Omaha-based Commercial Federal Corp. says it is buying Liberty Financial of West Des Moines mostly for its commercial lending portfolio.

Commercial, a thrift company with $7.1 billion of assets, agreed to pay $109 million for $621 million-asset Liberty, which owns mostly banks. The deal is expected to close by next March 31, the end of the buyer's fiscal third quarter.

Buying Liberty would expand Commercial's Iowa network from seven branches to 43 and provide a toehold in Arizona. It would also add $220 million of commercial and agricultural loans and provide business lending expertise.

Russell G. Olson, Liberty's president and chief executive officer, is expected to stay on and play a role in the expansion of business lending, said Gary Matter, Commercial's senior vice president and controller.

Over the past four years Commercial, like many thrift companies, has been trying to diversify outside of mortgage lending. Its business lending is limited to real estate; it says it has a $253 million real estate portfolio.

Liberty has a mix of agricultural, construction, and other business loans in addition to a business leasing portfolio.

"We feel this acquisition gets us a very good foothold" in commercial lending, Mr. Matter said. "We hope to be able to leverage that business."

Liberty earned 1.48% on assets and 24% on equity last year and had net income of $6.7 million; Commercial would pay 2.64 times book value.

That seems expensive, said analyst Caren E. Mayer of Montgomery Securities, but is hard to tell, because Liberty's financial statements are not public,

Liberty owns seven banks and one thrift in Iowa and six branches in Tucson. Its majority owner is West Des Moines businessman William A. Krause, who would be named, along with his family, to Commercial's board.

Mr. Matter said Commercial expects Liberty to add 3% to 5% to earnings within a year. He expects Commercial to cut about 20% of Liberty's cost base, mostly through consolidation of bank charters and computer systems. The company plans to take a restructuring charge of between $12 million and $15 million when the acquisition is completed.

Ms. Mayer said she has long considered Commercial an attractive takeover candidate. The company's market is mostly in Iowa, Kansas, Nebraska, and Oklahoma, but it also holds the sixth-largest deposit market share in Denver, with $1.2 billion of deposits there.

Colorado is the "jewel of the franchise," Ms. Mayer said. She said she believes any three of the large Minneapolis-based banks - Norwest Corp., TCF Financial Corp., and U.S. Bancorp - would be interested in buying Commercial.

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