Old Second in Illinois to buy Evergreen Bank for $197 million

Old Second Bancorp in Aurora, Ill., has agreed to buy Bancorp Financial in Oak Brook, Ill.

The $5.7 billion-asset Old Second said in a press release that it would pay $197 million in cash and stock for the parent of the $1.5 billion-asset Evergreen Bank. The deal, which is expected to close in the third quarter, priced Bancorp Financial at 131% of its tangible book value.

Evergreen has three branches, $1.2 billion of deposits and $1.2 billion of loans. It also has a loan-production office in Reno, Nev., and operates two powersports lending divisions.

Darin Cambell, Bancorp Financial’s chairman, will join Old Second’s board and lead consumer lending.

Old Second plans to sell the entire available-for-sale securities portfolio and Evergreen’s solar loan portfolio.

“The partnership provides us with an exciting opportunity to continue to expand our presence in the greater Chicago markets, as well as adding meaningful consumer lending capabilities that we have long lacked,” James Eccher, Old Second’s chairman, president and CEO, said in the release.

“I believe this transaction offers a terrific pro forma balance sheet profile by combining the strength of Old Second’s funding profile with the yield resiliency of Evergreen’s unique asset strategies,” Eccher added. “We believe the combined income statement offers significantly less volatility and a stronger earnings profile in all rate environments.”

The deal is expected to be 16% accretive to Old Second’s earnings per share in its first full year, including cost savings. It should take three years to earn back any dilution to tangible book value.

Old Second expects to incur $17.6 billion of merger-related expenses. It plans to cut 30% of Bancorp Financial’s annual noninterest expenses, or roughly $12 million.