OLD KENT FINANCIAL CORP /MI/
10-Q, 1999-08-16
STATE COMMERCIAL BANKS
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  For the quarterly period ended June 30, 1999, or
 
[   ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  For the transition period from _________ to _________

Commission File Number: 0-14591

OLD KENT FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)


Michigan 38-1986608
(State or Incorporation) (I.R.S. Employer Identification Number)
 
111 Lyon Street, NW  
Grand Rapids, Michigan 49503
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (616) 771-5000


Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes    X              No        

The number of shares outstanding of the registrant's Common Stock, par value $1, as of July 31, 1999 was 113,125,094 shares.


INDEX

OLD KENT FINANCIAL CORPORATION


PART I. FINANCIAL INFORMATION
 
Item 1. Financial Statements
 
  Consolidated Balance Sheets as of June 30, 1999
       and December 31, 1998
 
  Consolidated Statements of Income for the three and
       six months ended June 30, 1999 and 1998
 
  Consolidated Statements of Cash Flows for the
       six months ended June 30, 1999 and 1998
 
  Notes to Consolidated Financial Statement
 
Item 2. Management's Discussion and Analysis of
       Financial Condition and Results of Operations
 
Item 3. Quantitative and Qualitative Disclosures about Market Risk
 
PART II. OTHER INFORMATION
 
Item 6. Exhibits and Reports on Form 8-K
 
SIGNATURES









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FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and about Old Kent Financial Corporation ("Old Kent" or the "Corporation") itself. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "is likely," "plans," "judgment," "projects," variations of such words and similar expressions are intended to identify such forward-looking statements. Management judgments relating to, and discussion of the provision and allowance for credit losses involve judgments as to future events and are inherently forward looking statements. Assessments that Old Kent is Year 2000 "compliant" are necessarily statements of belief as to the outcome of future events, based in part on information provided by vendors and others which Old Kent has not independently verified. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed, implied or forecasted in such forward-looking statements. Future factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulations; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of pending and future litigation and contingencies; trends in customer behaviors as well as their ability to repay loans; the ability of the companies on which Old Kent relies to make their computer systems Year 2000 compliant; the ability to locate and convert all relevant computer codes and data; the vicissitudes of the national economy; the possibility that expected cost savings from mergers might not be fully realized within the expected time frame; and similar uncertainties. Old Kent undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.









-3-

Item 1.   Financial Statements

OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)


  June 30,   December 31,
(dollars in thousands)
 1999
  
 1998
 
ASSETS:      
Cash and due from banks $   579,107   $   615,845
Federal funds sold and resale agreements 13,325
   9,230
Total cash and cash equivalents 592,432   625,075
Interest-earning deposits 102   5,044
Trading account securities --   349,090
Mortgages held-for-sale 1,378,693   2,262,696
Securities available-for-sale:      
     Collateralized mortgage obligations and other      
          mortgage-backed securities 1,784,418   1,819,122
     Other securities 696,767
   947,574
Total securities available-for-sale (amortized cost of      
     $2,516,364 and $2,735,301, respectively) 2,481,185   2,766,696
Securities held-to-maturity:      
     Collateralized mortgage obligations and other      
          mortgage-backed securities 121,355   180,369
     Other securities 620,953
   623,376
Total securities held-to-maturity (market values of      
     $739,632 and $823,610, respectively) 742,308   803,745
Loans 9,822,624   8,883,716
Allowance for credit losses (169,391)
   (167,665)
Net loans 9,653,233
   8,716,051
Premises and equipment 221,513   220,981
Other assets 859,124
   839,480
Total Assets $15,928,590
   $16,588,858
 
LIABILITIES AND SHAREHOLDERS' EQUITY:      
Liabilities:      
Deposits:      
     Non-interest-bearing $ 1,949,222   $ 2,098,446
     Interest-bearing 10,342,866   10,700,895
     Foreign deposits -- interest-bearing 71,252
   140,077
          Total deposits 12,363,340   12,939,418
Other borrowed funds 2,046,711   2,061,142
Other liabilities 246,208   253,188
Long term debt 200,000
   200,000
Total Liabilities 14,856,259
   15,453,748
 
Shareholders' Equity:      
Preferred stock: 25,000,000 shares authorized and unissued --   --
Common stock, $1 par value: 300,000,000 shares authorized;      
     107,557,728 and 104,498,649 shares issued and outstanding 107,558   104,499
Capital surplus 251,974   139,736
Retained earnings 735,727   870,468
Accumulated other comprehensive income (loss) (22,928)
   20,407
Total Shareholders' Equity 1,072,331
   1,135,110
 
Total Liabilities and Shareholders' Equity $15,928,590
   $16,588,858

The accompanying notes to consolidated financial statements are an integral part of these statements.


-4-

OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)

  For the Three Months   For the Six Months
  Ended June 30,   Ended June 30,
(dollars in thousands, except per share data)
 1999
  
 1998
  
 1999
  
 1998
 
Interest income:              
     Interest and fees on loans $200,043   $196,884   $387,213   $398,650
     Interest on mortgages held-for-sale 27,511   30,004   63,490   56,885
     Interest on securities available-for-sale 44,742   37,372   88,695   73,962
     Interest on securities held-to-maturity:              
          Taxable 6,328   20,394   13,988   43,756
          Tax-exempt 6,128   4,713   11,980   9,301
     Interest on deposits 110   219   291   395
     Interest on federal funds sold and resale agreements 234   618   430   1,542
     Interest on trading account securities --
   30
   1,609
   42
     Total interest income 285,096
   290,234
   567,696
   584,533
 
Interest Expense:              
     Interest on domestic deposits 102,847   111,061   210,824   222,024
     Interest on foreign deposits 1,444   503   2,171   1,163
     Interest on other borrowed funds 24,540   30,483   46,610   61,777
     Interest on subordinated debt 3,207
   3,387
   6,415
   6,753
     Total interest expense 132,038
   145,434
   266,020
   291,717
 
Net Interest Income 153,058   144,800   301,676   292,816
 
Provision for credit losses 4,794
   11,858
   11,660
   27,239
     Net interest income after provision              
          for credit losses 148,264
   132,942
   290,016
   265,577
 
