UPDATE: Other banks likely wanted First Indiana

July 9, 2007

Many banks, including Harris Bankcorp of Chicago, would have wanted to buy First Indiana Corp., according to long-time analyst John Reed, president of investment banking group at David A. Noyes & Co. of Chicago.

In fact, Reed expected Harris instead of Marshall & Ilsley Corp. to snap up First Indiana.

Harris is the U.S. unit of Bank of Montreal in Canada. In January, Harris closed on a $290 million acquisition of First National Bank & Trust, a Kokomo institution owned by Mark and Hart Hasten. First National had a few branches in the Indianapolis area, but mostly operated in Kokomo and western Indiana, Reed noted.

That suggested Harris would try to grab First Indiana to flesh out its Indianapolis presence.

"M&I wanted it more badly, I guess," Reed said. "If you have heart set on being in central Indiana, it's the only bank of size left."

First Indiana Corp.'s Milwaukee-based acquirer said this morning that it will pay $529 million, or $32 a share. That's a 45 percent premium to where First Indiana stock has been trading.

Rumors have swirled for weeks that First Indiana, the city's largest remaining locally based bank, was in negotiations to be acquired. Industry buzz had focused on national powerhouses, such as San Francisco-based Wells Fargo.

Instead, First Indiana is selling to the modest-size Marshall & Ilsley. Its M&I Marshall & Ilsley Bank is the largest Wisconsin-based bank, with 192 offices in the state. M&I also has offices in Arizona, Florida and other markets.

The branches will become Marshall & Ilsley branches after the deal closes late this year or in early 2008.

Marshall & Ilsley has assets of $56.5 billion. First Indiana is far smaller, with assets of $2.1 billion and 32 local branches.

"First Indiana has a long-standing relationship with M&I," Bob Warrington, First Indiana's CEO, said in a statement. "The two organizations knew each other well, and this partnership is a natural evolution of our relationship together."

In the spring of 2006, First Indiana sold its trust division to Marshall & Ilsley for $15 million in cash.

Marshall & Ilsley announced before the market opened this morning that it had reached a definitive agreement to buy First Indiana.

Ironically, Marshall & Ilsley is buying its way into Indianapolis just two weeks after Fort Wayne-based Tower Financial Corp. said it would indefinitely delay plans to launch a location in Carmel. The primary reason for the pullback was intense competition in the Indianapolis-area market, Tower said.
Source: XMLFULL/XMLFull2961.xml

Recent Articles by IBJ Staff

Comments powered by Disqus