Old Second Bancorp announces $197m acquisition of Bancorp Financial

Old Second Bancorp, Inc. has entered into a definitive agreement to acquire Bancorp Financial, the parent company of Evergreen Bank Group, in a cash-and-stock deal valued at approximately $197 million. The transaction marks a significant expansion for Old Second Bancorp, strengthening its market presence, consumer lending capabilities, and financial growth potential.

The merger agreement, unanimously approved by both companies’ boards, stipulates that Bancorp Financial stockholders will receive 2.5814 shares of Old Second Bancorp common stock and $15.93 in cash per share. Based on the February 24, 2025, closing price of Old Second Bancorp stock at $18.08 per share, the implied purchase price per Bancorp Financial share is $62.60. The transaction is structured to include approximately 75% stock and 25% cash, reinforcing Old Second Bancorp’s commitment to maintaining a strong capital position while driving future growth.

How Does This Merger Strengthen Old Second Bancorp’s Market Position?

The acquisition of Bancorp Financial is a strategic expansion that positions Old Second Bancorp as a stronger competitor in the highly fragmented Chicago banking market. The combined entity is projected to hold $7.1 billion in total assets, $6.0 billion in deposits, and $5.2 billion in loans, making it the second-largest community bank in Chicago with assets under $10 billion.

Old Second Bancorp President and CEO James Eccher described the merger as a significant step forward, emphasizing that the transaction enhances the company’s ability to diversify its revenue streams. He highlighted that Evergreen Bank Group’s strong consumer lending division, particularly in powersport financing, adds a new dimension to Old Second Bancorp’s banking services. The deal also bolsters the company’s loan portfolio diversification, providing a stable earnings profile across economic cycles.

Evergreen Bank Group Chairman Darin Campbell stated that the merger represents a seamless alignment of business philosophies, ensuring continued growth and an enhanced customer experience. He noted that Evergreen Bank Group has built a highly regarded national presence in consumer lending, particularly through its FreedomRoad Financial and Performance Finance divisions, which specialize in powersports lending.

What Are the Key Financial and Operational Benefits of This Deal?

The merger is expected to deliver immediate and long-term financial benefits to Old Second Bancorp’s stockholders, with an anticipated 16% earnings-per-share accretion in the first full year following completion. The deal is also expected to drive increased profitability, with projections indicating an over 13-basis-point rise in return on assets and a 267-basis-point improvement in return on tangible common equity.

Old Second Bancorp also intends to leverage excess capital at an internal rate of return exceeding 20%, ensuring that the transaction remains financially prudent while maintaining strong capital ratios. The combined bank’s funding structure will also benefit from Evergreen Bank Group’s high-yielding assets, allowing Old Second Bancorp to mitigate earnings volatility and strengthen its balance sheet.

Eccher emphasized that the acquisition would provide the company with a more resilient income statement, reducing risk exposure while expanding revenue-generating opportunities. He also highlighted that the merger aligns with Old Second Bancorp’s long-term commitment to strengthening its Chicago presence, enhancing technological investments, and expanding consumer-focused banking solutions.

How Will the Merger Enhance Banking Services and Customer Experience?

The combined company will operate a network of 56 branches across the Chicagoland area, ensuring greater accessibility for customers. The merger will also allow Old Second Bancorp to integrate Evergreen Bank Group’s specialized consumer lending expertise, improving the company’s ability to offer tailored financial solutions.

Campbell noted that Evergreen Bank Group’s customer-first approach has played a pivotal role in its success. By joining forces with Old Second Bancorp, he expects that customers will benefit from enhanced product offerings, increased digital banking capabilities, and improved service delivery.

The transaction is also expected to facilitate significant investments in financial technology, allowing Old Second Bancorp to maintain a competitive edge in digital banking and fintech integration.

What Are the Next Steps for the Merger?

The acquisition is subject to customary regulatory approvals and Bancorp Financial stockholder approval, with the expected closing date set for Q3 2025. Both companies have enlisted leading financial and legal advisors to ensure a seamless transition.

Old Second Bancorp has retained Piper Sandler & Co. as its financial advisor and Nelson Mullins Riley & Scarborough LLP as legal counsel. Bancorp Financial has engaged Keefe, Bruyette & Woods, a Stifel Company, as its financial advisor, while Vedder Price P.C. is providing legal guidance.

Eccher assured stakeholders that the integration process would be carefully managed to minimize disruptions for employees and customers. He emphasized that both banks share a commitment to community banking values, ensuring that the combined entity remains focused on local engagement, customer service, and long-term financial stability.

What Does This Deal Mean for the Future of Old Second Bancorp?

The merger represents a transformational growth opportunity, providing Old Second Bancorp with the scale, diversification, and financial strength needed to navigate a rapidly evolving banking landscape. With an expanded product portfolio, a larger geographic footprint, and increased technological investments, the company is well-positioned for long-term success.

Campbell reiterated his optimism about the future, stating that the combined institution would be stronger, more competitive, and better equipped to serve customers and communities. He also emphasized that the deal would provide new career opportunities for employees, fostering a collaborative and growth-oriented corporate culture.

As Old Second Bancorp prepares for the integration process, industry analysts expect that the acquisition will drive greater shareholder value, enhance earnings stability, and improve operational efficiencies. The transaction underscores a broader trend in the financial sector, where regional banks are leveraging strategic mergers to strengthen their market positions and enhance their service offerings.