Other Income:              
     Mortgage banking revenues (net) 48,481   36,813   92,030   66,718
     Investment management and trust revenues 17,678   15,126   35,197   29,343
     Deposit account revenues 15,308   14,310   29,640   28,170
     Insurance sales commissions 6,124   4,783   11,979   10,343
     ATM revenues 2,137   1,804   3,939   3,406
     Brokerage commissions 1,672   955   2,851   1,511
     Securities gains 193   2,588   316   3,426
     Nonrecurring income/(expense) --   776   (30)   6,489
     Other 10,402
   10,082
   21,955
   20,459
     Total other income 101,995
   87,237
   197,877
   169,865
 
Other Expenses:              
     Salaries and employee benefits 81,074   71,897   160,133   146,354
     Occupancy expense 11,355   10,211   22,768   20,420
     Equipment expense 10,019   9,046   19,148   17,762
     Amortization of goodwill and intangibles 3,703   3,552   7,251   7,130
     Advertising and promotion 2,007   2,992   4,524   5,320
     Other expenses 46,856
   37,690
   90,011
   74,623
     Total other expenses 155,014
   135,388
   303,835
   271,609
 
Income Before Income Taxes 95,245   84,791   184,058   163,833
     Income taxes 33,205
   29,957
   63,415
   57,476
Net Income $ 62,040
   $ 54,834
   $120,643
   $106,357
 
Earnings Per Common Share:              
     Basic $     0.58   $     0.48   $     1.11   $     0.93
     Diluted $     0.57   $     0.48   $     1.10   $     0.92
 
Dividends Per Common Share $   0.190   $   0.163   $   0.380   $   0.326
 
Average number of shares used to compute: (in thousands)
     Basic earnings per share 107,626   113,342   108,328   114,074
     Diluted earnings per share 108,576   114,266   109,314   115,018

The accompanying notes to consolidated financial statements are an integral part of these statements.




-5-

OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)

  For the Six Months
  Ended June 30,
(dollars in thousands)
 1999
  
 1998
 
CASH FLOWS FROM OPERATING ACTIVITIES:      
     Net income $  120,643   $  106,357
     Adjustments to reconcile net income      
          to net cash provided by (used for) operating activities:      
               Provision for credit losses 11,660   27,239
               Depreciation, amortization and accretion 25,635   24,688
               Net gains on sales of assets (92,474)   (79,597)
               Net change in trading account securities 349,216   1,072
               Originations and acquisitions of mortgages held-for-sale (7,136,002)   (6,000,061)
               Proceeds from sales and prepayments of mortgages held-for-sale 7,982,833   5,751,830
               Net change in other assets 99,021   18,927
               Net change in other liabilities 23,759
   (18,179)
     Net cash provided by (used for) operating activities 1,384,291
   (167,724)
 
CASH FLOWS FROM INVESTING ACTIVITIES:      
     Proceeds from maturities and prepayments of securities available-for-sale 448,645   133,914
     Proceeds from sales of securities available-for-sale 499,221   693,383
     Purchases of securities available-for-sale (727,825)   (922,597)
     Proceeds from maturities and prepayments of securities held-to-maturity 136,228   353,339
     Purchases of securities held-to-maturity (74,350)   (189,136)
     Net change in interest-earning deposits 4,942   (14,542)
     Proceeds from sale of loans 9,482   123,203
     Net change in loans (958,005)   129,676
     Purchases of leasehold improvements, premises and equipment, net (16,468)
   (12,408)
     Net cash provided by (used for) investing activities (678,130)
   294,832
 
CASH FLOWS FROM FINANCING ACTIVITIES:      
     Change in time deposits (519,169)   (76,511)
     Change in demand and savings deposits (56,927)   323,370
     Change in other borrowed funds (14,429)   (225,168)
     Repurchases of common stock (118,634)   (143,981)
     Proceeds from common stock issuances 11,674   13,878
     Dividends paid to shareholders (41,319)
   (41,122)
     Net cash provided by (used for) financing activities (738,804)
   (149,534)
 
     Net change in cash and cash equivalents (32,643)   (22,426)
     Cash and cash equivalents at beginning of year 625,075
   674,649
     Cash and cash equivalents at June 30 $  592,432
   $  652,223
 
Supplemental disclosures of cash flow information:      
     Interest paid on deposits, other borrowed funds and      
          subordinated debt $  264,835   $  301,054
     Income taxes paid 28,519   42,381
Significant non-cash transactions:      
     Stock dividend issued 213,910   163,011

The accompanying notes to consolidated financial statements are an integral part of these statements.




-6-

OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, 1999


NOTE A: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six month period ended June 30, 1999 are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. For further information, refer to the consolidated financial statements and footnotes thereto included in the Corporation's annual report on Form 10-K for the year ended December 31, 1998.

Certain reclassifications have been made to prior periods' financial statements to place them on a basis comparable with the current periods' financial statements.

NOTE B: FINANCIAL INSTRUMENT ACCOUNTING POLICIES
Old Kent uses certain off-balance sheet derivative financial instruments, including interest rate swaps, Treasury futures and options, and interest rate caps and floors in connection with risk management activities. Provided these instruments meet specific criteria, they are considered hedges and accounted for under the accrual or deferral methods, as more fully discussed below.

Old Kent uses interest rate swaps to hedge interest rate risk on interest earning assets and interest bearing liabilities. Amounts receivable or payable under these agreements are included in net interest income. There is no recognition on the balance sheet for changes in the fair value of the hedging instrument. Gains or losses on terminated interest rate swaps are deferred and amortized to interest income or expense over the remaining life of the hedged item.

Old Kent uses forward sale agreements and options on forward sale agreements to protect the value of residential loan commitments, loans held for sale and related mortgage backed securities held in the trading account. The market value of the financial hedges associated with loan origination commitments and loans held for sale are included in the aggregate valuation of mortgages held for sale. Premiums paid for options are deferred as a component of other assets and amortized against gains on sale of loans over the contract term. Forward sale agreements associated with mortgage backed securities held in the trading account are considered when marking those securities to market, with the corresponding adjustment recorded to gains on sale of loans.

