First Midwest Bank acquires Standard Bank and Trust

First Midwest Bank has acquired Standard Bank and Trust for $365m, granting it access to Standard Bank and Trust's 35 branches and expanding its position in the southwest. The merger also provides First Midwest Bank with an additional $2.5bn of assets and $1.8bn in loans. The acquisition is expected to be completed by 2017 following its approval from shareholders and regulators.

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First Midwest Bank is acquiring Hickory Hills' 35-branch Standard Bank and Trust Co. for $365 million. (Stacey Wescott / Chicago Tribune)

First Midwest Bank is bolstering its footprint in the south suburbs with its acquisition of the 35-branch Standard Bank and Trust Co. for $365 million, but some locations are likely to disappear because of overlap.

The merger, announced Tuesday evening, will add $2.5 billion in assets and proximate branches across the south suburbs and northwest Indiana to First Midwest's growing suburban presence. It is the Itasca-based bank's fifth acquisition in two years, and its largest to date.

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"It solidifies our position as the leading business bank in our markets," Mike Scudder, 55, president and CEO of First Midwest Bancorp, said Wednesday.

First Midwest has 110 locations and assets of about $10.7 billion, making it the 12th largest bank in the Chicago area. It acquired National Bank & Trust Co. of Sycamore, Ill., in March, and Peoples' Bank of Arlington Heights late last year.

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Founded in 1947, Hickory Hills-based Standard occupies a banking space similar to First Midwest, with strong business and wealth management offerings. Standard has $1.8 billion in loans, most of which are commercial. It also presents significant geographic overlap, with 21 of its 35 branches located within 3 miles of an existing First Midwest branch.

"We would anticipate that there would be some branch closures as part of this," said Mark Sander, 57, president and chief operating officer of First Midwest Bank.

The Standard acquisition is expected to close later this year or in early 2017, pending approval by regulators and shareholders, moving another rival bank under the First Midwest banner.

Lawrence Kelley, Standard's president and CEO, will become market president for First Midwest in the bank's southern metro region. He will also join First Midwest's board.

A decision on which branches to close will be made with the next month or two, executives said. Both First Midwest and Standard locations will be under consideration for closure, but those closings won't take place until next year.

"In some cases, Standard's location may be preferred to our own," Scudder said. "It's all about keeping the best of both franchises."

Founded in 1940 in Joliet, First Midwest became a publicly traded company in 1983. In recent years it has been at or near the top of the list of Midwest banks with the most satisfied retail customers in J.D. Power surveys.

As part of its recent acquisition spree, First Midwest said it planned to close several branches and sell a dozen already-closed offices and seven land parcels previously bought for expansion, citing the evolution to mobile and online banking.

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First Midwest is looking at cutting noninterest expenses at Standard by 40 percent, or about $30 million per year, with a portion of the cost savings coming through staffing reductions. Executives declined Wednesday to speculate how many employees would be laid off as a result of the acquisition.

Scudder said the biggest driver of the deal was the strategic expansion of First Midwest.

"It positions us to expand and deliver a broader product set to the existing clients that Standard has and builds on a leading market share for us," he said.

While its assets will grow by about 25 percent with the Standard acquisition, First Midwest will remain the 12th-largest bank in Chicago, just shy of MB Financial Bank, which along with First Midwest, Wintrust and PrivateBancorp, has been among the few midsize publicly traded banks based in the Chicago area.

PrivateBank's parent, Chicago-based PrivateBancorp, announced Wednesday it is in a deal to be acquired by Toronto-based CIBC for $3.8 billion.

Chicago Tribune's Becky Yerak contributed.

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rchannick@tribpub.com

Twitter @RobertChannick