Old Second Bancorp(US:OSBC) ZACKSยท2025-02-27 16:31Core Viewpoint - Old Second National Bancorp, Inc. (OSBC) has entered into a definitive merger agreement to acquire Bancorp Financial, Inc. and its subsidiary Evergreen Bank Group for approximately $197 million, with the consideration being 75% stock and 25% cash [1][2]. Acquisition Details - OSBC will pay $15.93 per share in cash and 2.5814 OSBC shares for each share of Evergreen, with the merger expected to close in Q3 2025, pending regulatory and shareholder approvals [2]. - Bancorp Financial operates two branches in the west and one in the south Chicago suburbs, with total assets of about $1.5 billion, gross loans of $1.2 billion, and deposits of $1.2 billion as of December 31, 2024 [3]. Post-Merger Structure - After the merger, the combined entity will have approximately $7.1 billion in total assets, $5.2 billion in total loans, and $6 billion in total deposits [4]. Strategic Rationale - The acquisition is expected to enhance OSBC's deposit mix and scale, making it the second-largest community bank under $10 billion in assets in the Chicago market, while also expanding its market reach through Evergreen's Powersport lending business [5]. - The CEO of OSBC highlighted the opportunity to enhance consumer lending capabilities and improve the balance sheet profile through the merger [6]. Financial Projections - The deal is projected to be 16% accretive to OSBC's 2026 earnings per share, with expected cost savings of 30% of Evergreen's 2025 non-interest expenses [7][6]. - Tangible book value is anticipated to dilute by 5.9%, with a three-year earn-back period, and improvements in return metrics are expected by 2026 [8]. Growth Strategy - This acquisition aligns with OSBC's inorganic growth strategy, following a previous acquisition of five Illinois branches in December 2024, aimed at expanding its presence in the Chicago region [9]. Market Performance - OSBC shares have increased by 7.8% over the past six months, outperforming the industry growth of 7.1% [10].