From time to time, Old Kent uses Treasury futures and options on Treasury futures to help protect against market value changes in the mortgage servicing right ("MSR") portfolio. The fair value of the hedges are recorded as an adjustment to the carrying amount of the MSR with a corresponding adjustment to cash or other receivables or payables. If terminated, the realized gain or loss on the hedge is included in MSR amortization over the estimated life of the loan servicing that had been hedged. Option premiums paid or


-7-

OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited)
June 30, 1999


received are deferred as a component of other assets and amortized as MSR amortization over the contract term.

Derivative financial instruments, such as caps and floors, that do not meet the required criteria are carried on the balance sheet at fair value with realized and unrealized changes in that value recognized in earnings. If the hedged item is sold or its outstanding balance otherwise declines below that of the related hedging instrument, the derivative product (or applicable excess portion thereof) is marked-to-market and the resulting gain or loss is included in earnings.

NOTE C: ADOPTION OF FASB 133
In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities. The Statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or a liability measured at its fair value. The Statement requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in the income statement, and requires that a company must formally document, designate, and assess the effectiveness of transactions that receive hedge accounting.

Statement 133 is effective beginning January 1, 2001. A company may also implement the Statement as of the beginning of any fiscal quarter after issuance. Statement 133 cannot be applied retroactively. Statement 133 must be applied to (a) derivative instruments and (b) certain derivative instruments embedded in hybrid contracts that were issued, acquired, or substantively modified after December 31, 1997 (and, at Old Kent's election, those issued or acquired before January 1, 1998).

Old Kent has not yet quantified the impacts of adopting Statement 133 on the consolidated financial statements and has not determined the timing of or method of adoption of Statement 133. However, the Statement could increase volatility in earnings and other comprehensive income.

NOTE D: LOANS AND NONPERFORMING ASSETS
The following summarizes loans and nonperforming assets at the dates indicated (in thousands of dollars):






-8-

OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited)
June 30, 1999


  June 30,   December 31,
Loans: 1999
   1998
Commercial $2,945,482   $2,727,892
Real estate - Commercial 2,018,143   1,920,107
Real estate - Construction 810,094   693,958
Real estate - Residential mortgages 1,065,617   1,012,510
Real estate - Consumer home equity 1,475,843   1,031,312
Consumer 1,328,609   1,334,374
Lease financing 178,836
   163,563
Total Loans $9,822,624
   $8,883,716
 
  June 30,   December 31,
Nonperforming assets: 1999
   1998
Nonaccrual loans $    47,832   $    57,120
Restructured loans 2,502
   2,664
     Impaired loans 50,334   59,784
Other real estate owned 5,792
   6,872
Total nonperforming assets $    56,126
   $    66,656
 
Loans past due 90 days or more $    13,657
   $    15,083

At June 30, 1999, the Corporation's management has identified loans totaling approximately $15.4 million as potential problem loans. These loans are not included as nonperforming assets in the table above. While these loans were in compliance with repayment terms at June 30, 1999, other circumstances caused management to seriously doubt the ability of the borrowers to continue to remain in compliance with existing loan repayment terms.

NOTE E: ALLOWANCE FOR CREDIT LOSSES AND NET CHARGE-OFFS
The following summarizes the changes in the allowance for credit losses, and net charge-offs (in thousands of dollars):

    For the Six Months
    ended June 30,
  Allowance for Credit Losses 1999
   1998
  Balance at January 1, $167,665   $160,952
  Changes in allowance due to acquisitions / divestitures / sales 120   (475)
  Provision for credit losses 11,660   27,239
  Gross loans charged-off (19,313)   (28,675)
  Gross recoveries of loans previously charged-off 9,259
   8,714
  Balance at end of period $169,391
   $167,755



-9-

OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited)
June 30, 1999


    For the Six Months
    ended June 30,
  Net Loan Charge-Offs 1999
   1998
  Commercial & Commercial Real Estate Loans $  3,523   $  9,563
  Consumer 5,605   9,255
  Residential Mortgages 250   141
  Leases 676
   1,002
  Total Net Charge-Offs $10,054
   $19,961

NOTE F: SECURITIES AVAILABLE-FOR-SALE
The following summarizes amortized costs and estimated market values of securities available-for-sale at the dates indicated (in thousands of dollars):

                Carrying
        Gross   Gross   Value
    Amortized   Unrealized   Unrealized   at Market
  June 30, 1999: Cost   Gains   Losses   Value
  U.S. Treasury and federal agency securities $   537,098   $ 1,017   $ 8,286   $   529,829
  Collateralized mortgage obligations:  
       U.S. Government issued 1,127,321   727   19,072   1,108,976
       Privately issued 285,759   250   1,658   284,351
  Mortgage-backed pass-through securities 397,441   125   6,475   391,091
  Other securities 168,745
   515
   2,322
   166,938
  Total securities available-for-sale $2,516,364
   $ 2,634
   $37,813
   $2,481,185
 
  December 31, 1998:  
  U.S. Treasury and federal agency securities $   726,839   $21,576   $     42   $   748,373
  Collateralized mortgage obligations:  
       U.S. Government issued 1,301,667   8,661   1,817   1,308,511
       Privately issued 365,343   2,055   902   366,496
  Mortgage-backed pass-through securities 143,449   1,230   564   144,115
  Other securities 198,003
   1,659
   461
   199,201
  Total securities available-for-sale $2,735,301
   $35,181
   $ 3,786
   $2,766,696

NOTE G: SECURITIES HELD-TO-MATURITY
The following summarizes amortized costs and estimated market values of securities held-to-maturity at the dates indicated (in thousands of dollars):




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OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited)
June 30, 1999


        Gross   Gross    
    Amortized   Unrealized   Unrealized   Market
  June 30, 1999: Cost   Gains   Losses   Value
  U.S. Treasury and federal agency securities $122,990   $   607   $   121   $123,476
  Collateralized mortgage obligations:  
       U.S. Government issued 42,694   --   417   42,277
       Privately issued 6,274   --   45   6,229
  Mortgage-backed pass-through securities 72,387   1,481   527   73,341
  State and political subdivisions 497,028   8,811   12,465   493,374
  Other securities 935
   --
   --
   935
  Total securities held-to-maturity $742,308
   $10,899
   $13,575
   $739,632
 
  December 31, 1998:  
  U.S. Treasury and federal agency securities $182,364   $ 2,406   $     33   $184,737
  Collateralized mortgage obligations:  
       U.S. Government issued 65,647   77   240   65,484
       Privately issued 26,210   --   106   26,104
  Mortgage-backed pass-through securities 88,512   1,974   93   90,393
  State and political subdivisions 440,077   16,347   467   455,957
  Other securities 935
   --
   --
   935
  Total securities held-to-maturity $803,745
   $20,804
   $  939
   $823,610

NOTE H: SHAREHOLDERS' EQUITY
In June, 1999, the Board of Directors of Old Kent Financial Corporation declared a 5% stock dividend payable July 19, 1999, to shareholders of record on June 29, 1999. All per share amounts included in this report have been adjusted to reflect this dividend.

