Old National expects deal for First Midwest to close soon

Old National Bancorp in Evansville, Indiana, said that while Federal Reserve approval of its deal to acquire First Midwest Bancorp in Chicago was delayed, regulators’ feedback has been positive and the company expects to close the transaction early this year.

“While we're still waiting on Federal Reserve approval, we continue to have frequent and constructive dialogue with the Fed staff, who assure us our application is complete and ready for review” by the Fed’s board, a final step, Old National Chairman and CEO Jim Ryan said Tuesday during an earnings call.

The $24.5 billion-asset Old National announced in June that it would acquire First Midwest; the $2.5 billion all-stock deal would create a $45 billion-asset regional lender spanning much of the Midwest. The two banks had hoped to close the deal by the end of 2021.

However, the approval process for several large bank deals was drawn out last year as the Fed grappled with increased merger activity and pandemic-related staffing shortages.

Last year was among the most active for bank M&A since the 2008 financial crisis, according to S&P Global. There were 208 bank deals announced in 2021, nearly double the 111 in 2020.

Additionally, President Biden in July issued an executive order calling for closer examination of mergers as part of a broader effort to promote more competition in financial services and other sectors, adding another layer of work for regulators.

“We expect we will hear positive news this quarter. As soon as we hear, we will move expeditiously towards the close,” Ryan said. "There's no outstanding questions or issues that we're aware of and feel like we're in good shape and ready for approval.”

The deal was billed as a merger of equals, though Old National investors would own 56% of the combined company, which would take the Old National name. Ryan will be CEO. Michael Scudder, chairman and CEO of the $21.8 billion-asset First Midwest, will serve as executive chairman.

The combined bank will rank as the sixth-largest Midwestern banking franchise, with a presence in six of the region’s largest markets, including St. Louis, Milwaukee, Minneapolis, Indianapolis and Chicago.

In anticipation of building on the First Midwest acquisition, Old National said it is actively recruiting in Chicago as well as Minneapolis. "I just believe there's always an opportunity to add talent,” Ryan said.

Old National on Tuesday reported fourth-quarter net income of $56.2 million, or 34 cents per share, down from $74.1 million, or 44 cents, a year earlier.