BMO Financial Group (TSX, NYSE: BMO) and its U.S. subsidiary, Harris Bank, today announced a definitive agreement to purchase Mercantile Bancorp, Inc., based in Hammond, Indiana.
Additionally, Harris intends to purchase the stock of Lake Commercial Corp., an entity established to develop potential branch properties for Mercantile Bank.
Mercantile Bank is a privately held community bank network with 19 branch locations in Lake and Porter counties in Northwest Indiana. The purchase price totals CDN$197.4 million (US$156.5 million) for both transactions. The impact on BMO cash earnings per share is neutral in year one and accretive beginning year two, excluding one-time costs.
“Our goal is to become a leading Midwest personal and commercial bank,” said Tony Comper, President and CEO, BMO Financial Group. “Nearly one-third of our U.S. revenue comes from our strong, entrenched branch network in Illinois. This is our first acquisition in Indiana and we will be looking for other opportunities to expand our network in the states contiguous to Illinois,” he said.
“Mercantile Bank provides Harris with an excellent opportunity to extend our community banking model into a growing area that is a natural fit with our existing branch network,” said Frank Techar, President and CEO, Harris Bank. “While we already have 41 Harris ABMs in Indiana through our relationship with Speedway gas stations, Mercantile Bank will provide another convenient banking option for the large number of commuters in Lake and Porter counties.”
Mercantile Bank’s branch locations include the high-growth communities of Schererville and Dyer. “These branch locations will be all the more attractive as plans move forward on a new and improved commuter rail line linking these communities to Chicago,” said Techar.
The transaction is expected to close in December, subject to U.S. and Canadian regulatory approval. Upon close, the proposed acquisition would increase the Harris community-banking network to 189 locations and would further expand the 450-plus network of Harris ABMs.
"We're really pleased to be partnering with Harris, and we see this relationship as a very good fit. While we didn't enter into this decision lightly, we're confident that, given our shared commitment to employees, exceptional customer service and community involvement, our customers are in good hands,” said Chris Morrow, Chairman, Mercantile Bank.
About Harris Bank
Harris Bank is one of the largest community-banking networks in Illinois and is part of Harris, an integrated financial services organization that provides more than 1.5 million personal, business, corporate and institutional clients with banking, lending, investing, financial planning, trust administration, portfolio management, family office and wealth transfer services. For more information, please visit www.theharris.com.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified financial services organization. With total assets of CDN$262 billion as at July 31, 2004 and more than 34,000 employees, BMO provides a broad range of retail banking, wealth management and investment banking products and solutions. BMO Financial Group serves clients across Canada and in the United States through its Canadian retail arm BMO Bank of Montreal; Chicago-based Harris; BMO Nesbitt Burns, one of Canada's leading full-service investment firms; and Harris Nesbitt, its U.S. investment and corporate banking operation.
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