At that same meeting, Old Kent's Directors authorized management, at its discretion, to purchase up to 3.0 million shares of the Corporation's common stock. It is anticipated that these shares will be purchased by the Corporation in a systematic program of open market or privately negotiated purchases. They will be reserved for later reissue in connection with potential future stock dividends, the dividend reinvestment plan, employee benefit plans, and other general corporate purposes.

NOTE I: REPORTABLE OPERATING SEGMENTS
Under the provisions of "SFAS No. 131," Old Kent has six reportable operating segments: Corporate Banking, Retail Banking, Community Banking, Investment and Insurance Services, Mortgage Banking and Treasury. Old Kent's reportable segments are strategic business units that are managed separately because each business requires different technology and marketing strategies, and also differs in product emphasis.

The following table summarizes information about reportable operating segments' profit for the three month period ended June 30, 1999 and 1998:



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OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited)
June 30, 1999


  Net Interest   Non Interest   Net
  Income   Income and Fees   Income
June 30, 1999          
Corporate Banking $35,203   $3,554   $16,742
Retail Banking 63,480   14,289   14,708
Community Banking 38,112   7,817   13,176
Investment & Insurance Services 4,660   26,308   7,779
Mortgage Banking 11,237   49,509   5,718
Treasury 366
   518
   3,917
Consolidated $153,058
   $101,995
   $62,040
 
June 30, 1998          
Corporate Banking $ 33,717   $   3,581   $13,659
Retail Banking 59,970   12,812   14,519
Community Banking 38,273   8,591   14,211
Investment & Insurance Services 3,527   21,875   5,147
Mortgage Banking 5,351   37,236   4,039
Treasury 3,962
   3,142
   3,259
Consolidated $144,800
   $  87,237
   $54,834

The following table summarizes information about reportable operating segments' profit for the six month period ended June 30, 1999 and 1998:


  Net Interest   Non Interest   Net
  Income   Income and Fees   Income
June 30, 1999          
Corporate Banking $ 70,077   $   7,326   $ 32,160
Retail Banking 123,840   28,081   28,192
Community Banking 75,672   15,819   26,237
Investment & Insurance Services 8,656   51,723   14,545
Mortgage Banking 23,616   93,728   12,253
Treasury (185)
   1,200
   7,256
Consolidated $301,676
   $197,877
   $120,643




-12-

OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited)
June 30, 1999


June 30, 1998          
Corporate Banking $69,147   $7,339   $28,189
Retail Banking 119,305   26,654   26,986
Community Banking 76,784   20,879   26,995
Investment & Insurance Services 6,907   43,170   9,091
Mortgage Banking 11,429   67,137   6,246
Treasury 9,244
   4,686
   8,850
Consolidated $292,816
   $169,865
   $106,357

NOTE J: OTHER ASSETS
Other assets, as shown in the accompanying consolidated balance sheets, include the following (net of amortization):

  June 30,   December 31,
  1999   1998
Goodwill $101,114   $102,538
Core Deposit Intangibles 17,376
   19,452
Total $118,490
   $121,990

Other assets, as shown in the accompanying consolidated balance sheets, include mortgage servicing rights ("MSRs") as follows:

  June 30,   December 31,
  1999   1998
MSRs (net of amortization) $278,440   $227,625
Less servicing impairment reserve (7,587)
   (9,129)
Carrying value of MSRs $270,853
   $218,496
Estimated aggregate fair value of capitalized MSRs $320,000
   $253,000

The following reflects changes in capitalized mortgage serving rights for the time periods indicated:

  For the Six Months
  ended June 30,
  1999   1998
Balance at beginning of period $218,496   $146,359
Additions 157,772   104,897
Sales (74,607)   (17,813)
Amortization (32,350)   (22,826)
Impairment Provision 1,542
   (2,500)
Balance at end of period $270,853
   $208,117


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OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited)
June 30, 1999


Old Kent Mortgage Company actively manages prepayment risks associated with mortgage servicing rights through its significant loan origination and replenishment capacity, customer retention initiatives, recurring bulk sales of mortgage servicing rights, and use of financial hedges. Old Kent Mortgage Company has entered into an agreement to sell mortgage serving rights associated with $4.5 to $9.0 billion of mortgage loans during 1999. This forward bulk servicing sale agreement provides for quarterly sales of newly originated conventional mortgage servicing rights.

NOTE K: EARNINGS PER SHARE
The following table reconciles the numerators and denominators used in the calculations of basic and diluted earnings per share:

  For the Three Months   For the Six Months
  ended June 30,
   ended June 30,
  1999   1998   1999   1998
Numerators: Numerator for both basic and diluted              
     earnings per share, net income 62,040,000
   54,834,000
   120,643,000
   106,357,000
 
Denominators:              
Denominator for basic earnings per share, average              
     outstanding common shares 107,626,050   113,342,250   108,328,500   114,074,100
Potential dilutive shares resulting from employee              
     stock plans 950,250
   924,000
   985,950
   943,950
Denominator for diluted earnings per share 108,576,300
   114,266,250
   109,314,450
   115,018,050
 
Earnings per share:              
Basic $0.58   $0.48   $1.11   $0.93
Diluted $0.57   $0.48   $1.10   $0.92

NOTE L: COMPREHENSIVE INCOME
Comprehensive income reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. For Old Kent, comprehensive income represents net income adjusted for the change in unrealized gains and losses on available-for-sale securities. Comprehensive income was approximately $32 million and $57 million for the quarters ended June 30, 1999 and 1998, respectively, and approximately $77 million and $111 million for the six month period ended June 30, 1999 and 1998, respectively.

