First Midwest Bank name to vanish in $6.5 billion merger with Indiana-based Old National

First Midwest Bank and Indiana-based Old National Bank announced a $6.5 billion merger Monday that will create a regional bank with $45 billion in combined assets — and end the First Midwest name.

The all-stock “merger of equals” will move Chicago-based First Midwest under the larger Old National banner, with combined executive teams, a six-state footprint and dual headquarters in Chicago and Evansville, Indiana.

“Together, we will have an extensive and diversified Midwest footprint, anchored in Chicago and with a strong presence in many of the most important Midwestern markets,” Michael Scudder, chairman and CEO of First Midwest, said during a joint investor call Monday. “Our enhanced scale, our prospects for growth, all combine to allow us to compete more effectively, both with the largest banking organizations, as well as our traditional competitors that we have today.”

Scudder will serve as executive chairman, while Jim Ryan, chairman and CEO of Old National, will be CEO of the combined bank.

Under the terms of the deal, First Midwest shareholders will receive 1.1336 shares of Old National common stock for each share they own. Upon completion, First Midwest shareholders will own about 44% of the combined company. The transaction, which values First Midwest at $2.5 billion, is expected to close in late 2021 or early 2022, pending regulatory and shareholder approval.

The combined bank will be tied with Wintrust Financial as the fifth largest Midwest-based bank in total assets, and the 10th largest bank in Chicago in terms of deposits, according to S&P Global Market Intelligence data provided by Old National and First Midwest.

Merger discussions began in January, according to Ryan, bringing together regional banks with similar strengths — middle market business lending, commercial real estate, mortgages and consumer banking — with minimal geographic overlap.

“There’s a little bit of overlap between our two franchises actually, in Danville, Illinois, and then most recently, with their acquisition in Milwaukee, but we think they’re very complementary,” Ryan said. “And we need as many people out interfacing with clients as possible. So we don’t think there’s any need to do anything different than we’re doing today.”

The Chicago area is new turf for Old National, and the longtime home for First Midwest.

First Midwest has $21 billion in assets and more than 100 branches in Chicago and the suburbs. The bank had been on a buying spree in recent years, acquiring Waukegan-based NorStates Bank and south suburban Bridgeview Bank in 2018, and expanded into southeast Wisconsin in 2019.

Founded in 1940 as Union National Bank and Trust Company of Joliet, the bank grew through mergers and became a publicly traded company, First Midwest Bancorp, in 1983. First Midwest has branches in Illinois, Wisconsin, Indiana and Iowa.

In January, First Midwest closed 17 branches, or about 15% of its branch network.

Old National was founded in Evansville in 1834 and is the largest Indiana-based bank with nearly $24 billion in assets. Old National has 162 locations in Indiana, Illinois, Kentucky, Michigan, Minnesota and Wisconsin.

While Chicago will be the combined bank’s largest market and home to the most branches, the 40-year-old First Midwest brand name is being eliminated after “a good amount of discussion” and consultation with “outside resources” in Chicago, Mark Sander, president and chief operating officer of First Midwest, said during the call.

All 108 of the First Midwest branches will convert to the Old National name after the merger is complete.

“We thought this was the best name for the combined company,” Sander said. “And so we just have to help our colleagues and our clients with that transition.”