Pro forma scarcity value in Chicago has increased, leaving only two locally based small- and mid-cap banks above $10 billion in assets in the form of First Midwest Bancorp Inc. and Wintrust Financial Corp., wrote Keefe Bruyette & Woods analyst Christopher McGratty.
The analyst further wrote: "With so few local banks of size remaining, we believe this is also creating a unique opportunity for several smaller, more nimble banks" such as First Busey Corp., Byline Bancorp Inc. and Old Second Bancorp Inc., which are poised to "emerge as more meaningful players in the Chicagoland market."
According to the analyst, Bank of America Corp.'s purchase of LaSalle Bank Corp. in 2007 started a decade of M&A and shift in market share in Chicago, which the analyst described as the Midwest's largest and most significant market. The recent announcement of Fifth Third Financial Corp.'s acquisition of MB Financial Inc. is an example of a larger bank using M&A to move up the relative rankings, wrote McGratty. A similar strategy was applied when Canadian Imperial Bank of Commerce acquired PrivateBancorp Inc. in 2017.
