A big deal for 'conservative' bank: Midland States takes over area Amcore branches

DIXON – As the mortgage crisis impacts many other banks, it's been business as usual at Midland States Bank.

The bank's conservative approach has kept it free from the pitfalls others have been prone to, Leon J. Holschbach, president and chief executive officer, said Monday.

But Monday was anything but business as usual for Midland. Its conversion of 12 former Amcore Banks in northern Illinois began for its customers and was marked by a news conference at the branch in Dixon.

"This is a major undertaking for us," Holschbach said.

How major? The private community bank's assets increased from $1.15 billion to $1.7 billion with the sale. Midland recorded net income of $30.7 million in 2009.

The acquisition nearly doubled Midland's number of bank branches to 27.

The bank's employee payroll will double with the 117 Amcore employees Midland will keep in its fold. Midland also plans to hire home loan experts and investment advisers when it expands those services.

The deal adds 50,000 bank accounts, officials said. The transition from Amcore to Midland could take 2 weeks, along with converting the outward appearance of eight to 10 ATMs. All customers already should have new cards, and be able to use ATMs as they have in the past.

New computer and software systems and phones also will be included in the transition. Customers can call 866-334-7886 with questions about their accounts.

The acquisition includes former Amcore branches in Dixon, Rock Falls, Sterling, Oregon, Princeton, Peru, Mendota and Freeport. All will remain open.

Holschbach knows Amcore. He worked there as recently as 21/2 years ago.

He also oversaw the purchase of a failed FDIC bank last year. Midland's second-quarter acquisition of Strategic Capital Bank in Champaign doubled Midland's size in one fell swoop. He said he doesn't know whether Midland will buy more banks anytime soon, but said the Amcore purchase had value. Midland is a $1 billion bank that bought a $500 million branch, Holschbach said.

Jeffrey Lovett, Midland's regional market president, also was at Monday's news conference. Lovett, 52, is a Dixon native and former manager of the Amcore market. He also has a long history in Sauk Valley banking.

Lovett and Holschbach agreed the area has more than one specific business supporting it, including farms.

"The nice thing about the communities that we are in, whether it's Freeport, Dixon, Sterling, Princeton, Peru, Mendota, Effingham and the markets down south, is that they are pretty well diversified," Lovett said. "It's not a one-company kind of town like an auto town. In the old days, you go back 20 years, Sterling was a steel mill community. We've diversified enough, we're surrounded by land of corn and beans and some good agriculture."

Midland got its start 129 years ago and always has had headquarters in Effingham.

The bank has a history of surviving bad economic times. Officials said its success comes from customers' saving habits, paying back loans and the bank's entrepreneurial and conservative approaches.

"We had a real substantial mortgage business – 998 home loans in our market [last year]," Holschbach said.

He said Midland didn't take on risky mortgages, and never has owned any Freddie Mac or Fannie Mae mortgages. He reported only two foreclosures, and Midland will lend to good customers whose finances took a hit because of other banks' poor business practices.

"If you underwrite more conservatively, then that's your reward," Holschbach said. "People pay."