In a deal that would make its branch network the second- largest in the Chicago area, Harris Bankcorp said Tuesday it has agreed to buy 54 branches of Household Bank for $277 million in cash.
Expected to close this summer, the transaction would raise Harris' deposits by $2.9 billion, to $15 billion, but would not substantially increase its $18.7 billion of total assets.
John Harris, an investment banker with Chicago Corp., called the deal pricey, but Harris Bankcorp appears willing to pay for market share.
Household Bank, a subsidiary of consumer finance giant Household International, said it still intends to hold onto its savings and loan charter as a vehicle for selling bank products.
Including the Household branches, which have $300 million of loans, Harris would have 140 in Chicago, second only to First Chicago NBD Corp.'s 145.
Harris, a subsidiary of Bank of Montreal, also would be neck and neck in Chicago with rival LaSalle National Corp., which is owned by the Dutch bank ABN Amro. Both Harris and LaSalle have set goals of being No. 1 or No. 2 in the retail banking market.
ABN Amro made a move last month by announcing it would acquire the $1.4 billion-asset Illinois subsidiary of Comerica Inc., Detroit.
The foreign-owned banks - which each have relationships with less than 6% of retail banking customers in Chicago, according to Claritas Inc. - have a long way to go to catch up to First Chicago NBD's 20% share.
Harris said it would close a handful of the Household branches, but has not yet determined which ones.
