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Old National (ONB), First Midwest (FMBI) Merger Gets Fed Nod
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Old National Bancorp (ONB - Free Report) and First Midwest Bancorp, Inc. have received the approval from the Federal Reserve for their merger of equal transaction, which was announced on Jun 1, 2021. The merger deal has already received a nod from the Office of the Comptroller of the Currency and stockholders of both companies, last year. Further, it was unanimously approved by the boards of directors of both companies.
With all approvals in place, the merger is expected to be completed on Mar 1, 2022, subject to customary closing conditions. The system conversion is expected to be completed by July 2022.
The combined company, to be one of the largest banks headquartered in the Midwest with $45 billion in assets, will operate under the name Old National Bancorp and Old National Bank. It will have dual headquarters at Evansville, IN and Chicago. The merger will lead to better commercial banking services,an improved wealth platform and a robust retail footprint.
First Midwest chairman and CEO, Mike Scudder, who will become Old National’s chairman once the merger is completed, said, “This partnership is, at its core, a growth strategy, and as a combined organization, we will be in an even stronger position to invest, grow and innovate in talent, capabilities and services that will further set us apart as a market leader across the Midwest.”
At the time of announcing the deal, it was noted that First Midwest stockholders will receive 1.1336 shares of Old National common stock for each share of First Midwest common stock they own. Thus, following the completion, former First Midwest stockholders will own about 44% of the combined company. Further, at that time, it was expected that the earnings per share (EPS) accretion would be 22% for Old National and 35% for First Midwest. This excludes merger charges and takes into consideration the fully phased-in cost savings.
Our Take
Old National and First Midwest have been strengthening their footprints and commercial banking operations, and expanding inorganically through strategic acquisitions. We believe that the combined company will create more value for its shareholders.
Over the past year, shares of Old National have gained 7% and First Midwest has increased 21.6%. Over the same time period, the industry grew 12.2%.
Several companies from the finance sector are undertaking consolidation efforts to improve competencies in a bid to counter the low-interest-rate environment and diversify revenues.
In a move to enhance M&A advisory service competencies in the digital infrastructure sector, Citizens Financial Group, Inc. (CFG - Free Report) announced a definitive agreement to acquire substantially all assets of DH Capital LLC on Dec 15, 2021.
The move marks Citizens Financial’s third acquisition over the past four months to augment its corporate advisory team. In September 2021, CFG had closed the buyout of Willamette Management Associates, and had acquired JMP Group in November.
Velocity Financial, Inc. (VEL - Free Report) acquired the majority stake in Century Health & Housing Capital on Dec 28, 2021. Century, licensed “Ginnie Mae” issuer and servicer, offers government-insured Federal Housing Administration, mortgage financing for multi-family housing, senior housing and long-term care/assisted living facilities.
The acquisition will help Velocity Financial leverage Century’s well-established platform and diversify revenues with the addition of fee-based origination and servicing income. This, along with Velocity Financial’s national origination footprint, offers ample development scope for origination growth and the expansion of commercial mortgage product offerings.
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Old National (ONB), First Midwest (FMBI) Merger Gets Fed Nod
Old National Bancorp (ONB - Free Report) and First Midwest Bancorp, Inc. have received the approval from the Federal Reserve for their merger of equal transaction, which was announced on Jun 1, 2021. The merger deal has already received a nod from the Office of the Comptroller of the Currency and stockholders of both companies, last year. Further, it was unanimously approved by the boards of directors of both companies.
With all approvals in place, the merger is expected to be completed on Mar 1, 2022, subject to customary closing conditions. The system conversion is expected to be completed by July 2022.
The combined company, to be one of the largest banks headquartered in the Midwest with $45 billion in assets, will operate under the name Old National Bancorp and Old National Bank. It will have dual headquarters at Evansville, IN and Chicago. The merger will lead to better commercial banking services,an improved wealth platform and a robust retail footprint.
First Midwest chairman and CEO, Mike Scudder, who will become Old National’s chairman once the merger is completed, said, “This partnership is, at its core, a growth strategy, and as a combined organization, we will be in an even stronger position to invest, grow and innovate in talent, capabilities and services that will further set us apart as a market leader across the Midwest.”
At the time of announcing the deal, it was noted that First Midwest stockholders will receive 1.1336 shares of Old National common stock for each share of First Midwest common stock they own. Thus, following the completion, former First Midwest stockholders will own about 44% of the combined company. Further, at that time, it was expected that the earnings per share (EPS) accretion would be 22% for Old National and 35% for First Midwest. This excludes merger charges and takes into consideration the fully phased-in cost savings.
Our Take
Old National and First Midwest have been strengthening their footprints and commercial banking operations, and expanding inorganically through strategic acquisitions. We believe that the combined company will create more value for its shareholders.
Over the past year, shares of Old National have gained 7% and First Midwest has increased 21.6%. Over the same time period, the industry grew 12.2%.
One-Year Price Performance
ONB currently carries a Zacks Rank #4 (Sell), while FMBI has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inorganic Growth Efforts by Other Firms
Several companies from the finance sector are undertaking consolidation efforts to improve competencies in a bid to counter the low-interest-rate environment and diversify revenues.
In a move to enhance M&A advisory service competencies in the digital infrastructure sector, Citizens Financial Group, Inc. (CFG - Free Report) announced a definitive agreement to acquire substantially all assets of DH Capital LLC on Dec 15, 2021.
The move marks Citizens Financial’s third acquisition over the past four months to augment its corporate advisory team. In September 2021, CFG had closed the buyout of Willamette Management Associates, and had acquired JMP Group in November.
Velocity Financial, Inc. (VEL - Free Report) acquired the majority stake in Century Health & Housing Capital on Dec 28, 2021. Century, licensed “Ginnie Mae” issuer and servicer, offers government-insured Federal Housing Administration, mortgage financing for multi-family housing, senior housing and long-term care/assisted living facilities.
The acquisition will help Velocity Financial leverage Century’s well-established platform and diversify revenues with the addition of fee-based origination and servicing income. This, along with Velocity Financial’s national origination footprint, offers ample development scope for origination growth and the expansion of commercial mortgage product offerings.