Decision on Cole Taylor's Fate Expected Soon; Sale Predicted

After an internal feud that left its fate in doubt for nearly six months, a decision on Cole Taylor Financial Group Inc.'s future is expected soon.

Milwaukee analyst William W. McGinnis last week raised his rating on $2 billion-asset Cole Taylor, predicting a decision on its future in the next few weeks - and a more than 50% chance of a sale.

On March 27 Mr. McGinnis, of Robert W. Baird & Co., estimated the company's acquisition value at between $35 and $50 a share. He also predicted an outright sale to a large bank holding company.

The stock was trading around $24 on March 25, and around $26 at the close of trading March 26. It shot up to $28.25 when Mr. McGinnis' report came out and was trading above $29 by Monday.

The destiny of the Wheeling, Ill.-based company has been in limbo since Cole Taylor hired investment advisers amid a dispute between its founding families.

In an interview with Crain's Chicago Business, Jeffrey W. Taylor, Cole Taylor's president and chief executive, said it was "getting closer to a decision."

Mr. Taylor did not return a telephone call from American Banker, but Philip Worley, his vice president of communications, confirmed that the exploration of the company's options was "coming to an end."

The strategic planning began last fall after director Lori Cole, the daughter of a company founder, said publicly that she wanted Cole Taylor to evaluate a merger or sale. Ms. Cole declined to comment on the current situation.

Management, led by Jeffrey and Bruce Taylor, sons of the other founder, wanted to stick to existing business plans.

However, at the end of October management reversed its stance and hired the Chicago Corp. and Sandler O'Neill & Partners LP to evaluate future options.

Observers say the company's future options include: selling everything, selling either Cole Taylor Bank or the company's sub-prime automobile financier, Reliance Acceptance Corp., or selling them both separately. It also could spin off part of the finance company or keep everything independent.

The Taylors also could buyout the Coles' stock, but some analysts dismissed that as too complicated and expensive. Each family owns roughly a quarter of the company.

Concerns about rising delinquencies at consumer finance companies likely have depressed sale values and drawn out the process, said analyst John E. Snow, formerly with Rodman & Renshaw in Chicago and now starting his own company.

Robert C. Ollech, an analyst in the Chicago and Milwaukee offices of Principal Financial Securities Inc., said he doesn't expect the Taylors to sell the bank.

It's more likely, he said, that Cole Taylor will give part of Reliance Acceptance to shareholders, putting the profitable finance company into the public market. "If your objective is only to get the price of Cole Taylor stock up ... that would take care of it."

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