Toledo, OH (PRWEB) July 11, 2014
In the highest premium to tangible book value deal since 2010 involving a Chicagoland community bank, Austin Associates, LLC, an Ohio-based financial institutions investment banking and consulting firm, served as financial advisor to Matteson, IL-based Great Lakes Financial Resources, Inc. in a proposed merger with First Midwest Bancorp, Inc., headquartered in Itasca, IL. The cash and stock deal would combine Great Lakes, a $580-million asset community banking company with the $8.3-billion asset First Midwest in a $58 million transaction that represents a premium of 132 percent over Great Lakes' March 31, 2014 tangible book value and more than 18 times its last 12-months earnings.
The total deal value represents the highest premium to tangible book value involving a Chicago-area community bank since 2010. "M&A has been a hot topic of discussion in many community bank board meetings since mid-2013," said Rick Maroney, who co-manages Austin Associates' investment banking practice area. The Chicago MSA is one of the most competitive banking markets in the United States with approximately 125 community banks with total assets under $1 billion. "This deal may be the breakthrough in transaction pricing that might compel more community banks to identify and negotiate with prospective merger partners," Maroney added.
"A low interest rate environment, rising regulatory and technology costs and pervasive competition are constraining earnings growth that often leads to less than desirable shareholder returns," says Craig Mancinotti, who co-manages Austin's investment banking practice area with Maroney. "Community bank business models are constantly changing in response to an evolving financial services industry that more than ever relies on economies of scale and technologically-oriented service delivery channels to drive profitability," Mancinotti added.
The deal is expected to close by year-end 2014 following all regulatory and shareholder approvals. The Great Lakes transaction is Austin's sixth M&A deal announcement in 2014.