VALPARAISO | 1st Source Bank will locate a regional headquarters in town but plans to close or consolidate some smaller First National Bank of Valparaiso branches as part of its acquisition of the formerly family owned bank.
The $135 million sale closed May 31, merging First National Bank branches in Porter and LaPorte counties with the South Bend-based 1st Source Bank's 67 banking centers in the northern Indiana, southwestern Michigan area.
1st Source CEO Christopher Murphy said Tuesday he was pleased with how quickly the deal closed, but added, "the real critical issue is what happens afterward."
"If everybody's happy over there and we've treated customers right and expanded business, then we'll be happy," Murphy said.
Converting First National Bank to 1st Source could take until early next year, after 1st Source completes an ongoing conversion of its own technology system, Murphy said.
"We don't want to have to convert (First National) twice," he said.
And, "we want to make sure we've gone through training and decided what the right products are for the area," he said. "We try to do that carefully and in a nurturing way."
First National Bank's nearly 250-person work force will remain largely intact, though some employees could be placed in other jobs, Murphy said.
About 11 of First National's 26 branches will be closed or consolidated, Murphys said.
A list of the branches wasn't available on Tuesday, but all are "very tiny branches," Murphy said.
First National previously "had gone on a building spree of tiny facilities," Murphy said. "Customers have not been responding to them, and we think it's appropriate to refocus our energies."
1st Source also agreed to sell First National Bank branches in Hamlet and North Judson to Bank of Indiana NA of Dana, Ind., to comply with federal regulations required for the acquisition to close, Murphy said.
Beginning next month, 1st Source will establish its regional headquarters in the downtown Valparaiso First National Bank building, Murphy said.
Robert Ax, of 1st Source, will head the regional office, which will provide a new level of services in retirement planning and investment, one of 1st Source Bank's strengths, Murphy said.
First National Bank was founded in 1889 as First State Bank of Valparaiso and moved into its downtown location in 1903.
The acquisition by 1st Source ended the Welter family's 33-year owner of the First Nation.
A family decision led to the sale of the bank, which in September held $541.6 million in total deposits, according to Federal Deposit Insurance Corp. data earlier this year.
1st Source Bank parent, 1st Source Corp., is the largest locally controlled financial institution headquartered in Northern Indiana, with $3.81 billion in assets, according to 1st Source.
Its common stock is traded on the NASDAQ.
