Long a hotspot for bank M&A, Illinois has kept up the trend this year, with seven deal announcements as of June 24, the second most of any state after California's eight announcements. In 2020, eight deals were announced in Illinois, second only to Texas, and in 2019, 21 deals were announced in the state, again second only to Texas.
Most recently, on June 1, Evansville, Ind.-based Old National Bancorp and Chicago-based First Midwest Bancorp Inc. announced a merger of equals with a value of $2.47 billion in the biggest deal in Illinois since May 2018 when Ohio-based Fifth Third Bancorp announced it would acquire Chicago's MB Financial Inc. for $4.62 billion.
Old National and First Midwest expect to complete their deal by the first quarter of 2022, and the combined company will operate under the Old National brand, running dual headquarters out of Evansville and Chicago.
On May 25, North Liberty, Iowa-based GreenState CU announced that it was buying both Oak Brook, Ill.-based Oxford Bank & Trust as well as Omaha, Neb.-based Premier Bank. If completed, this will mark the fourth Illinois community bank purchased by a credit union since the beginning of 2019.
Overall, the state's community banks lagged the broader industry during the first quarter in all six of the major banking metrics examined by S&P Global Market Intelligence. The state's median return on average equity was 9.32%, compared to 10.68% for the nation as a whole. Similarly, the median net interest margin among Illinois community banks was 3.09%, 27 basis points lower than the national metric.
Similarly, deposits grew by a median 20.0% year over year at the state's community banks, while loans grew by a median 4.1%, compared to 22.1% and 6.8%, respectively, for the broader U.S. banking industry.
With slightly less than $7 billion in assets, Effingham-based Midland States Bank and Chicago-based Byline Bank, Illinois' two largest community banks under $10 billion in assets, posted better net interest margins than the Illinois and national medians in the first quarter. The pair also posted lower efficiency ratios and higher loan growth than their in-state and national peers as well.
On June 2, Midland States completed its acquisition of ATG Trust Co. and its roughly $400 million in assets under management, helping to push Midland's total assets under management in its wealth management business to $4.1 billion.
Earlier this year, Midland States Bancorp Inc.'s president and CEO, Jeffrey Ludwig, said that while the company would be internally focused in 2021, it may look for smaller bolt-on acquisitions or niche businesses, according to a transcript of the company's earnings call on April 23.
Meanwhile, on Byline Bancorp Inc.'s first-quarter earnings call, company President Alberto Paracchini fielded questions on the bank's appetite for M&A. Paracchini noted that while M&A dialogue has picked up recently, it can take time and prove difficult to agree on price with a potential seller.
Byline was an active acquirer in the past, announcing whole-bank deals in 2016, 2017 and 2018.
Forty-eight bank branches were closed in Illinois in the first quarter, while only five were opened as banks look to cut costs and consumers shift toward online banking. Old National led the state with 15 branch closures in the quarter, followed by U.S. Bancorp and Fifth Third, which each closed eight.
Through the year ended March 31, 22 new bank branches were opened in Illinois and 168 closed.
To access a spreadsheet containing first-quarter 2021 financial information for Illinois community banks, click here.