NOTE M: BUSINESS COMBINATIONS
On July 9, 1999, Old Kent completed the acquisition of CFSB Bancorp, Inc. ("CFSB"). The merger was accounted for as a pooling-of-interests. Old Kent exchanged .5939 shares of Old Kent Common Stock for each outstanding share of CFSB Common Stock. The issuance totaled approximately 5.5 million shares. CFSB was a holding company headquartered in Lansing, Michigan. When acquired, CFSB had consolidated


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OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited)
June 30, 1999


assets of approximately $878 million and consolidated deposits of approximately $567 million. CFSB was the parent of Community First Bank. CFSB provided banking services through sixteen offices in Ingham, Clinton, Eaton and Ionia counties. The following details the proforma effects of the merger as if it had been completed as of June 30, 1999:

  For the Three Months   For the Six Months
  ended June 30, 1999   ended June 30, 1999
  Old Kent   Proforma   Old Kent   Proforma
 
Net Income $62,040,000   $63,307,709   $120,643,000   $124,449,469
Basic E.P.S. $0.58   $0.56   $1.11   $1.09
Diluted E.P.S. $0.57   $0.55   $1.10   $1.08
Number of shares used to calculate              
     basic E.P.S. 107,626,000   113,141,700   108,328,000   113,700,900
Number of shares used to calculate              
     diluted E.P.S. 108,576,000   114,168,700   109,314,000   114,896,000

  For the Three Months   For the Six Months
  ended June 30, 1998   ended June 30, 1998
  Old Kent   Proforma   Old Kent   Proforma
 
Net Income $54,834,000   $58,043,158   $106,357,000   $112,395,989
Basic E.P.S. $0.48   $0.48   $0.92   $0.93
Diluted E.P.S. $0.48   $0.49   $0.93   $0.94
Number of shares used to calculate              
     basic E.P.S. 113,342,000   118,683,500   114,074,000   119,458,500
Number of shares used to calculate              
     diluted E.P.S. 114,266,000   119,867,800   115,018,000   120,665,800

On March 18, 1999, Old Kent entered into a definitive agreement for the merger of Pinnacle Banc Group, Inc. ("Pinnacle"). The merger will be accounted for as a pooling-of-interests. Old Kent will exchange .75285 shares of Old Kent Common Stock for each outstanding share of Pinnacle Common Stock. Old Kent expects to issue approximately 5.6 million shares related to this transaction. Pinnacle is a bank holding company headquartered in the Chicago suburb of Oak Brook, Illinois, with consolidated assets of approximately $1,005 million and consolidated deposits of approximately $861 million at June 30, 1999. Pinnacle is the parent of Pinnacle Bank which operates thirteen branches in the Chicago metropolitan area and Pinnacle Bank of the Quad-Cities which operates three branches in western Illinois. The merger is expected to be completed in the third quarter of 1999.

On July 29, 1999, Old Kent entered into a definitive agreement for the acquisition of Merchants Bancorp, Inc. ("Merchants"). The merger will be accounted for as a pooling-of-interests. Old Kent will exchange .830


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OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited)
June 30, 1999


shares of Old Kent Common Stock for each outstanding share of Merchants Common Stock. Old Kent expects to issue approximately 4.5 million shares related to this transaction. Merchants is a bank holding company headquartered in Aurora, Illinois, with consolidated assets of approximately $921 million and consolidated deposits of approximately $778 million at June 30, 1999. Merchants operates 12 suburban Chicago area banking sites as well as two banking sites in Dekalb and Kendall Counties. The merger is subject to shareholder and regulatory approval and is expected to be completed in the first quarter of 2000.

NOTE N: LONG TERM DEBT
Long term debt, as shown in the accompanying consolidated balance sheets, consists of the following:

  June 30,   December 31,
  1999   1998
Subordinated notes, 6 5/8% due November 15, 2005 $100,000   $100,000
Capital securities, as described below 100,000
   100,000
Total long term debt $200,000
   $200,000

On January 31, 1997, Old Kent issued a floating rate junior subordinated debenture (the "Debenture") having a principal amount of $103,092,784 to Old Kent Capital Trust I (the "Trust"). Cumulative interest on the principal sum of the Debenture accrues from January 31, 1997, and it is payable quarterly in arrears on the first day of February, May, August and November of each year at a variable rate per annum equal to LIBOR (London Interbank Offering Rate) plus .80% until paid. Interest is computed on the actual number of days elapsed in a year of twelve 30 day months. The Debentures rank subordinate and junior in right of payment to all indebtedness (as defined) of Old Kent. The Debenture matures on February 1, 2027, but may be redeemed in whole or in part beginning on February 1, 2007, or earlier upon the occurrence of certain special events defined in the Indenture governing the Debenture.

On January 31, 1997, the Trust sold Floating Rate Subordinated Capital Income Securities ("Preferred Securities") having an aggregate liquidation amount of $100 million to investors and issued Common Capital Securities ("Common Securities") having an aggregate liquidation amount of $3,092,784 to Old Kent. All of the proceeds from sale of Preferred Securities and Common Securities were invested in the Debenture. Preferred Securities and Common Securities represent undivided beneficial interests in the Debenture, which is the sole asset of the Trust. Holders of Preferred Securities and Common Securities are entitled to receive distributions from the Trust on terms which correspond to the interest and principal payments due on the Debenture. Payment of distributions by the Trust and payments on liquidation of the Trust or redemption of Preferred Securities are guaranteed by Old Kent to the extent the Trust has funds available (the "Guarantee"). Old Kent's obligations under the Guarantee, taken together with its obligations under the Debenture, the Indenture, the applicable Declaration of Trust and Old Kent's agreement to pay all fees and expenses related to the trust and all ongoing costs, expenses and liabilities of the Trust for so long as the trust holds the Debenture, constitute a full and unconditional guarantee of all of the Trust's obligations under the Preferred Securities issued by the Trust. Because the Common Securities held by Old Kent represent all of the outstanding voting securities of the Trust (in the absence of a default or other specified event), the Trust


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OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited)
June 30, 1999


is considered to be a wholly owned subsidiary of Old Kent for reporting purposes and its accounts are reflected in the consolidated financial statements of Old Kent.

