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OLD KENT FINANCIAL CORP /MI/
10-Q, 1999-11-15
STATE COMMERCIAL BANKS

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q
 

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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 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 Small Business Issuer as Specified in its Charter)

Michigan	38-1986608
(State or Other Jurisdiction of	(IRS Employer Identification No.)
Incorporation or Organization)
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 October 31, 1999 was 117,721,723 shares.

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OLD KENT FINANCIAL CORPORATION

INDEX

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PART 1.	FINANCIAL INFORMATION				Page No.
	Item 1.		Financial Statements
		Consolidated Balance Sheets as of September 30, 1999
			and December 31, 1998		4
		Consolidated Statements of Income for the three and nine
			months ended September 30, 1999 and 1998		5
		Consolidated Statements of Cash Flows for the nine months
			ended September 30, 1999 and 1998		6
		Notes to Consolidated Financial Statements			7
	Item 2.		Management's Discussion and Analysis of Financial
			Condition and Results of Operations		16
	Item 3.		Quantitative and Qualitative Disclosures about Market Risk		21
PART II.	OTHER INFORMATION
	Item 6.		Exhibits and Reports on Form 8-K		22
SIGNATURES					23

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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.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

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

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			September 30,		December 31,
(dollars in thousands)			1999		1998
ASSETS:
Cash and due from banks			$550,848		$667,125
Federal funds sold and resale agreements			71,905		9,730
Total cash and cash equivalents			622,753		676,855
Interest-earning deposits			3,274		7,578
Trading account securities			--		349,090
Mortgages held-for-sale			1,450,667		2,262,694
Securities available-for-sale:
	Collateralized mortgage obligations and other mortgage-
		backed securities	1,825,128		1,841,843
	Other securities		809,775		1,493,659
Total securities available-for-sale (amortized cost of
	$2,688,510 and $3,285,350, respectively)		2,634,903		3,335,502
Securities held-to-maturity:
	Collateralized mortgage obligations and other mortgage-
		backed securities	104,125		180,369
	Other securities		590,437		623,376
Total securities held-to-maturity (market values of
	$682,865 and $823,610, respectively)		694,562		803,745
Loans			11,250,260		10,220,078
Allowance for credit losses			(185,969	)	(179,605	)
Net loans			11,064,291		10,040,473
Premises and equipment			249,671		252,073
Other assets			921,985		886,715
Total Assets			$17,642,106		$18,614,725
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Deposits:
	Non-interest-bearing		$2,010,632		$2,244,534
	Interest-bearing		11,516,617		12,028,829
	Foreign deposits -- interest-bearing		44,196		140,077
		Total deposits	13,571,445		14,413,440
Other borrowed funds			2,330,514		2,404,971
Other liabilities			302,015		274,460
Long term debt			200,000		200,000
Total Liabilities			16,403,974		17,292,871
Shareholders' Equity:
Preferred stock: 25,000,000 shares authorized and unissued			--		--
Common stock, $1 par value: 300,000,000 shares authorized;
	118,105,102 and 114,936,763 shares issued and outstanding		118,105		114,937
Capital surplus			349,238		253,859
Retained earnings			805,633		920,362
Accumulated other comprehensive income/(loss)			(34,844	)	32,696
Total Shareholders' Equity			1,238,132		1,321,854
Total Liabilities and Shareholders' Equity			$17,642,106		$18,614,725

