8-K: Old Second Bancorp Completes Strategic Merger with Bancorp Financial, Expands Midwest Footprint

Old Second Bancorp, Inc. has successfully completed its previously announced merger with Bancorp Financial, Inc., significantly expanding its asset base and market footprint in the Chicago area.

Summary

• Old Second Bancorp, Inc. (Old Second) completed its merger with Bancorp Financial, Inc. (Bancorp Financial) on July 1, 2025.
• Bancorp Financial merged into Old Second, and its wholly-owned subsidiary, Evergreen Bank Group, merged into Old Second National Bank.
• Bancorp Financial stockholders received 2.5814 shares of Old Second common stock and $15.93 in cash for each share of Bancorp Financial common stock.
• Pro forma as of March 31, 2025, the combined entity has approximately $6.98 billion in assets, $5.95 billion in deposits, and $5.09 billion in loans.
• The combined company now operates 56 locations across Cook, DeKalb, DuPage, Kane, Kendall, LaSalle, and Will counties in Illinois.
• Darin Campbell, former President and CEO of Bancorp Financial and Evergreen Bank Group, was appointed to the boards of directors of both Old Second and Old Second National Bank.
• Jill Voss, former CFO of Bancorp Financial, was appointed to the board of directors of Old Second National Bank.
• Darin Campbell's employment agreement includes an annual base salary of $550,000, a target annual bonus of 50% of base salary, and annual equity grants with a target value of 30% of base salary.

Sentiment

Score: 8

Explanation: The document announces the successful completion of a strategic merger, which is generally positive for growth and market expansion. It details the integration of key personnel and their compensation, indicating a structured approach to the combined entity. While standard risks associated with mergers are mentioned, no new or unexpected negative information is presented, suggesting a positive outlook for the company's strategic direction.

Positives

• The completion of the merger significantly expands Old Second's market presence and scale in the Chicago metropolitan area.
• The merger is expected to create a tremendous opportunity to deliver great outcomes for stockholders, customers, employees, and communities due to complementary product and service offerings and increased scale.
• The addition of experienced executives Darin Campbell and Jill Voss to the boards of directors is expected to provide valuable insights and active participation in the combined institution.

Risks

• Anticipated benefits of the transaction, including cost savings and strategic gains, may not be realized when expected or at all due to integration challenges, economic conditions, competitive factors, or other unexpected events.
• The impact of purchase accounting or changes in assumptions used to determine the fair value of acquired assets and assumed liabilities could differ from expectations.
• Management's attention may be diverted from ongoing business operations and opportunities during the integration process.
• Potential adverse reactions or changes to business or employee relationships may occur as a result of the transaction's completion.
• The integration of the businesses and operations may take longer, be more costly, or have unanticipated adverse results.
• Business disruptions could occur following the merger.
• Future results of the combined company may be affected by changes in asset quality and credit risk, inability to sustain revenue and earnings growth, changes in interest rates and capital markets, inflation, customer borrowing, repayment, investment and deposit practices, general economic conditions, technological changes, capital management activities, and actions of the Federal Reserve Board and legislative/regulatory reforms.

Future Outlook

Old Second anticipates that the merger will create a tremendous opportunity to deliver great outcomes for stockholders, customers, employees, and communities due to complementary product and service offerings and increased scale. The company expects to integrate the operations and leverage the combined strengths.

Management Comments

• "We are extremely pleased to close our merger with Bancorp Financial. Today, approximately four months after we announced our merger, we celebrate the culmination of our combined efforts and extend a warm welcome to Evergreen Bank customers and team members." James Eccher, Chairman, President and Chief Executive Officer of Old Second.
• "With complementary product and service offerings and the additional scale created by the merger, we believe we have a tremendous opportunity to deliver great outcomes for our stockholders, customers, employees and communities." James Eccher.
• "We welcome Mr. Campbell and Ms. Voss to Old Second, and we look forward to their active participation and insights as we bring together our two great institutions." James Eccher.

Industry Context

The merger represents a strategic consolidation within the regional banking sector, specifically targeting expansion and increased market share in the competitive Chicago metropolitan area. This move aligns with broader industry trends where regional banks pursue M&A to achieve greater operational efficiencies, expand their geographic footprint, diversify service offerings, and enhance their competitive position against larger national banks and smaller community banks.

Comparison to Industry Standards

• The combined entity's pro forma assets of approximately $6.98 billion position Old Second as a significant regional bank in the Midwest, comparable in scale to other mid-sized regional banks that have grown through strategic acquisitions, such as Wintrust Financial Corporation (WTFC) or First Midwest Bancorp (FMBI) prior to its acquisition by Old National Bancorp (ONB).
• The merger consideration, a mix of stock and cash (2.5814 shares of OSBC and $15.93 in cash per Bancorp Financial share), is a common structure in bank M&A, reflecting typical valuation methodologies based on multiples of tangible book value or earnings, although specific multiples are not detailed in this filing.
• The integration of key management from the acquired entity, specifically Darin Campbell and Jill Voss joining the boards, is a standard practice in bank mergers aimed at retaining institutional knowledge, ensuring continuity, and facilitating a smoother integration process, similar to how First Horizon (FHN) integrated leadership from IBERIABANK following their merger.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders: Bancorp Financial shareholders received a mix of Old Second stock and cash. Old Second shareholders' shares remained unaffected. The merger is expected to deliver 'great outcomes' for stockholders through increased scale and complementary offerings.
• Customers: Evergreen Bank customers are welcomed to Old Second National Bank, with expectations of 'great outcomes' due to complementary product and service offerings.
• Employees: Evergreen Bank team members are welcomed. Darin Campbell and Jill Voss, former Bancorp Financial executives, have joined Old Second's leadership, indicating some integration of personnel. The document mentions 'potential adverse reactions or changes to business or employee relationships' as a risk, but also 'great outcomes' for employees.
• Communities: The merger is expected to deliver 'great outcomes' for communities served by the combined entity.

Next Steps

• Old Second will nominate Darin Campbell for election for a three-year term as a Class I director at the 2026 annual meeting of stockholders.
• Old Second National Bank will nominate Darin Campbell and Jill Voss for election to the Bank's board of directors for one-year terms at the 2026 annual meeting of the Bank's sole shareholder.
• The unaudited pro forma condensed combined balance sheet as of June 30, 2025, and the unaudited pro forma condensed combined income statement for the six months ended June 30, 2025, will be filed no later than 71 days after the date on which this report is required to be filed.

Key Dates

Recommendation

Keywords

Merger, Acquisition, Banking, Financial Services, SEC Filing, 8-K, Old Second Bancorp, Bancorp Financial, Evergreen Bank Group, Financial Reporting, Corporate Governance, Risk Management, Strategic Analysis, Illinois Banking, Community Banking, Wealth Management, Lending