In an unusual twist, a mutually owned thrift is buying a publicly owned bank. Through the acquisition, Chicago-based BankFinancial Corp. will diversify into commercial lending, which is the strong suit of Success Bankshares, the cross-town bank it’s buying. And BankFinancial has a strong retail base, something Success lacks.

"We want to boost the business side of our lending, and Success is strong there," says Greg Adams, a senior vice president at BankFinancial, which was founded in 1924 and has $1.2 billion in assets.

"The deal is a good fit on the balance sheet and a good fit geographically," says Adams. He points out that Success branches are on Chicago’s Northside, while BankFinancial branches are on the south and west sides of the city. "This provides us with a good footprint in Chicago," he says.

Given that there’s no overlap of branches, BankFinancial has no plans for big layoffs, says Adams. In any case, the thrift wants to take its time in integrating the two companies. "Until we get our working teams together, we don’t want to walk into Success and overlay our culture on theirs and risk stamping out something that works."

As a mutual, BankFinancial has a lot of leeway to pursue whatever strategy it thinks best because it’s free of pressure from stockholders clamoring for quick returns. BankFinancial is "one of the largest mutuals in the country, and we enjoy the greater control it gives us," says Adams.

Success, which has $600 million in assets, will give up its public status and be absorbed into BankFinancial when the deal closes later this year. Bill Meinen, CEO of Success, has been with the bank for two and a half years, having come on board when the former CEO died suddenly. Meinen had been Banc One’s chief credit officer in Chicago.

"There was quite a lot of clean-up to do with this Success franchise," he says. "We got rid of some branches and reengineered the commercial sales program."

After the makeover, the bank, which has been in business since 1973, was a more valuable property, he says. Its first-quarter earnings were $658,000, an increase of $263,000 from a year earlier.

"Now is a much better time for a sale. We brought good value to our shareholders in this merger, which was an all-cash deal," says Meinen. Success shareholders will receive $19 per share, making the deal worth $48 million. BankFinancial will assume approximately $2.5 million of Success’ term debt and $15 million in subordinated debt.

BankFinancial will combine its eight branches with Success’ seven, and all will operate under the BankFinancial name. Morgan Gaisor, the CEO of BankFinancial, will retain that position, while Meinen becomes executive vice president.

The thrift has what it calls a five-year plan for growth, says Adams, who adds that the deal with Success advances that plan by "two or three years." The business plan, in brief, "is to become more profitable," he says.

The management styles of BankFinancial and Success are similar, with "both being conservative in their underwriting and approval process," says Meinen. "We’re stronger together than apart."

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