Old Second Bancorp Expands Presence with Strategic Acquisition
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Old Second National Bank Acquires 5 Illinois Branches
Proposed Acquisition to Add $304 Million in Deposits and $12 Million in Loans
Old Second Bancorp, Inc. (“Old Second Bancorp”) (NASDAQ: OSBC), the parent company of Old Second National Bank (“Old Second”), and First Merchants Corporation (“First Merchants Corp.”) (NASDAQ: FRME), the parent company of First Merchants Bank (“First Merchants”), have announced a significant transaction involving the acquisition of branch operations. Old Second has entered into a Purchase and Assumption Agreement to purchase five Illinois branch locations along with branch-related loans and deposits from First Merchants.
Strategic Expansion in the Chicagoland Area
This acquisition represents a pivotal move for Old Second as it enhances its standing as one of the largest banks based in Chicago. By expanding its branch network into the Southeast Chicago market, Old Second aims to bolster its operational scale and market penetration significantly. This development will also mark the completion of First Merchants' exit from suburban Chicago markets, further reshaping the regional banking landscape.
Financial Details of the Transaction
Old Second is set to assume approximately $304 million in deposits as part of this acquisition, in addition to an estimated $12 million in branch-related loans. The bank is expected to provide a deposit premium of 7.5%, equating to approximately $23 million in cash consideration to First Merchants. Following the completion of the transaction, the branches will initially continue to operate under the First Merchants name and will be re-branded as Old Second branches upon closure.
Expected Timeline and Regulatory Approvals
Pending regulatory approval, the closing of this transaction is anticipated to occur towards the end of 2024. This timeline aligns with Old Second Bancorp's commitment to enhancing its market footprint, assuring stakeholders of potential benefits and expanded service offerings once the transaction is completed.
Advisors for the Transaction
Keefe, Bruyette & Woods, Inc. has provided financial advisory services to Old Second Bancorp, while Nelson Mullins Riley & Scarborough LLP has served as the company's legal advisor. For First Merchants Corp., Stephens Inc. acted as financial advisor, and Dentons Bingham Greenebaum LLP took on the legal advisory role.
About Old Second Bancorp
Old Second Bancorp, Inc. is headquartered in Aurora, Illinois and is the banking holding company for Old Second National Bank, which celebrated its 150th anniversary recently. The bank's common stock is traded on the NASDAQ Stock Market under the ticker symbol "OSBC". With approximately $5.7 billion in assets, $4.5 billion in deposits, and $4.0 billion in loans as of mid-2024, Old Second National Bank offers a comprehensive range of financial services tailored to meet customer needs.
About First Merchants Corporation
First Merchants Corporation is a financial holding company based in Muncie, Indiana, with its main operating entity being First Merchants Bank, which also provides wealth advisory services. The company trades on the NASDAQ Global Select Market under the symbol "FRME". First Merchants is known for its wide array of services designed to support both personal and commercial banking needs.
Frequently Asked Questions
What does this acquisition involve?
The acquisition involves Old Second Bancorp purchasing five Illinois branches from First Merchants Corporation along with branch-related loans and deposits.
Why is Old Second Bancorp acquiring these branches?
The acquisition enhances Old Second's presence in the Chicago area and provides an opportunity for improved market penetration and operational scale.
What are the financial details of the transaction?
Old Second will assume approximately $304 million in deposits and $12 million in loans, with a deposit premium of about $23 million for First Merchants.
When is the closing of the transaction expected?
The closure of the acquisition is expected to occur around the end of 2024, pending regulatory approval.
Who are the advisors for this transaction?
Keefe, Bruyette & Woods, Inc. and Nelson Mullins Riley & Scarborough LLP provided advisory services for Old Second, while Stephens Inc. and Dentons Bingham Greenebaum LLP served the same role for First Merchants Corporation.
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