UPDATE: McKinneys to rake in $111 million from sale

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The largest shareholders of First Indiana Bank, the McKinney family, stand to reap $111 million from the sale of the bank announced today.

The family owns about 3.5 million shares, or approximately 21 percent, of the company, according to recent filings with the SEC. The acquisition by Milwaukee-based Marshall & Ilsley Corp. would pay $32 per share, or about $529 million, for the largest locally based bank in Indianapolis.

Robert H. McKinney and his daughter, Marni, both serve on the bank’s board; she is chairwoman, according to the bank’s Web site.

Marshall & Ilsley said this morning it expects to realize cost savings of 20 percent by merging back-office functions and cutting potentially dozens of local jobs.

The Wisconsin institution hopes to retain most of First Indiana’s bankers and will keep all 32 branches open. CEO Mark Furlong told IBJ this morning that within three to four years, the bank should more than replace the quantity of jobs it eliminates.

He would not estimate job cuts. First Indiana has about 500 full-time workers.

In the last several years, First Indiana has played up its status as a local bank that hasn’t sold to an out-of-state financial institution. Executives say they don’t expect customers to punish them for changing course, since the same bankers will be in place.

“We still all live here, and we’re still devoted to the community,” said First Indiana CEO Robert Warrington. “The customers will come first, just like they did Friday.”

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.

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