ABN Amro to Acquire Mich. Thrift for $1.9B

Expanding for the first time out of its Chicago hub, ABN Amro North America announced an agreement Friday to acquire Standard Federal Bancorp. of Troy, Mich., for $1.9 billion in cash.

Standard Federal, a $15.5 billion-asset thrift company, would give Dutch-owned ABN Amro a solid retail footing in Detroit and southeast Michigan, and a mortgage banking operation spanning 44 states.

The deal, expected to close by midyear 1997, would put ABN Amro in direct competition in Michigan with a familiar adversary, First Chicago NBD Corp., owner of the largest bank in both Chicago and Detroit.

ABN Amro is No. 2 in Chicago deposits and would be No. 3 in Detroit. "They will be like two gorillas going at it," said Joel Gomberg, an analyst with Chicago-based Howe Barnes Investments Inc.

The purchase price, $59 a share, represents 2.1 times Standard Federal's book value, or 2.6 times tangible book value when goodwill is factored in. Buying a thrift, the U.S. subsidiary of Amsterdam-based

ABN Amro Bank NV is paying a hefty price by either measure.

But analysts said Standard Federal has substantial earnings momentum and provides a number of growth opportunities for ABN Amro. The latter has $29.4 billion in retail banking assets in the Midwest and owns $9 billion-asset European American Bank in New York State. They are part of a $385 billion-asset international empire.

For such a company, Standard Federal's $15 billion asset size "is a rounding error," said analyst Michael Moran of Roney & Co., Detroit.

Standard Federal is a "powerful, profitable franchise," Mr. Moran said. He said it was clear the thrift would be vulnerable to takeover when Thomas R. Ricketts, 65, chief executive officer for more than 22 years, indicated he may retire next year.

ABN Amro expects to get substantial cost savings from the deal, but it was initially unclear where they would come from. The only overlap is with Bell Federal Bank, a $1.9 billion-asset Chicago thrift acquired by Standard Federal last spring. Bell will be merged into ABN Amro's LaSalle National Corp., a group of five banks and a thrift in Chicago.

Harrison F. Tempest, ABN Amro North America chairman and CEO, called the acquisition "a natural extension," noting Detroit's proximity to Chicago. He also said his company was attracted to Standard Federal's stronghold in Detroit and its national mortgage business.

The idea of being bigger in the Midwest, and the potential to grow in Detroit, seemed the biggest attractions.

"Substantial market share, we believe, results in earnings power," Mr. Tempest said. "You can do things with advertising and you can do things with pricing that you can't do if you're a minor participant."

Garry G. Carley, executive vice president and secretary of Standard Federal, said it decided to sell primarily because it received a good offer from ABN Amro and wanted to expand in commercial lending, a task it decided would be difficult without merging.

Mr. Ricketts, who will remain chairman of Standard Federal for a year, said he looked forward to competing with the big players in Chicago.

ABN Amro officials said early this year they want to surpass First Chicago NBD as the No. 1 retail bank and No. 1 middle-market business lender in Chicago.

On Friday, Mr. Tempest backed away from those assertions, saying First Chicago is too dominant to be toppled in its hometown. Likewise, Mr. Tempest said he doesn't believe he can overtake First Chicago in Detroit, where it is first in deposits and middle-market lending.

But a bigger ABN Amro will certainly pressure $107 billion-asset First Chicago. Its chairman and CEO, Verne Istock, has said he wants to acquire in the Midwest. But First Chicago has already seen one potential merger candidate, Boatmen's Bancshares of St. Louis, agree to be sold to NationsBank Corp. of Charlotte, N.C.

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