Buy Makes ABN a Chicago Leader
Amsterdam-based ABN-Amro Holding's acquisition of Talman Home Federal Savings and Loan Association makes the Dutch bank the second-biggest player in the Chicago retail deposit market.
ABN announced late Monday that it had bought Talman for $97 million. In addition, ABN will invest $300 million in capital to bring the $5.9 billion-asset thrift into compliance with regulatory standards.
Talks Had Been Broken Off
The announcement came a wekk after ABN, which owns Chicago-based LaSalle National Corp., said it had broken off talks with Talman.
The deal gives the Dutch bank 55 branches in Chicago, $13.3 billion in assets and about $7 billion in deposits.
First Chicago Corp., the biggest retail bank in the city, has about $8 billion in retail deposits and 86 banking offices. Citicorp Savings, a unit of New York-based Citicorp and now the city's third-biggest retail institution, has about $5 billion in deposits and 57 offices.
An Astute Move, Analysts Say
Analysts hailed the acquisition as an astute move that boosts ABN's share of low-cost retail deposits in Chicago to about 13% of the total, offers significant cost savings, and broadens the company's focus from middle-market lending to residential mortgages.
But John E. Snow, a bank stock analyst at the Chicago Corp., added that ABN is paying a relatively steep price. "It's high price, even if they have the ability to make the operation generate strong net income," he said. BankAmerica Corp. reportedly was the other main bidder.
Talman is profitable but was hurt badly by a provision of the thrift-bailout law eliminating goodwill as a component of capital. Talman had $351 million in equity - or about 6% of assets - at March 31. But it also had $508 million in goodwill resulting from mergers with several smaller and weaker thrifts in the early 1980s, leaving negative net worth of $157 million.
Officials of ABN Armor North America Inc., the Dutch group's U.S. holding company, were unavailable for comment.
However, a bank spokesman told Reuters that ABN plans to finance the deal with an issue of U.S. preferred shares by LaSalle, which has $7.4 billion in assets. A U.S. issue will be cheaper than a European one, he said.
Including Talman and European American Bank, a suburban New York City retail bank of which ABN took control last year, the group has more than $20 billion in U.S. assets.
John Evans in London contributed to this report.