A pair of Chicago-area banks are joining forces, with Finward Bancorp acquiring Royal Financial Inc. and its wholly-owned subsidiary, Royal Savings Bank of Chicago, in a stock-and-cash transaction worth approximately $52.9 million.
Royal Financial is a Chicago-based bank holding company with $533 million in total consolidated assets as of June 30. Based in Munster, Ind., Finward Bancorp is the holding company of Peoples Bank, a financial institution with $1.55 billion in total assets, $1.36 billion in total securities and $965.26 million in net loans and leases. Peoples Bank provides a wide range of personal and business financial services from its nearly two dozen locations in Lake and Porter counties in Northwest Indiana and south Chicagoland.
Benjamin Bochnowski, president and chief executive officer of Finward Bancorp, said that as part of the merger, Peoples Bank expects to close at least one Royal Savings Bank location and is undertaking a market review of its footprint. Bochnowski noted that he is “committed to evaluating all Royal Savings Bank employees for potential roles post-close.”
To Bochnowski, the “combined markets, customer share, and deep cultural roots are intangibles that energize this partnership,” giving Peoples Bank a solid presence in Chicago while enhancing its suburban presence.
“I’m proud to announce our merger with Royal Financial and Royal Savings Bank, an exciting combination that we are confident will create value for our shareholders, our employees, our customers and our communities. This partnership is a strong cultural, strategic and financial fit for both of our organizations. Our companies have a long history of serving our communities and helping our customers be more successful,” Bochnowski said. “By joining together, we expect to achieve more on a greater scale to help us serve our customers and communities better than ever before.”
The merger is expected to be completed in 1Q 2022, subject to approval by bank regulatory authorities and the shareholders of both Finward Bancorp and Royal Financial. The combined operations will be continued under the Peoples Bank name. Integration is expected to be complete in 2Q 2022.
Leonard Szwajkowski, Royal Savings Bank’s president and chief executive officer, said Royal shareholders who become Finward shareholders will benefit from increased liquidity and dividends. He also expects customers to have “increased lending capacity, more banking locations, and the additional services that Peoples Bank offers.”
“We are pleased to join forces with Finward and believe that our shareholders, customers, employees, and communities will benefit strongly from the combined company. Like Royal, Finward has a rich tradition of community banking for more than a century that serves as a strong foundation for future growth. Royal shareholders who elect to become Finward shareholders will benefit from increased liquidity and dividends from a growing high-quality banking company. Our customers will benefit from increased lending capacity, more banking locations, and the additional services that Peoples Bank offers. As staff members of a $2 billion bank, many of our employees will enjoy greater professional development opportunities. This combination will contribute significantly to Finward’s commitment to excellence and growth in the Chicagoland market,” Szwajkowski said.
Under the agreement, Royal Financial stockholders who hold at least 101 shares of company common stock will be able to elect to receive $20.14 per share in cash or 0.4609 shares of Finward Bancorp common stock, or a combination of both, for each outstanding share of RYFL common stock, subject to allocation provisions. That option is intended to assure that, in the aggregate, 65 percent of Royal Financial’s outstanding shares of common stock will receive Finward Bancorp common stock and 35 percent will receive cash. Stockholders of RYFL holding less than 101 shares of Royal Financial common stock will be able to receive $20.14 in cash and no stock consideration for each share of RYFL common stock.