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

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OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
					For the Three Months				For the Nine Months
					Ended September 30,				Ended September 30,
(dollars in thousands, except per share data)					1999		1998		1999		1998
Interest Income:
Interest and fees on loans					$241,840		$222,781		$680,249		$671,151
Interest on mortgages held-for-sale					26,379		26,460		89,869		83,345
Interest on securities available-for-sale					43,457		39,905		145,477		127,621
Interest on securities held-to-maturity:
Taxable					5,239		20,122		19,553		64,289
Tax-exempt					6,273		4,914		18,243		14,204
Interest on deposits					159		209		470		625
Interest on federal funds sold and resale agreements					716		331		1,148		2,063
Interest on trading account securities					--		11		1,609		53
Total interest income					324,063		314,733		956,618		963,351
Interest Expense:
Interest on domestic deposits					114,654		125,339		351,031		375,681
Interest on foreign deposits					755		439		2,926		1,602
Interest on other borrowed funds					31,031		25,465		86,024		94,110
Interest on subordinated debt					3,279		3,405		9,695		10,158
Total interest expense					149,719		154,648		449,676		481,551
Net Interest Income					174,344		160,085		506,942		481,800
Provision for credit losses					6,783		8,664		18,653		36,098
Net interest income after provision
for credit losses					167,561		151,421		488,289		445,702
Other Income:
Mortgage banking revenues (net)					46,352		39,902		139,219		107,860
Investment management and trust revenues					18,556		16,577		55,131		47,283
Deposit account revenues					17,854		16,196		51,336		47,988
Insurance sales commissions					5,956		5,191		17,906		15,681
ATM revenues					2,461		2,226		6,684		5,884
Brokerage commissions					1,470		825		4,322		2,337
Securities gains					3		3,949		7,925		12,552
Nonrecurring income					--		--		--		4,100
Other					11,776		10,686		34,870		32,544
Total other income					104,428		95,552		317,393		276,229
Other Expenses:
Salaries and employee benefits					85,676		80,810		257,919		238,532
Occupancy expense					12,707		11,918		37,931		34,493
Equipment expense					10,580		9,780		31,538		28,994
Amortization of goodwill and intangibles					4,179		4,159		12,636		12,497
Advertising and promotion					3,060		2,978		8,142		9,209
Other expenses					47,401		43,810		149,477		121,178
Total other expenses					163,603		153,455		497,643		444,903
Merger charges					26,000		--		26,000		--
Total					189,603		153,455		523,643		444,903
Income Before Income Taxes					82,386		93,518		282,039		277,028
Income taxes					37,999		31,634		109,108		95,619
Income taxes (applicable to merger charges)					(8,400	)	--		(8,400	)	--
Net Income					$52,787		$61,884		$181,331		$181,409
Earnings Per Common Share:
Basic					$0.45		$0.51		$1.52		$1.45
Diluted					$0.44		$0.50		$1.51		$1.44
Dividends Per Common Share					$0.200		$0.172		$0.580		$0.500
Average number of shares used to compute: (in thousands)
Basic earnings per share					118,448		122,637		119,047		124,277
Diluted earnings per share					119,366		123,796		120,115		125,483

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

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OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Nine months ended September 30,
(dollars in thousands)		1999		1998

CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income	$   181,331		$   181,409
	Adjustments to reconcile net income
	to net cash provided by (used for) operating activities:
	Provision for credit losses	18,653		36,098
	Depreciation, amortization and accretion	43,359		41,796
	Net (gains) losses on sales of assets	(137,296	)	(135,499	)
	Net change in trading account securities.	349,306		1,123
	Originations and acquisitions of mortgages held-for-sale	(9,875,191	)	(9,240,459	)
	Proceeds from sales and prepayments of mortgages held-for-sale	10,635,016		8,976,634
	Net change in other assets	128,779		56,890
	Net change in other liabilities	69,334		(22,036	)
	Net cash provided by (used for) operating activities	1,413,291		(104,044	)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Proceeds from maturities and prepayments of securities available-for-sale	515,092		222,617
	Proceeds from sales of securities available-for-sale	980,727		1,557,228
	Purchases of securities available-for-sale	(887,792	)	(1,793,464	)
	Proceeds from maturities and prepayments of securities held-to-maturity	195,885		490,734
	Purchases of securities held-to-maturity	(86,039	)	(222,369	)
	Net change in interest-earning deposits	4,305		2,236
	Proceeds from sale of loans	9,482		178,532
	Net change in loans	(1,051,633	)	(29,145	)
	Purchases of leasehold improvements, premises and equipment, net	(24,742	)	(23,898	)
	Net cash provided by (used for) investing activities	(344,715	)	382,471
CASH FLOWS FROM FINANCING ACTIVITIES:
	Change in time deposits	(725,733	)	(264,316	)
	Change in demand and savings deposits	(116,261	)	474,041
	Change in other borrowed funds	(74,457	)	(367,104	)
	Repurchases of common stock	(150,551	)	(195,320	)
	Proceeds from common stock issuances	15,944		17,327
	Dividends paid to shareholders	(71,620	)	(72,052	)
	Net cash provided by (used for) financing activities	(1,122,678	)	(407,424	)
	Net change in cash and cash equivalents	(54,102	)	(128,997	)
	Cash and cash equivalents at beginning of year	676,855		727,041
	Cash and cash equivalents at September 30	$  622,753		$  598,044
	Supplemental disclosures of cash flow information:
	Interest paid on deposits, other borrowed funds and
	subordinated debt	$  448,670		$  488,259
	Income taxes paid	46,771		46,270
	Significant non-cash transactions:
	Stock dividend issued	234,446		164,831

