Fifth Third spends $4.7 billion for Rosemont's MB Financial

Fifth Third Bancorp is buying Rosemont's MB Financial for about $4.7 billion, mostly in stock.

The deal will create convenience and a larger footprint for customers of both banks, said Greg Carmichael, chairman and CEO of Cincinnati, Ohio-based Fifth Third, though some branches are expected to close.

MB branches will take the Fifth Third Bank name, Carmichael said during a phone interview Monday.

The deal helps Fifth Third build critical mass in the Chicago area. Fifth Third gains MB Financial's roughly $20 billion of assets. MB Financial, which was founded in 1911 by a group of Chicago businessmen, is based in Rosemont and focuses on lending to mid-size companies.

The Chicago market has become highly fragmented in recent years and has drawn interest from Canadian banks looking to expand in the U.S., according to Nathan Race, an analyst at Piper Jaffray & Co. The largest U.S. banks control a smaller percentage of assets in Chicago than in other major markets, including New York, Los Angeles, Atlanta and Dallas.

With $25.4 billion in combined deposits, the new bank will rank fourth in total deposits and second in retail deposits in the Chicago market, Carmichael said.

There will be some branch consolidation.

Fifth Third has 148 branch locations in the Chicago area while MB Financial has 91, said Mitchell Feiger, president and CEO of MB Financial.

Initially, all branches will continue to operate, but eventually to save on costs, up to 50 of the 239 branches could close in overlapping markets.

MB Financial has about 2,000 employees in the market, while Fifth Third has 1,800, said Feiger, who will become CEO of the Chicago region for the combined bank.

"It's an exciting day for Fifth Third and MB Financial," Carmichael said. "It creates a great platform for our employees," he said.

Additionally, the combined company will also have a 20 percent share of middle market relationships in Chicago, ranking it second, Feiger said.

"There were no other potential partners of the same caliber as MB Financial in the Chicago market, and we are very pleased to reach an agreement to merge our companies," Carmichael said.

Feiger agreed. "Our commercial expertise and strong credit culture complement the strengths of Fifth Third in large corporate lending, capital markets, wealth management and the payments business."

MB Financial shareholders will receive a total of about $54.20 for each of their shares, consisting of 1.45 shares of Fifth Third common stock and $5.54 in cash, the companies said. Two members of MB Financial's board will join Fifth Third's board. About 90 percent of the deal will be paid for in stock and the rest in cash.

• Bloomberg contributed to this report.