The Preferred Securities qualify as Tier I capital for regulatory capital purposes. Issuance of the Preferred Securities by the Trust had the effect of increasing Old Kent's regulatory capital. Proceeds from the sale of the Debenture to the Trust were available for general corporate purposes, including repurchase of shares.










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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations


The following is management's discussion and analysis of certain significant factors which have affected Old Kent's financial condition and results of operations during the periods included in the consolidated financial statements included in this filing.

RESULTS OF OPERATIONS
Old Kent's net income was $62.0 million for the second quarter of 1999 compared to $54.8 million for the same period in 1998. Second quarter diluted earnings per share was $.57, a 19% increase over $.48 for the same period last year. For the six month period ended June 30, 1999, net income was $120.6 million compared to $106.4 million a year ago and diluted earnings per share was $1.10, a 19.6 % increase over year to date 1998 of $.92.

Total assets were $15.9 billion at quarter-end compared to $16.6 billion at December 31, 1998. The decrease was primarily a result of a reduction in mortgages held-for-sale. Return on average equity for the second quarter of 1999 was 23.2% compared to 18.7% for the second quarter of 1998. Return on average assets was 1.53% for the second quarter of 1999 compared to 1.38% for the second quarter of 1998.

Old Kent's net interest income for the second quarter of 1999 was $153.1 million, a 5.7% increase over the $144.8 million recorded in the same period of 1998. For the second quarter of 1999, the net interest margin was 4.23% compared to 4.03% a year ago. These increases are due to a favorable change in the asset mix as well as a decrease in costs of funds. On the asset side, higher yielding commercial and consumer loans grew $966 million, while lower yielding securities and mortgages held-for-sale decreased $733 million. These improvements in asset mix on the balance sheet helped to offset a decline in overall asset yields, resulting in only a 21 basis point decrease in the yield on earning assets. On the funding side, savings and DDA combined grew $608 million and wholesale borrowing grew $106 million to offset a similar decrease of $176 million in negotiable and foreign deposits as the Corporation reduced its funding costs by 52 basis points. By attaining higher quality leverage in the balance sheet the margin increased by 20 basis points compared to second quarter, 1998.

The provision for credit losses was $4.8 million in the second quarter of 1999 and $11.9 million in the second quarter of 1998. Net credit losses were $4.0 million or .17% of average loans for the second quarter of 1999 compared to $9.9 million or .44% of average loans for the same period a year ago. The decrease was primarily due to lower net charge offs in the consumer and commercial portfolios. This improvement was directly attributable to strong credit quality policies as well as emphasis in reducing loan balances with undesirable credit risk through sale transactions or through exits of the credit relationship. The allowance for credit losses as a percent of loans and leases outstanding was 1.72% at June 30, 1999 and 1.89% at December 31, 1998. Impaired loans as a percent of total loans was .51% at June 30, 1999 and .67% at December 31, 1998.

Total other operating income, (other income, excluding securities transactions and other nonrecurring income) increased 21.4% or $17.9 million during the second quarter of 1999 over the same period a year ago. The mortgage banking business contributed $11.7 million of this increase, primarily as a result of growth and expansion of Old Kent Mortgage Company, along with a generally favorable economy. Investment management and trust revenues increased 16.9% or $2.6 million as a result of focused sales


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initiatives and business development efforts. Service charges on deposits increased 7.0% or $1 million. All other service charges and fees increased $2.7 million over the same period a year ago.

Old Kent sold approximately $3.3 billion of residential mortgage loans during the quarter. Old Kent's residential third party mortgage servicing portfolio was $14.7 billion at June 30, 1999, and $14.0 billion at December 31, 1998.

Total net securities gains for the second quarter of 1999 were $193 thousand compared to gains of $2.6 million for the same period of 1998.

Total operating expenses for the second quarter of 1999 increased $19.6 million, or 14.5 %, over the same period in 1998. These increases are primarily attributable to the growth in Mortgage Banking. Old Kent Mortgage Company operated 167 branches in 32 states as of June 30, 1999 compared to 125 branches in 30 states as of June 30, 1998.

Salaries, wages and employee benefits increased $9.2 million or 12.8% for the second quarter of 1999 over the second quarter of 1998 largely as a result of increased staffing in the Mortgage Company. The number of full-time equivalent employees for the Corporation increased by 657 over a year ago, to 7,878 at June 30, 1999.

  June 30,
  1999
  
 1998
  
 Change
Full-time equivalent staff:          
     Banking units 4,554   4,816   (262)
     Mortgage banking 3,014   2,077   937
     Insurance, leasing & brokerage 310
   328
   (18)
 
     Total 7,878
   7,221
   657

During the second quarter of 1999 compared to the same period a year ago, occupancy expenses increased 11.2%, and equipment expenses increased 10.8%. Other operating expenses increased by 18.8% or $8.3 million over the prior year.

YEAR 2000 READINESS DISCLOSURE
The Corporation is currently in the process of addressing a significant issue facing all users of automated information systems. The problem is that many computer systems that process transactions based on two digits representing the year of transaction may recognize a date using "00" as the year 1900 rather than the year 2000. The problem could affect a wide variety of automated information systems such as mainframe applications, personal computers and communication systems, in the form of software failure, errors or miscalculations. By nature, the banking and financial services industries are highly dependent upon computer systems to process significant transaction volumes and because of a date dependency for interest measurements on financial instruments such as loans and deposits.

The Corporation initiated its Year 2000 analysis in early 1995. The assessment included an inventory of software applications, communications with third party vendors and suppliers, and certification of compliance from third party providers. The Corporation has a comprehensive written plan which is regularly updated and


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monitored by technical and non-technical management and personnel. Plan status is regularly reviewed by management of the Corporation and reported upon to the Board of Directors.

The Corporation utilizes vendor supplied software packages for its "mission critical" applications. All "mission critical" systems were Year 2000 ready with the current releases installed and tested for all applications and were in production on December 31, 1998. In addition, the Corporation has acquired testing tools which were used during a second phase of testing completed on June 30, 1999. System dates were reset and validation took place in an integrated event level testing environment.

The testing of the remediated systems was very successful with no significant failures experienced when processing data beyond December 31, 1999. The Corporation has also updated its business resumption plans to include contingency actions for Year 2000 issues. With these measures in place, the Corporation expects no materially adverse failures in its data processing systems as a result of the century change. As of June 30, 1999, Old Kent believes that it is compliant on all applications.