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

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OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
September 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 nine month period ended September 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 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.

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

NOTE C: ADOPTION OF FASB 133

In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities as amended by SFAS 137, Deferral of the Effective Date of FASB Statement No. 133. 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, 1998 (and, at Old Kent's election, those issued or acquired before January 1, 1999).

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):
 

				September 30,		December 31,
	Loans:			1999		1998
	Commercial			$3,088,811		$2,818,555
	Real estate - Commercial			2,299,454		2,093,009
	Real estate - Construction			945,731		742,834
	Real estate - Residential mortgages			1,539,215		1,895,912
	Real estate - Consumer home equity			1,774,763		1,125,139
	Consumer			1,388,425		1,378,255
	Lease financing			213,861		166,374
	Total Loans			$11,250,260		$10,220,078

 
 

				September 30,		December 31,
	Nonperforming assets:			1999		1998
	Nonaccrual loans			$50,617		$61,238
	Restructured loans			1,876		3,147
	Impaired loans			52,493		64,385
	Other real estate owned			6,512		8,106
	Total nonperforming assets			$59,005		$72,491
	Loans past due 90 days or more			$17,082		$16,858

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

At September 30, 1999, the Corporation's management has identified loans totaling approximately $17.4 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 September 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 Nine Months
				ended September 30,
	Allowance for Credit Losses			1999		1998
	Balance at beginning of period			$179,605		$173,203
	Changes in allowance due to acquisitions / divestitures / sales			120		(475	)
	Provision for credit losses			18,653		36,098
	Gross loans charged-off			(28,653	)	(41,613	)
	Gross recoveries of loans previously charged-off			16,244		12,821
	Balance at end of period			$185,969		$180,034

 
 

				For the Nine Months
				ended September 30,
	Net Loan Charge-Offs			1999		1998
	Commercial & Commercial Real Estate Loans			$2,840		$14,114
	Consumer			8,046		12,332
	Residential Mortgages			553		514
	Leases			970		1,829
	Total Net Charge-Offs			$12,409		$28,789

NOTE F: SECURITIES AVAILABLE-FOR-SALE

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

									Carrying
					Gross		Gross		Value
			Amortized		Unrealized		Unrealized		at Market
	September 30, 1999:		Cost		Gains		Losses		Value
	U.S. Treasury and federal agency securities		$  609,373		$  674		$11,390		$   598,657
	Collateralized mortgage obligations:
	U.S. Government issued		1,128,835		273		25,466		1,103,642
	Privately issued		304,077		--		4,654		299,423
	Mortgage-backed pass-through securities		435,478		404		13,819		422,063
	State and political subdivisions		16,381		2,948		43		19,286
	Other securities		194,366		82		2,616		191,832
	Total securities available-for-sale		$2,688,510		$ 4,381		$57,988		$2,634,903

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

									Carrying
					Gross		Gross		Value
			Amortized		Unrealized		Unrealized		at Market
	December 31, 1999:		Cost		Gains		Losses		Value

