A 12-pound walleye, a trophy from a Lake Erie outing, sits mounted atop a table in Charles J. Koch's office.

Beaming over his catch, Mr. Koch is as much sportsman as banker. Whether he's talking about fishing or acquisitions, the 50-year-old chairman and chief executive of Charter One Financial Inc. doesn't let many get away.

Having completed 16 acquisitions since 1980, when Mr. Koch was named president, Charter One has avoided snags that other banks have encountered following mergers. Operating profitability and efficiency has improved after each deal since the $14 billion-asset thrift company went public in 1989.

Charter One "has one of the best acquisition track records in the industry," said analyst Fred Cummings of McDonald & Company Securities in Cleveland.

Other analysts agreed, saying Charter One provides a text-book example of how to make acquisitions that enhance shareholder value.

Mr. Koch, they contend, has a knack for seeing hidden value in underperforming institutions that other would-be buyers believe require too much work.

Mr. Koch said, "We never did a merger or acquisition that hasn't been accretive to shareholders in the first year, and, in most cases, very accretive right away."

Mr. Koch's deals have run the gamut from government-assisted transactions of failed thrifts in the early 1990s to FirstFed Michigan Corp. - a deal that doubled his company in asset size when it was completed Oct. 31.

Since 1989, when Charter One made its initial public offering of stock, the thrift has been able to reduce its ratio of noninterest expense to revenue after each acquisition. That ratio is currently at 41%.

Mr. Koch doesn't go after costly deals. Sometimes that means aiming at ugly targets - where only Mr. Koch sees hidden beauty.

"The girl all dressed up and ready to go to the prom is probably not the one we want to date," Mr. Koch said.

Take FirstFed as an example. For the last few years, the Detroit thrift had been considered an ineffectual franchise.

Certainly no one thought it was worth $1.2 billion, which is what Charter One paid, for $8 billion in assets and $2.5 billion in deposits. Just before the deal, three other potential suitors - believed to be Standard Federal Bancorp., TCF Financial Corp., and Huntington Bancshares - pulled out of the race.

FirstFed was so maligned that analyst Michael Moran of Detroit-based Roney & Co. called it a "huge and massive piece of garbage."

Other analysts agreed. Chad Yonker, an analyst with Fox-Pitt Kelton, said FirstFed was mismanaged and needed significant restructuring.

Mr. Koch saw potential.

He saw those large branches as capable of holding scores of free checking accounts that his thrift would offer. He believed operating costs could be reduced because Charter One operates a one-bank holding company. And he knew he could shed unwanted investments and derivatives quickly.

"A lot of people took a look at FirstFed and said they couldn't make it work," Mr. Moran said. "I liken it to looking at a house for sale. Most people walked through and saw the wallpaper was ugly and the carpet was crummy and the roof had to be replaced. Bud walked through the same house and saw something else."

Specifically, Mr. Koch slashed costs by eliminating redundant back room operations and about 250 of 500 positions. In all, the company identified $15 million in savings, most of which will be realized this year. He also went to work on the balance sheet immediately, terminating interest rate swaps and selling fixed-rate investments and mortgage-backed securities. The Michigan balance sheet was reduced by more than $1 billion in assets.

But the biggest potential for the Michigan operation, Mr. Koch said, was the ability to drum up new loan business. Charter One this year hired 50 loan originators and more than 30 salespeople for mutual funds and annuities.

Management for the Michigan bank was decided well in advance of the merger's closing. In July, Mr. Koch hired Anthony Sisto, a former Household Bank executive, to preside over the Michigan operations.

The Michigan company contributes more than one-third to the loan growth. In the second quarter, loan originations were $1.2 billion, compared with $362 million in second quarter 1995. Net income rose $41 million in the quarter, a 32% increase from a year earlier.

With the acquisition, Charter One is hoping to continue its earnings growth through yearend. It aims to earn 18% on equity and 1.2% on assets. As of the second quarter, return on equity was 17.8% and it has met its return-on-assets goal. Moreover, the company said it has pretty much digested its acquisition.

Mr. Yonker compares Charter One's approach to the acquisition strategy of Washington Mutual. Other than the California thrift, Charter One is without peer when it comes to acquisitions, Mr. Yonker said.

Indeed, Standard Federal, which considered buying FirstFed on a few occasions since 1989, decided it couldn't make the deal work. It wasn't the only Detroit-area institution to look at it. Comerica Inc., Michigan National Corp., and NBD Corp. all looked at FirstFed from 1989 to 1991, said Mr. Moran.

Now, analysts agree there's no question Charter One's deal was successful.

Mr. Koch said he'll continue to be an M&A opportunist, and would consider entering new markets, such as Western Pennsylvania, upstate New York, Indiana, Wisconsin, and the Cincinnati, Ohio, area.

There is no acquisition timetable, however. Mr. Koch wants to spend more time developing business, such as a new consumer finance venture expected this year.

"It's good not to be doing transactions every minute of every month. We'd like to get some other things done," he said.

Although he is the third Koch to run the thrift - his grandfather founded it - Mr. Koch has vowed not to "fall on the sword of independence" just for the sake of not being taken over.

"If you're not profitable and efficient, you're not going to be around very long," Mr. Koch said.

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