pay $173.1 million in cash and stock for United, or roughly $13.17 a share. The amount represents a 76% premium compared to United's closing price on Tuesday.

United has $919 million in assets, $806 million in deposits, $869 million in wealth management assets and a $963 million loan-servicing portfolio. Adding United's 18 southern Michigan branches would give Old National 36 in the region and a total of 188.

Todd Clark, United's chief operating officer and chief banking officer, will join Old National as Michigan regional president after the deal closes, Old National said in a press release Wednesday.

"We are incredibly excited about this partnership, which introduces Old National to the vibrant community of Ann Arbor and significantly expands our presence throughout southern Michigan," Old National President and Chief Executive Bob Jones said in the release.

Old National agreed in September to buy Tower Financial in Fort Wayne, Ind., for $107.7 million. Jones said at that time that he wanted to reach $12 billion in assets, if the company passed the $10 billion threshold, to make back income the company would lose due to the Durbin Amendment, which caps interchange fees for institutions with more than $10 billion in assets.

In late December, United exited the Troubled Asset Relief Program with a $10.4 million payment.

Raymond James & Associates advised Old National on the agreement and Sandler O'Neill advised United. The companies expect the deal to close in the second quarter.