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First Midwest Bancorp in Itasca, Ill., has agreed to buy NI Bancshares in Sycamore, Ill.
November 12 -
CEOS of midsize banks traveled to Washington recently to seek relief from some of the more onerous regulations that they say are making it harder for them to compete with both big banks and largely unregulated marketplace lenders that are aggressively going after their customers.
November 6 -
First Midwest Bancorp in Itasca, Ill., has agreed to buy Peoples' Bank of Arlington Heights in Illinois.
September 22 -
Michael Scudder stands to get a full year of benefits from three recently completed deals. The big question, however, is whether First Midwest will pursue a transformative deal to cross over $10 billion in assets and offset a heightened regulatory burden.
December 29
First Midwest Bancorp in Itasca, Ill., has positioned itself to surpass $10 billion in assets at some point early next year.
The $9.9 billion-asset company
First Midwest's
NI Bancshares is the latest in a series of smaller deals for First Midwest. Late last year, the company bought the $570 million-asset
First Midwest's latest deal "is just another step forward," John Rodis, an analyst at FIG Partners, said. "They'll probably have to take a few more steps."
While $10 billion in assets is the threshold for added compliance, Rodis and other industry observers believe banks need to surpass that mark by at least $2 billion to find enough revenue and efficiencies to offset increased regulatory burden.
First Midwest, for instance, said it expects NI Bancshares and People's to boost annual earnings by 5 cents a share in 2017. But a cap on interchange fees that is expected to take hold in mid-2017 could cost the company 5-7 cents a share in annual revenue.
"It is almost a wash, which leads me to believe that they'll certainly look to do more deals," Rodis said, noting that Chicago is a fragmented market where it is difficult to find a large acquisition target. "To a degree, you have to take what you can get."
First Midwest, meanwhile, isn't planning on shedding assets in order to wait for a large deal to materialize.
"I'm not very good at running backwards," Michael Scudder, the company's chief executive,
First Midwest, meanwhile, will pay $70 million, or $65.86 a share, in cash and stock for NI Bancshares, which is the parent of National Bank & Trust Co. of Sycamore. The bank has 10 branches, $534 million in core deposits, $415 million in loans and more than $700 million in trust assets under administration.
The deal values NI Bancshares at 127% of its tangible book value. First Midwest expects to incur about $9 million in pretax merger-related expenses.
NI Bancshares provides several opportunities for First Midwest to boost its bottom line. The seller has a 69% loan-to-deposit ratio, providing low-cost funding, and an 84% efficiency ratio, suggesting that there is plenty of room for cutting costs.
Alan Kline contributed to this report.