	U.S. Treasury and federal agency securities		$1,168,946		$28,964		$      51		$1,197,859
	Collateralized mortgage obligations:
	U.S. Government issued		1,267,819		8,661		1,817		1,274,663
	Privately issued		366,307		2,057		902		367,462
	Mortgage-backed pass-through securities		198,890		1,499		671		199,718
	State and political subdivisions		16,851		2,591		1		19,441
	Other securities		266,537		11,399		1,577		276,359
	Total securities available-for-sale		$3,285,350		$55,171		$ 5,019		$3,335,502

NOTE G: SECURITIES HELD-TO-MATURITY

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

					Gross		Gross
			Amortized		Unrealized		Unrealized		Market
	September 30, 1999:		Cost		Gains		Losses		Value
	U.S. Treasury and federal agency securities		$ 84,659		$   231		$    209		$   84,681
	Collateralized mortgage obligations:
	U.S. Government issued		33,641		--		456		33,185
	Privately issued		4,963		--		43		4,920
	Mortgage-backed pass-through securities		65,521		1,217		645		66,093
	State and political subdivisions		501,662		6,938		18,732		489,868
	Other securities		4,116		2		--		4,118
	Total securities held to maturity		$694,562		$8,388		$20,085		$682,865
	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

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

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 over the ensuing twelve month period. 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. To date, 750,000 shares have been purchased by the corporation under this authorization.

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 September 30, 1999 and 1998:
 

			Net Interest		Non Interest		Net
			Income		Income and Fees		Income
September 30, 1999
Corporate Banking			$ 39,426		$ 4,388		$17,922
Retail Banking			71,898		16,020		17,655
Community Banking			44,438		9,015		16,721
Investment & Insurance Services			5,032		26,612		7,438
Mortgage Banking			13,511		47,123		6,323
Treasury			39		1,270		4,328
Reconciling Items*			--		--		(17,600	)
Consolidated			$174,344		$104,428		$52,787
September 30, 1998
Corporate Banking			$ 36,112		$ 3,362		$14,319
Retail Banking			67,556		14,173		16,167
Community Banking			43,134		9,908		16,028
Investment & Insurance Services			4,148		23,176		4,829
Mortgage Banking			5,206		39,955		4,212
Treasury			3,929		4,978		6,329
Consolidated			$160,085		$ 95,552		$61,884

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

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

			Net Interest		Non Interest		Net
			Income		Income and Fees		Income
September 30, 1999
Corporate Banking			$114,528		$  11,831		$ 50,803
Retail Banking			207,040		46,165		46,888
Community Banking			129,733		28,090		44,437
Investment & Insurance Services			14,535		79,742		22,022
Mortgage Banking			37,346		140,982		18,718
Treasury			3,760		10,583		16,063
Reconciling Items*			--		--		(17,600	)
Consolidated			$506,942		$317,393		$181,331
September 30, 1998
Corporate Banking			$109,353		$   9,450		$ 43,584
Retail Banking			197,197		40,970		45,384
Community Banking			128,324		37,204		46,644
Investment & Insurance Services			12,055		67,496		14,168
Mortgage Banking			16,815		106,690		10,575
Treasury			18,056		14,419		21,054
Consolidated			$481,800		$276,229		$181,409

*The reconciling items in the table above reflect the one-time charges related to Old Kent's mergers with CFSB Bancorp, Inc. and Pinnacle Banc Group Inc. The merger charges totaled $17.6 million after-tax and are described in more detail in Note M.

NOTE J: OTHER ASSETS

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

				September 30,		December 31,
				1999		1998
Goodwill				$116,488		$122,089
Core Deposit Intangibles				17,276		20,560
Total				$133,764		$142,649

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

				September 30,		December 31,
				1999		1998
MSRs (net of amortization)				$281,038		$227,626
Less servicing impairment reserve				(6,087)		(9,129)
Carrying value of MSRs				$274,951		$218,497
Estimated aggregate fair value of capitalized MSRs				$333,000		$253,000

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

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

				For the Nine Months
				ended September 30,
				1999		1998
Balance at beginning of period				$218,497		$146,359
Additions				212,965		138,483
Sales				(113,778)		(55,577)
Amortization				(45,775)		(37,019)
Impairment Provision				3,042		(4,500)
Balance at end of period				$274,951		$187,746

