Two Illinois bank companies said this week that they have agreed to merge as equals into a $1.6 billion-asset institution that would be among the 10 largest based in the state.
The new company, Grand Premier Financial Inc., would be based in Wauconda, Ill., and is expected to debut in the third quarter after regulatory and shareholder approvals.
Northern Illinois Financial Corp., which has $950 million of assets and is based in Wauconda, brings four banks to the deal: Grand National Bank of Crystal Lake, Grand National of Niles, Grand National of South Chicago Heights, and Grand National of Waukegan.
Freeport-based Premier Financial Services Inc., with $650 million of assets, brings Premier Trust Services and Premier Insurance Services to Grand Premier. Its First Banks would be renamed Grand National banks.
After the merger, Grand Premier would be the ninth- or 10th-largest Illinois-based banking company, said Richard L. Geach, Premier Financial's president and chief executive. He is to be chairman and CEO of the new entity.
The two companies bring different expertise to the table, said Robert W. Hinman, Northern Illinois' president and CEO, who would be president and chief operating officer of Grand Premier.
Premier offers its "large and successful" trust department, as well as a strong retail product line, he said, while "from our side, we bring pretty strong commercial lending expertise. We have a very good technological system."
On a pro forma basis, Grand Premier would have $875 million in total loans and deposits of $1.35 billion, the banks said. The merger would require no branch closings and minimal layoffs, Mr. Hinman said.
Management expects pretax cost savings of $4 million annually within three years of the merger.
The banks' executives admitted that combining two management teams - usually the biggest hurdle in so-called mergers of equals - would be challenging.
However, "we aren't going to have a big culture clash," Mr. Hinman said. "We both are very interested in doing retail business at the community level. We also are trying to build a strong commercial base."
The deal, which would be accounted for as a pooling of interests, calls for Northern Illinois shareholders to get 4.25 shares of Grand Premier stock for each share held. Premier Financial shareholders are to exchange each of their shares for 1.116 share of Grand Premier.