Old Second Bancorp, Inc. ("Old Second Bancorp") and First Merchants Corporation ("First Merchants Corp.") have announced a significant transaction involving Chicagoland branch operations. Old Second National Bank, a subsidiary of Old Second Bancorp, is set to acquire 5 Illinois branch locations in the southeast Chicago MSA from First Merchants Bank, along with certain branch-related loans and deposits.
The acquisition is expected to add approximately $304 million in deposits and $12 million in loans to Old Second's portfolio. As part of the agreement, Old Second will pay a deposit premium of 7.5%, totaling approximately $23 million in estimated cash consideration to First Merchants.
This move aims to enhance Old Second's position as one of the largest banks headquartered in the Chicagoland area, providing improved scale and penetration in the southeast Chicago market. The branches to be acquired by Old Second will operate as First Merchants branches until the closing of the transaction, after which they will be re-branded as Old Second branches.
As of June 30, 2024, Old Second has approximately $5.7 billion in assets, $4.5 billion in deposits, and $4.0 billion in loans. This acquisition is expected to further strengthen the bank's presence and offerings in the region.
The closing of the transaction is subject to regulatory approval, but it is anticipated to occur near the end of 2024. Keefe, Bruyette & Woods, Inc. and Nelson Mullins Riley & Scarborough LLP served as financial and legal advisors, respectively, to Old Second Bancorp, while Stephens Inc. and Dentons Bingham Greenebaum LLP served in the same capacity for First Merchants Corp.
This development marks a significant strategic move for both institutions, with Old Second Bancorp expanding its footprint and First Merchants Corporation completing its branch exit from suburban Chicago markets. Today the company's shares have moved -1.1% to a price of $16.39. Check out the company's full 8-K submission here.
