Mutual of Omaha Insurance Co.’s banking unit late Friday acquired the deposits and some assets of a failed bank holding company based in Arizona.
Mutual of Omaha paid a 4.41% premium to acquire the deposits of 3 units of First National Bank Holding Co., Scottsdale, Ariz.: First National Bank, which operates 15 branches in Arizona and 10 in Nevada; and First Heritage Bank, which specializes in commercial banking and has 3 locations in Los Angeles.
The transaction cost Mutual of Omaha an estimated $130 million, according to Jeff Schmid, chairman of Mutual of Omaha Bank, in an interview.
Schmid said the acquisition of these accounts aligns with Mutual of Omaha Bank’s growth strategy of expanding into fast-growing markets where its parent company has a strong brand presence and a base of insurance customers.
The core insurance products for Mutual of Omaha are life insurance, disability and long term care products. The company also offers group life and dental and 401(k) plan management.
The acquisition is in line with Mutual of Omaha Bank’s strategy of using its strong balance sheet to “build a good, traditional banking franchise within the company,” Schmid said.
This started last November when the Mutual of Omaha Bank acquired non-troubled banks in Colorado and Nebraska, he said.
Mutual of Omaha Bank already had been looking at acquiring First National Bank Holding Company since last fall, “but the timing was just not right,” Schmid said. The Federal Deposit Insurance Corp. recently approached his company as a potential acquirer because it was on a previously qualified list of potential buyers, he added.
Mutual of Omaha recently opened a loan production office in Des Moines and a bank in the Dallas-Fort Worth area.
“We want to be in 15 or 20 states over the next 5 years with traditional banks,” Schmid said.
The insurer also plans to open a new national mortgage unit soon. “When we come out on the other side of this mortgage-loan cycle, we want to be in a position to offer mortgages in the markets we are in,” Schmid explained.
The company’s current strategy is to look at what banking products to offer its insurance customers, such as credit cards and home equity loans.
“We will then look at what insurance products we can offer,” he said. “There is no way you can bet against California, Nevada and Arizona over the next 50 years.”
Mutual of Omaha Bank has a thrift charter, which Schmid said is a “very good mechanism to grow this bank.”
The acquisition also includes two First National operations, its wealth management division and Community Association Banc, which serves neighborhood and condominium homeowners associations.
The assets it acquired were valued at only $200 million, according to a spokesman for the bank and a statement from the Federal Deposit Insurance Corporation.
The failed banks had combined assets of $3.6 billion, the FDIC said. It estimated the failure will cost it $862 million, less the amount it received for the deposits from Mutual of Omaha.