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 and $2.5 to $5.0 billion during 2000. 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 Nine Months
			ended September 30,		ended September 30,
			1999	1998	1999	1998
Numerators: Numerator for both basic and diluted    earnings per share, net income			52,787,000	61,884,000	181,331,000	181,409,000
Denominators:
Denominator for basic earnings per share, average    outstanding common shares			118,448,000	122,637,000	119,047,000	124,277,000
Potential dilutive shares resulting from employee stock plans			918,000	1,159,000	1,068,000	1,206,000
Denominator for diluted earnings per share			119,366,000	123,796,000	120,115,000	125,483,000
Earnings per share:
Basic			$0.45	$0.51	$1.52	$1.45
Diluted			$0.44	$0.50	$1.51	$1.44

Potential dilutive shares resulting from employee stock plans did not include outstanding options to purchase shares totaling 1.9 million and 3,150 ranging from $40.74 to $41.85 for the three and nine month periods, respectively, ending September 30, 1999. The average market price of Old Kent's common stock was less than the exercise price of these options for those periods. Under the treasury stock method of computing the impact of these options the result would be anti-dilutive and therefore is not included for purposes of calculating diluted earnings per share.

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

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 $41 million and $76 million for the quarters ended September 30, 1999 and 1998, respectively, and approximately $114 million and $197 million for the nine month period ended September 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 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.

On September 3, 1999, Old Kent completed the acquisition of Pinnacle Banc Group, Inc. ("Pinnacle"). The merger was accounted for as a pooling-of-interests. Old Kent exchanged .75285 shares of Old Kent Common Stock for each outstanding share of Pinnacle Common Stock. The issuance totaled approximately 5.7 million shares. Pinnacle was a bank holding company headquartered in the Chicago suburb of Oak Brook, Illinois. When acquired, Pinnacle had assets of approximately $1,005 million and consolidated deposits of approximately $861 million. Pinnacle was the parent of Pinnacle Bank, which operated thirteen branches in the Chicago metropolitan area and Pinnacle Bank of the Quad-Cities which operated three branches in western Illinois.

During the third quarter of 1999, Old Kent recognized $17.6 million of after-tax, merger related charges associated with CFSB and Pinnacle which had the effect of reducing earnings per share by $.15. On a pre-tax basis, the charges consisted of transaction costs of $2.0 million; employment charges of $11.8 million primarily related to redundant staffing; and $12.2 million mainly associated with contract cancellation costs and asset obsolescence for duplicate operations. Old Kent's unexpended reserves were $15.9 million at September 30, 1999.

On July 29, 1999, Old Kent entered into a definitive agreement for the acquisition of Merchants Bancorp, Inc. ("Merchants"). The merger is intended to be accounted for as a pooling-of-interests. Old Kent will exchange .830 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 $984 million and consolidated deposits of approximately $746 million at September 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.

On September 10, 1999, Old Kent entered into a definitive agreement for the acquisition of Grand Premier Financial, Inc. ("Grand Premier"). The merger is intended to be accounted for as a pooling-of-interests. Old Kent will exchange .4231 shares of Old Kent Common Stock for each outstanding share of Grand Premier Common Stock. Old Kent expects to issue approximately 10 million shares related to this transaction. Grand Premier is a bank holding company headquartered in Wauconda, Illinois, with consolidated assets of approximately $1.6 billion and consolidated deposits of approximately $1.4 billion at September 30, 1999. Grand Premier operates 23 banking offices in the Chicago area and Northern

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

Illinois. The merger is subject to shareholder and regulatory approval and is expected to be completed in the second quarter of 2000.

NOTE N: LONG TERM DEBT

Long term debt, as shown in the accompanying consolidated balance sheets, consists of the following:
 

				September 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 a Debenture issued by Old Kent. 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 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.

As discussed in Note M to the Financial Statements, Old Kent completed the mergers of CFSB Bancorp, Inc. as of July 9, 1999 and Pinnacle BancGroup, Inc. as of September 3, 1999 into Old Kent. These mergers were accounted for as pooling-of-interests and all financial information in this report has been adjusted to reflect these business combinations.