Diagnosis, reprogramming and other remedies are expected to result in expenditures of approximately $16 million, over the four years ended December 31, 1999. As of June 30, 1999, approximately $14.7 million of these expenditures have been recognized as incurred by Old Kent since 1995.

In addition to reviewing its own computer operating systems and applications, the Corporation has initiated formal communications with its significant suppliers (operating risk) and large customers (credit risk) to determine the extent to which Old Kent is vulnerable to those third parties' failure to resolve their own Year 2000 issues. There is no assurance that the systems of other companies on which the Corporation's systems rely will be timely converted. If such modifications and conversions are not made, or are not completed in a timely manner, the Year 2000 issue could have an adverse impact on the operations of the Corporation. The Corporation's Year 2000 contingency plans for each line of business will address alternative processing methods for all critical functions including lending, transaction processing, liquidity and service delivery methods.

This Year 2000 Readiness Disclosure is based upon and partially repeats information provided by Old Kent's outside consultants, vendors and others regarding the Year 2000 readiness of Old Kent and its customers, vendors and other parties. Although management believes this information to be accurate, it has not in each case independently verified such information.

BALANCE SHEET CHANGES
Total interest-earning assets decreased 3.8% or $575 million from December 31, 1998. Loans increased $939 million or 10.6 % since year end 1998. Total securities decreased $280 million since year-end 1998. Mortgages held-for-sale decreased 39.1% or $884 million. Other interest-earning assets, primarily representing securitized mortgages classified as trading account securities, decreased $350 million since year end 1998.

Total deposits decreased $576 million or 4.5% from year-end 1998; noninterest-bearing deposits decreased 7.1 % or $149 million and interest-bearing deposits decreased 3.9% or $427 million. Other borrowed funds decreased $14 million from December 31, 1998.



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LIQUIDITY AND CAPITAL RESOURCES
The maintenance of an adequate level of liquidity is necessary to ensure that sufficient funds are available to meet customers' loan demand and deposit withdrawals. Old Kent Bank's liquidity sources consist of securities available-for-sale, maturing loans and securities held-to-maturity, and other short-term investments. Liquidity has also been obtained through liabilities such as customer-related core deposits, funds borrowed, certificates of deposit and public funds deposits.

Old Kent has filed a shelf registration to issue $250 million of common stock, preferred stock, depository shares, debt securities or warrants and a shelf registration to issue an additional $200 million of trust preferred securities. In addition, Old Kent has a $150 million committed line of credit from a syndicate of commercial banks. Sales of securities under these registration statements or advances against the line of credit could also be used as sources of liquidity and capital if and as needed.

At June 30, 1999, shareholders' equity was $1,072.3 million compared to $1,135.1 million at December 31, 1998. The changes in total shareholders' equity and book value per common share are summarized in the tables below.

  Total Share-    
  holders' Equity   Book Value Per
  (in millions)   Common Share
Balance, December 31, 1998 $1,135.1   $10.34
Net income for the six months ended 120.6   1.11
     June 30, 1999      
Cash dividends paid (41.3)   (.38)
Change in other comprehensive income (43.3)   (.40)
Other Changes 1.9   .02
Stock repurchases (net of stock issued) (100.7)
   (.72)
Balance, June 30, 1999 $1,072.3
   $ 9.97

As shown in the table below, the Corporation repurchased approximately 1.1 million shares of its common stock during the three months ended June 30, 1999. These shares were repurchased pursuant to previously announced authorizations by Old Kent's board of directors. The repurchase of these shares had a beneficial effect on earnings per common share and return on average equity for the three month period ended June 30, 1999.

Old Kent Common Stock repurchased and reserved for future reissuance in connection with:

          Dividend
          Reinvestment
      Stock   and Employee
  Total   Dividends   Stock Plans
Shares reserved at 3/31/99 5,092,222   3,900,000   1,192,222
Shares repurchased 1,118,209   1,118,209   0
Shares reissued (221,880)
   0
   (221,880)
Shares reserved at 6/30/99 5,988,551
   5,018,209
   970,342


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For a number of years, Old Kent has been authorized by its board of directors to repurchase shares in connection with the Corporation's Dividend Reinvestment and Employee Stock Plans, and on a quarterly basis has systematically maintained a level of shares equivalent to permissible needs.

At June 30, 1999, Old Kent held 5,988,551 shares of its common stock reserved for reissuance as detailed in the table above. These shares were repurchased under a June, 1998 board of directors authorization allowing management to repurchase up to 6 million shares of Old Kent Common Stock intended for future reissuance in connection with stock dividends, dividend reinvestment and employee stock plans, and other corporate purposes. Under the authorization, approximately 5.1 million of the total 6.0 million shares authorized are intended for anticipated future stock dividends. This number of shares was repurchased prior to the stock dividend paid in July, 1999 in a systematic pattern (on a quarterly ratable basis) of open market and privately negotiated transactions. The remaining .9 million shares of the authorization are intended for reissue in connection with the Corporation's dividend reinvestment and employee stock plans, as well as other unspecified corporate purposes such as business acquisitions accounted for as purchases.

At Old Kent's Annual Shareholders meeting in April 1999, the Stock Incentive Plan of 1999 was approved. Stock options have been an important component of Old Kent's executive incentive programs for many years. This new plan awards options to a much broader group of employees. The management of Old Kent believes that stock options are inherently performance-based compensation, in that they depend entirely on growth in stock price for their value. As of June 21, 1999, the Compensation Committee of the Old Kent Board of Directors approved grants of approximately 1.8 million stock options (adjusted for the 5% stock dividend) to employees.

In June, 1999, the Board of Directors of Old Kent Financial Corporation declared a 5% stock dividend payable July 19, 1999, to shareholders of record on June 29, 1999. All per share amounts included in this report have been adjusted to reflect this dividend.

At that same meeting, Old Kent's Directors authorized management, at its discretion, to purchase up to 3.0 million shares of the Corporation's common stock. It is anticipated that these shares will be purchased by the Corporation in a systematic program of open market or privately negotiated purchases. They will be reserved for later reissue in connection with a potential future stock dividends, the dividend reinvestment plan, employee benefit plans, and other general corporate purposes.

