Banc One Makes Hefty Bid for Bank Near Chicago
Banc One Corp. said Monday that it had agreed to buy First Illinois Corp., a highly profitable banking company in suburban Chicago, for about $347 million in stock.
The purchase price is almost three times First Illinois' book value as of March 31, which analysts said is an indication of the health and attractiveness of the Illinois market.
"That's expensive," said Fred Cummings, an analyst at McDonald & Co. in Cleveland. "Still, Banc One is buying a sound institution - there won't be a lot of work to do."
First Illinois, with $1.6 billion in assets, operates a network of 15 banking offices in about a dozen communities. The company earned $5.6 million in the first quarter, which represented a 1.4% annualized return on average assets and an 18% return on average equity.
First Illinois stock rallied following Banc One's announcement. Recently trading at roughly $8.50 a share, First Illinois common rocketed to by late Monday to $11.125, up $2.50. Banc One late Monday was off 62.5 cents late Monday, to $38.75.
Columbus-based Banc One agreed in March to acquire Marine Corp., a top-performing company based in the state capital of Springfield, for $190 million in stock. That represented almost two times Marine's book value. Marine has about $1.2 billion in assets.
More Swaps Are Forecast
Banc One hopes to do more stock-swap deals with other stellar banking companies in Illinois, said William Boardman, executive vice president in charge of acquisitions. He likened Banc One's Illinois strategy to that employed in Indiana, where the company built a $6.9 billion-asset franchise through a string of eight buyouts.
Banc One also owns Marine Bank Chicago, a $51 million asset bank not affiliated with Marine Corp. of Springfield.
While Banc One aspires to be a major player in Illinois, Mr. Boardman said it is not seeking head-to-head competition with the state's largest institutions such as Continental Bank Corp. and First Chicago Corp.
"We're not going to compete for major commercial accounts," said Mr. Boardman. "Far more attractive to us are middle markets in the suburban areas of Chicago and smaller towns in the state."
Marine's transaction is scheduled for completion during the fourth quarter of this year. First Illinois is expected to follow in first-quarter 1992.
Acquisition talk in Illinois, spurred by Banc One's pending purchase of Marine Corp. and NBD Bancorp's offer for FNW Bancorp of Mount Prospect, has pushed other stock prices higher. First Colonial Bankshares Corp., for example, rose $1 Monday to $16.50 a share. With $1.5 billion in assets and a Chicago base, its size and business mix is similar to First Illinois.