The scuttling of the merger deal between two prominent black-owned institutions has both parties rethinking their banking strategies for Chicago.
Indecorp Inc.'s top priorities include improving the community reinvestment performance of a subsidiary and maintaining profitability. Alvin J. Boutte, president and chief executive, said the Chicago-based company is unlikely to seek another buyer immediately.
Meantime, chairman William T. Johnson still wants to expand Omnibanc Corp. in the Chicago area. He said five area institutions - which he decline to name - have contacted him about selling, and he has not ruled out looking at Indecorp a second time if it again is put up for sale.
The acquisition would have made River Rouge, Mich.-based Omnibanc the nation's largest black-owned, multistate bank holding company.
But the deal collapsed last week after the parties could not renegotiate its terms.
Mr. Johnson had lowered his offer to $26 million from the original $35 million because, he said, Indecorp's Drexel National Bank and Independence Bank had substantial unrealized losses on securities that would have to be recognized in a sale.
"We've got to take a breath now and recover from some of the adverse publicity," said Mr. Boutte, who called allegations about the company's investment in derivatives "not a fact."
But he acknowledges that the company has suffered from unrealized losses on securities investments because of rising interest rates.
"It's not just us, it is the entire industry," said Mr. Boutte, who has been with Indecorp's banks for 30 years.
He said Indecorp, whose banks have nearly $300 million of assets, now will focus on Independence Bank's "needs to improve" CRA rating.
He said the company will restructure structure some senior personnel, but declined to disclose specifics.
The No. 2 priority will be maintaining profitability, Mr. Boutte said. Both Drexel and Independence have been examined in the past month - with satisfactory factory results, he said.
"The regulators know that Indecorp is a well-capitalized company," Mr. Boutte said.
While other undisclosed parties have expressed interest in acquiring Indecorp, "My feeling is that the board will not move in a sale in the immediate future," Mr. Boutte said.
Several parties previously expressed interest in acquiring Indecorp, including Chicago-based Shorebank Corp., former Federal Reserve Bank of Chicago head Marcus Alexis, and former Detroit Pistons basketball star Isiah Thomas - now an investor in Omnibanc.
Shorebank Corp. spokeswoman Joan Shapiro said that to her knowledge, the well-known development bank company had made no new inquiries about Indecorp. However, "Shorebank is always interested in opportunities," she said.
Walter E. Grady, president and chief executive of Seaway Bancorp, said his company considered buying Indecorp previously but has not recently, expressed interest.
Its subsidiary, $227 million-asset Seaway National Bank in Chicago, is the nation's largest bank owned by African-American.
Despite the recent conflicts, Mr. Johnson said he would look at Indecorp again if it goes back on the market.
"We think the banks offer a tremendous platform for ... rebuilding the South Side," he said.
If Indecorp does sell, many parties hope for continued minority ownership.
"There is a definite need for black banks throughout the country," Mr. Grady said.
Though banks are moving back into urban areas they previously abandoned, minority banks know the communities better, he said.
Chicago has not seen the last of Mr. Johnson, who has leased an apartment in the city. His son has relocated there and is working for him.
He said $25 million-asset Omnibanc would look at institutions with assets of between $50 million and $300 million - preferably in neighborhoods with high concentrations of African-Americans, such as Chicago's South or West Side.
Those familiar with Indecorp's communities don't expect community reinvestment pledges to die with the Omnibanc-Indecorp deal.
"There's been a lot of thought and effort put into what the needs are," said Dan Immergluck, who helped obtain the $10 million in CRA agreements Omnibanc made in connection with the deal.
He is vice president at the Chicago-based Woodstock Institute, which promotes reinvestment in low-income and moderate-income communities.
