Old Second National Bank Expands with Acquisition of 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”), has announced a significant acquisition involving First Merchants Corporation (“First Merchants Corp.”) (NASDAQ: FRME), the parent company of First Merchants Bank (“First Merchants”). Old Second has signed a Purchase and Assumption Agreement to acquire five branch locations in Illinois, along with associated loans and deposits from First Merchants.
Strategic Growth in the Chicagoland Area
This acquisition marks a crucial step for Old Second as it solidifies its position as one of the largest banks headquartered in Chicago. By expanding its branch network into the Southeast Chicago market, Old Second aims to significantly enhance its operational scale and market presence. This move will also signal the completion of First Merchants' exit from the suburban Chicago markets, reshaping the regional banking landscape.
Financial Aspects of the Acquisition
As part of this acquisition, Old Second will take on approximately $304 million in deposits and about $12 million in branch-related loans. The bank plans to offer a deposit premium of 7.5%, which amounts to roughly $23 million in cash consideration to First Merchants. Initially, the branches will continue to operate under the First Merchants name until they are rebranded as Old Second branches after the transition.
Timeline and Regulatory Approvals
The closing of this transaction is expected to take place towards the end of 2024, pending regulatory approval. This timeline reflects Old Second Bancorp's commitment to expanding its market presence, assuring stakeholders of the potential benefits and enhanced service offerings that will follow the completion of the acquisition.
Advisory Team for the Transaction
Old Second Bancorp received financial advisory services from Keefe, Bruyette & Woods, Inc., while legal advice was provided by Nelson Mullins Riley & Scarborough LLP. For First Merchants Corp., Stephens Inc. acted as the financial advisor, and Dentons Bingham Greenebaum LLP served as the legal advisor.
About Old Second Bancorp
Old Second Bancorp, Inc., based in Aurora, Illinois, is the banking holding company for Old Second National Bank, which recently celebrated its 150th anniversary. The bank's common stock is traded on the NASDAQ Stock Market under the ticker symbol "OSBC". As of mid-2024, Old Second National Bank boasts approximately $5.7 billion in assets, $4.5 billion in deposits, and $4.0 billion in loans, offering a wide range of financial services designed to meet the needs of its customers.
About First Merchants Corporation
First Merchants Corporation is a financial holding company located in Muncie, Indiana, with its primary operating entity being First Merchants Bank, which also provides wealth advisory services. The company is listed on the NASDAQ Global Select Market under the symbol "FRME". First Merchants is recognized for its extensive range of services tailored to meet both personal and commercial banking needs.
Frequently Asked Questions
What does this acquisition involve?
The acquisition entails Old Second Bancorp purchasing five Illinois branches from First Merchants Corporation, along with related loans and deposits.
Why is Old Second Bancorp acquiring these branches?
This acquisition will enhance Old Second's presence in the Chicago area and create opportunities for improved market penetration and operational scale.
What are the financial details of the transaction?
Old Second is set to assume about $304 million in deposits and $12 million in loans, with a deposit premium of approximately $23 million for First Merchants.
When is the closing of the transaction expected?
The acquisition is anticipated to close 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 fulfilled the same role for First Merchants Corporation.
