Old Second Bancorp buying West Suburban to bulk up in Chicago

Old Second Bancorp in Aurora, Illinois, has agreed to acquire a local rival, West Suburban Bancorp, for $297 million.

The two banks both operate predominantly in Greater Chicago. Should their deal close in the fourth quarter as planned, the combined bank would have $6.2 billion of assets, $5.3 billion of deposits and $3.4 billion of loans, Old Second said Monday.

Old Second would become the second-largest bank based in the Chicago metropolitan area; the largest is the $47.6 billion-asset Wintrust Financial in Rosemont, Illinois. The $3.3 billion-asset Old Second said acquiring West Suburban, of Lombard, Illinois, would give it the scale needed to compete with larger banks and to invest in rapidly advancing technology.

The bank would have more than 70 branches across the Chicago region.

“This combination is expected to significantly enhance our financial strength, our position in Chicago and our ability to invest in building the best bank for our customers and communities,” Old Second President and CEO James Eccher said in a press release.

Executives said the cash-and-stock deal is expected to deliver 38% accretion to Old Second’s 2022 earnings per share, once cost savings are fully realized. Old Second, however, did not specify how much it expects to save.

Janney analyst Brian Martin said the EPS accretion is substantial, but he estimated Old Second would need nearly five years to earn back “large” tangible book value dilution of 18%.

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