Chicago-based First Midwest Bancorp said Tuesday it will merge in a $6.5 billion deal with Old National Bancorp of Evansville, Indiana.
The merger will eliminate the name of First Midwest Bank, ranked as the ninth-largest savings institution in the Chicago area with deposits of about $14 billion. The combined company will use the Old National name and will maintain dual headquarters in Chicago and Evansville.
First Midwest stockholders will own about 44% of the new company once the merger is completed. They would get 1.1336 Old National shares for each First Midwest share they own. The transaction is expected to close in late 2021 or early 2022.
Executives said the deal will unite companies with similar values about customer service, a commitment to Midwest markets and little overlap in branch networks. Old National is strong in central and southern Indiana, near Detroit and Minneapolis-St. Paul, while First Midwest is rooted in Chicago, southeast Wisconsin and northwest Indiana.
“We believe we are creating the premier banking franchise in the Midwest,” Michael Scudder, First Midwest chairman, told stock analysts on a conference call. Scudder will be executive chairman of the new company. Jim Ryan, chairman and CEO of Old National, will continue as CEO.
Both men emphasized the cultural similarities of the two banks. Scudder said the evolution into a larger institution, with $34 billion in deposits, will benefit customers and the bank’s employees. While the Chicago-area banks will get a new name, “What we do is not going to change,” he said.
Other leadership positions in the combined company will be roughly divided among First Midwest and Old National executives. A new 16-member board will have eight from each side.
Ryan said First Midwest’s staff brings “exceptional consumer and commercial banking services” to the mix, with the new bank enjoying “powerful synergies, additional market coverage and financial strength.”
First Midwest has 112 branches in the Chicago region, according to 2020 data from the Federal Deposit Insurance Corp.