Total equity at June 30, 1999, was decreased by an after-tax unrealized loss of $23 million on securities available-for-sale. Shareholders' equity as a percentage of total assets as of June 30, 1999, was 6.73%.

The following table represents the Registrant's consolidated regulatory capital position as of June 30, 1999:







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Regulatory capital at June 30, 1999
(in millions)     Tier 1   Total
  Leverage   Risk-Based   Risk-Based
  Ratio   Capital   Capital
Actual capital $1079.9   $1079.9   $1,330.2
Required minimum regulatory capital 483.6
   479.3
   958.6
Capital in excess of requirements $ 596.3
   $ 600.6
   $  371.6
Actual ratio 6.70%   9.01%   11.10%
Regulatory Minimum Ratio 3.00%   4.00%   8.00%
Ratio considered "well capitalized"  
     by regulatory agencies 5.00%   6.00%   10.00%









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Item 3. Quantitative and Qualitative Disclosures about Market Risk.


The information concerning quantitative and qualitative disclosures about market risk contained and incorporated by reference in Item 7A of the Corporation's Form 10-K Annual Report for its fiscal year ended December 31, 1998, is here incorporated by reference.

Old Kent faces market risk to the extent that both earnings and the fair values of its financial instruments are affected by changes in interest rates. The Corporation manages this risk with three tools: static GAP analysis, simulation modeling, and economic value of equity estimation. Throughout the first six months of 1999, the results of these three measurement techniques were within the Corporation's policy guidelines. The Corporation does not believe that there has been a material change in the Corporation's primary market risk exposures, including the categories of market risk to which the Corporation is exposed and the particular markets that present the primary risk of loss to the Corporation. As of the date of this Form 10-Q Quarterly Report, the Corporation does not know of or expect there to be any material change in the general nature of its primary market risk exposure in the near term.

The methods by which the Corporation manages its primary market risk exposures, as described in the sections of its Form 10-K Annual Report incorporated by reference in response to this item, have not changed materially during the current year. As of the date of this Form 10-Q Quarterly Report, the Corporation does not expect to change those methods in the near term. However, the Corporation may change those methods in the future to adapt to changes in circumstances or to implement new techniques.

The Corporation's market risk exposure is mainly comprised of its vulnerability to interest rate risk. Prevailing interest rates and interest rate relationships are primarily determined by market factors which are outside of Old Kent's control. All information provided in response to this item consists of forward looking statements. Reference is made to the section captioned "Forward Looking Statements" at the beginning of this Form 10-Q Quarterly Report for a discussion of the limitations on Old Kent's responsibility for such statements. In this discussion, "near term" means a period of one year following the date of the most recent balance sheet contained in this report.







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Item 6. Exhibits and Reports on Form 8-K


          (a)          The following exhibits are filed as part of this report:

Number   Exhibit
2.1   Agreement and Plan of Merger between CFSB Bancorp, Inc., Old Kent Financial Corporation and OKFC Acquisition Corporation. Previously filed as Exhibit 2 to Old Kent's Form S-4 Registration Statement (Registration No. 333-75653) filed April 27, 1999. Here incorporated by reference.
 
2.2   Agreement and Plan of Merger between Pinnacle Banc Group, Inc., Old Kent Financial Corporation and OKFC Merger Corporation. Previously filed as Exhibit 2.1 to Old Kent's Form S-4 Registration Statement (Registration No. 333-78801) filed May 19, 1999. Here incorporated by reference.
 
2.3   Agreement and Plan of Merger between Merchants Bancorp, Inc., Old Kent Financial Corporation and Merchants Acquisition Corporation. Previously filed as Exhibit 2.1 to Old Kent's Form 8-K Current Report dated July 24, 1999. Here incorporated by reference.
 
3.1   Restated Articles of Incorporation. Previously filed as Exhibit 3.1 to Old Kent's Form S-4 Registration Statement (Registration No. 333-56209) filed June 5, 1998. Here incorporated by reference.
 
3.2   Bylaws. Previously filed as Exhibit 3.2 to Old Kent's Form 8-K Current Report dated March 15, 1999. Here incorporated by reference.
 
12   Ratio of Earnings to Fixed Charges
 
27   Financial Data Schedule

          (b)          The following reports on Form 8-K were filed during the second quarter of 1999:

  Date of Event Item   Financial Statements
  Reported Reported   Filed
 
  April 15, 1999 5   na
  June 21, 1999 5   na





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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


  OLD KENT FINANCIAL CORPORATION
 
 
Date: August 13, 1999 By /s/ David J. Wagner
       David J. Wagner
            Chairman of the Board, President and
            Chief Executive Officer
 
 
Date: August 13, 1999 By /s/ Mark F. Furlong
       Mark F. Furlong
            Executive Vice President and
            Chief Financial Officer






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EXHIBIT INDEX

Number   Exhibit
2.1   Agreement and Plan of Merger between CFSB Bancorp, Inc., Old Kent Financial Corporation and OKFC Acquisition Corporation. Previously filed as Exhibit 2 to Old Kent's Form S-4 Registration Statement (Registration No. 333-75653) filed April 27, 1999. Here incorporated by reference.
 
2.2   Agreement and Plan of Merger between Pinnacle Banc Group, Inc., Old Kent Financial Corporation and OKFC Merger Corporation. Previously filed as Exhibit 2.1 to Old Kent's Form S-4 Registration Statement (Registration No. 333-78801) filed May 19, 1999. Here incorporated by reference.
 
2.3   Agreement and Plan of Merger between Merchants Bancorp, Inc., Old Kent Financial Corporation and Merchants Acquisition Corporation. Previously filed as Exhibit 2.1 to Old Kent's Form 8-K Current Report dated July 24, 1999. Here incorporated by reference.
 
3.1   Restated Articles of Incorporation. Previously filed as Exhibit 3.1 to Old Kent's Form S-4 Registration Statement (Registration No. 333-56209) filed June 5, 1998. Here incorporated by reference.
 
3.2   Bylaws. Previously filed as Exhibit 3.2 to Old Kent's Form 8-K Current Report dated March 15, 1999. Here incorporated by reference.
 
12   Ratio of Earnings to Fixed Charges
 
27   Financial Data Schedule



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