Chesterton Tribune

First National Bank of Valparaiso bought by 1st Source of South Bend

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For more than a century First National Bank of Valparaiso has been locally owned, operated by FINA Bancorp Inc. of Valparaiso.

Now it’s regionally owned.

On Monday FINA and 1st Source Corporation, the holding company of 1st Source Bank headquartered in South Bend, entered into a definitive merger agreement in which 1st Source will acquire FINA in exchange for cash and stock.

The deal, approved by the directors of both companies, is valued at approximately $135 million or $3,206.57 per share of FINA. That price, according to a statement released on Monday, represents around 196 percent of book value and 41.5 times FINA’s 2006 earnings before securities losses. 1st Source Corporation will pay a minimum of 40 percent and a maximum of 42 percent of the purchase price in shares of 1st Source common stock and the remainder of the purchase price in cash.

First National Bank was established in 1889 as the First State Bank of Valparaiso by a group of community leaders, the bank’s website says. Its mission: “Porter County money for Porter County business.” It now has assets of $600 million, 26 banking facilities in Porter, LaPorte, and Starke counties, and offers a range of personal and business banking services as well as trust and asset management services.

1st Source Corporation is the largest locally controlled financial institution headquartered in the Northern Indiana and Southwestern Michigan area, with $3.81 billion in assets, the statement said. Its chief subsidiary, 1st Source Bank, was chartered in 1863 as the First National Bank of South Bend. It currently has 67 banking centers in 16 counties in Indiana and Michigan, and it has developed specialized financing services for new and used private and cargo aircraft, automobiles and light trucks for leasing and rental agencies, heavy and medium duty trucks, construction equipment, and environmental equipment.

“It is important to us that 1st Source is motivated to strengthen its presence in our market and not in just acquiring additional banking assets,” said Wayne Welter, CEO of First National Bank. “This translates into a stronger commitment to our communities and to our employees. 1st Source will make Valparaiso its regional headquarters, which means more investment and more key jobs will be retained here. This means a lot to us. We are confident that the commitment of 1st Source to its customers and communities provides a solid foundation for the future.”

“This is a wonderful opportunity to join two very strong local banks with similar values, history, and legacies,” said Christopher Murphy III, chair of 1st Source Corporation. “First National Bank, Valparaiso, is located in the fastest growing area of our 1st Source retail market, and it’s a natural fit for us. Our products and services are similar, and we both believe in being involved and giving back to the communities we serve.”

“As 1st Source,” Murphy added, “we pride ourselves on our comprehensive product line and personal attention. Our highest priority is the satisfaction of our new clients and welcoming new colleagues into the 1st Source family. Rest assured, we’ll work very hard to minimize disruptions and provide an excellent client experience. We are excited about the opportunities and challenges ahead as we work together to grow a very important area of our market.”

For 2006 1st Source Corporation reported a record net income of $39.30 million, an increase of 16.43 percent over the $33.75 million reported in 2005. Diluted net income per common share for 2006 was $1.72, an increase of 17.81 percent over the $1.46 diluted net income per common share in 2005.

1st Source Corporation common stock trades on the NASDAQ Global Select Market under “SRCE” and appears in the National Market System tables in many daily newspapers under “1st Src.”

First National Bank of Valparaiso “is a leader in providing support to local community development and redevelopment projects, low-income housing programs, and local bond issuances,” its website says. “Some specific community activities in which the bank demonstrated local leadership include the construction of Hilltop House, Valplayso, the Portage Boys and Girls Club, Christmas in April in Valparaiso, Portage, and Chesterton, and the development of West Side Park and Rose Garden.”

On at least a couple of occasions First National Bank has provided the Town of Chesterton with a tax anticipation warrant at an extremely favorable interest rate.


Posted 2/20/2007