RESULTS OF OPERATIONS

Old Kent's net income was $52.8 million for the third quarter of 1999 compared to $61.9 million for the same period of 1998. Third quarter diluted earnings per share was $.44, a 12% decrease from $.50 for the same period last year. For the nine month period ended September 30, 1999, net income was $181.3 million compared to $181.4 million a year ago and diluted earnings per share was $1.51, a 4.9% increase over $1.44 for 1998 year to date.

During the third quarter of 1999, Old Kent recognized $17.6 million of after-tax, merger related charges which had the effect of reducing diluted earnings per share by $.15. Excluding these merger charges, diluted earnings per share was $.59 for the three months ended September 30, 1999 or 18% better than the same period for 1998. Third quarter 1999 operating net income was $70.4 million or 13.7% greater than net income of $61.9 million for the same period for 1998.

Total assets were $17.6 billion at quarter-end compared to $18.6 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 third quarter of 1999 was 16.9% compared to 18.6% for the third quarter of 1998. Return on average assets was 1.18% for the third quarter of 1999 compared to 1.42% for the third quarter of 1998.

Old Kent's net interest income for the third quarter of 1999 was $174.3 million, an 8.9% increase over the $160.1 million recorded in the same period of 1998. For the third quarter of 1999, the net interest margin was 4.33% compared to 4.07% 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 $1.4 billion, while lower yielding securities and mortgages held-for-sale decreased $1.6 billion. On the funding side, savings and DDA combined grew $464 million and wholesale borrowing grew $338 million to offset decreases of $444 million in consumer time and negotiable and foreign deposits. The net of these changes increased the margin by 26 basis points compared to third quarter, 1998.

The provision for credit losses was $6.8 million in the third quarter of 1999 and $8.7 million in the third quarter of 1998. Net credit losses were $2.2 million or .07% of average loans for the third quarter of 1999 compared to $8.4 million or .33% 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 1.65% at September 30, 1999 and 1.76%

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at December 31, 1998. Impaired loans as a percent of total loans was .47% at September 30, 1999 and .63% at December 31, 1998.

Total other operating income, (other income, excluding securities transactions and other nonrecurring income) increased 14% or $12.8 million during the third quarter of 1999 over the same period a year ago. The mortgage banking business contributed $6.4 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 11.9% or $2.0 million as a result of focused sales initiatives and business development efforts. Service charges on deposits increased 10.2% or $1.7 million. All other service charges and fees increased $2.7 million over the same period a year ago.

Old Kent sold approximately $2.8 billion of residential mortgage loans during the quarter. Old Kent's residential third party mortgage servicing portfolio was $15.1 billion at September 30, 1999, and $14.0 billion at December 31, 1998.

Total net securities gains for the third quarter of 1999 were $3 thousand compared to gains of $3.9 million for the same period of 1998.

Total operating expenses excluding merger related charges for the third quarter of 1999 increased $10.1 million, or 6.6%, over the same period in 1998. These increases are primarily attributable to the growth in Mortgage Banking. Old Kent Mortgage Company operated 152 branches in 31 states as of September 30, 1999 compared to 136 branches in 32 states as of September 30, 1998 and 167 branches in 32 states as of June 30, 1999.

Salaries, wages and employee benefits increased $4.9 million or 6.0% for the third quarter of 1999 over the third 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 406 over a year ago, to 8,304 at September 30, 1999.
 

		September 30,
		1999		1998		Change
Full-time equivalent staff:
	Banking units	5,033		5,343		(310)
	Mortgage banking	2,951		2,227		724
	Insurance, leasing & brokerage	320		328		(8)
	Total	8,304		7,898		406

During the third quarter of 1999 compared to the same period a year ago, occupancy expenses increased 6.6%, and equipment expenses increased 8.2%. Other operating expenses increased by 58.3% or $29.7 million over the prior year including $26 million in merger related charges.

