Fed approves Old National’s bid to buy First Midwest

The Federal Reserve Board has approved Old National Bancorp’s $2.5 billion purchase of First Midwest Bancorp in Chicago.

Evansville, Indiana-based Old National, which has $24.5 billion of assets, announced last June that it would buy the $21.8 billion-asset First Midwest in an all-stock deal.

The companies initially hoped to close the deal by the end of 2021, but the approval process slowed as regulators dealt with a flurry of M&A activity and pandemic-fueled staffing shortages, and as advocacy groups raised objections.

In July, numerous housing advocacy organizations asked regulators to hold public hearings on the proposed merger, citing Old National’s record of lending in low-income areas. Three months later, the Fair Housing Center of Indiana sued Old National, alleging mortgage discrimination, which the bank denied.

Earlier this month, Old National executives expressed optimism that regulators would approve the deal this quarter.

The deal has been billed as a merger of equals, although Old National will be the surviving brand and Old National investors will own 56% of the company. Old National Chairman and Chief Executive James Ryan will be CEO of the combined entity, while First Midwest Chairman and CEO Michael Scudder will become executive chairman.

The resulting company will have $45.8 billion of assets and roughly $35.4 billion of deposits, the Fed said Thursday in a statement. After the deal closes, Old National will be the 59th-largest bank in the U.S. and the 10th-largest bank in the state of Illinois. It will become the fourth-largest bank in the state of Indiana and the eighth largest in Wisconsin.