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

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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 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 September 30, 1999, Old Kent management believes that it is compliant on all material 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 September 30, 1999, approximately $15.2 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 4.6% or $781 million from December 31, 1998. Loans increased $1.0 billion or 10% since year end 1998. Total securities decreased $810 million since year-end 1998. Mortgages held-for-sale decreased 35.9% or $812 million. Other interest-earning assets, primarily

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primarily representing securitized mortgages classified as trading account securities, decreased $291 million since year end 1998. Total deposits decreased $842 million or 5.8% from year-end 1998; non-interest-bearing deposits decreased 10.4% or $234 million and interest-bearing deposits decreased 5.0% or $608 million. Other borrowed funds decreased $75 million from December 31, 1998.

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 September 30, 1999, shareholders' equity was $1,238.1 million compared to $1,321.9 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 (in millions)		Book Value Per Common Share
Balance, December 31, 1998	$ 1,321.9		$10.95
Net income for the nine months ended	181.3		1.51
September 30, 1999
Cash dividends paid	(71.6	)	(.61	)
Change in other comprehensive income	(67.5	)	(.57	)
Other Changes	1.9		.02
Stock repurchases (net of stock issued)	(127.9	)	(.82	)
Balance, September 30, 1999	$1,238.1		$10.48

As shown in the table below, the Corporation repurchased approximately 750 thousand shares of its common stock during the three months ended September 30, 1999. A portion of 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 September 30, 1999.

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

	Total		Stock Dividends		Dividend Reinvestment and Employee Stock Plans
Shares reserved at 6/30/99	5,988,551		5,018,209		970,342
Shares repurchased	750,000		375,000		375,000
Shares reissued	(5,240,108)		(5,018,209)		(221,899)
Shares reserved at 9/30/99	1,498,443		375,000		1,123,443

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 September 30, 1999, Old Kent held 1.5 million shares of its common stock reserved for reissuance as detailed in the table above. These shares were repurchased under a June, 1999 Board of Directors authorization allowing management to repurchase up to 3.0 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 1.5 million of the total 3.0 million shares authorized are intended for anticipated future stock dividends. These shares will be repurchased in a systematic pattern (on a quarterly ratable basis) of open market and privately negotiated transactions. The remaining 1.5 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.

Total equity at September 30, 1999, was decreased by an after-tax unrealized loss of $35 million on securities available-for-sale. Shareholders' equity as a percentage of total assets as of September 30, 1999, was 7.02%.

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

Regulatory capital at September 30, 1999 (in millions)	Leverage Ratio			Tier 1 Risk-Based Capital		Total Risk-Based Capital
Actual capital	$1,244.7			$1,244.7		$1,510.2
Required minimum regulatory capital	$  533.7			$  531.0		$1,062.0
Capital in excess of requirements	$  711.0			$  713.7		$  448.2
Actual ratio	7.00%			9.38%		11.38%
Regulatory Minimum Ratio	3.00%			4.00%		8.00%
Ratio considered "well capitalized"
by regulatory agencies	5.00%			6.00%		10.00%

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 nine 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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PART II. OTHER INFORMATION

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.
	2.4		Agreement and Plan of Merger between Grand Premier Financial, Inc., Old Kent Financial Corporation and OKFC Merger Corporation. Previously filed as Exhibit 2.1 to Old Kent's Form 8-K Current report dated September 10, 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 third quarter of 1999:

	Date of Event	Item		Financial Statements
	Reported	Reported		Filed
	July 9, 1999	5, 7		N/A
	July 15, 1999	5,7		N/A
	July 29, 1999	5,7		N/A
	August 31, 1999	5		One Month Condensed Combined
				Income Statement (Unaudited)
	September 7, 1999	5,7		N/A

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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.
 

Date:   November 12, 1999	OLD KENT FINANCIAL CORPORATION     /s/ David J. Wagner David J. Wagner      Chairman of the Board, President and      Chief Executive Officer
Date:   November 12, 1999	/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.
	2.4		Agreement and Plan of Merger between Grand Premier Financial, Inc., Old Kent Financial Corporation and OKFC Merger Corporation. Previously filed as Exhibit 2.1 to Old Kent's Form 8-K. Current report dated September 10, 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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