Detroit's NBD Buying Deerbank in Illinois For $120 Million

Expanding its Illinois franchise, Detroit-based NBD Bancorp on Monday agreed to buy Deerbank Corp., a $766 million-asset thrift, in a transaction valued at roughly $120 million.

Upon the conclusion of this and one other deal, NBD will control 68 branches and $7 billion of banking assets in Illinois. The company said it would seek additional acquisitions in the state.

"The Chicago area is an important strategic market" for NBD, said Verne G. Istock, NBD's chairman and chief executive.

Deerbank operates 15 offices in suburban Chicago.

Based on recent trading values, the price equals 193% of Deerbank's book value at Sept. 30, according to an NBD spokesman, or, 14.3 times earnings for the 12 months ended Sept. 30.

Chicago Corp. analyst Gregory P. Anderson termed the pricing "rich" but said Deerbank is a well-managed and profitable company. Mr. Anderson added that Deerbank's small size in comparison with $45 billion-asset NBD limits any transition costs and dilution risk posed by the deal.

NBD will repurchase about four million of its shares in the open market, exchanging about $45 worth of repurchased shares for each of Deerbank's 2.56 million outstanding shares.

NBD's stock rose/fell by $tk on Monday, closing at $tk. Deerbank's stock rose/fell by $tk, closing at $tk per share.

J. Richard Johnson, an NBD spokesman, said the company had not released cost savings projections but expects the deal to have a neutral impact on 1995 earnings, becoming "slightly" accretive in 1996.

The Deerbank transaction is expected to close this summer.

Also on Monday, NBD completed the acquisition of Amerifed Financial Corp., a $900-million asset thrift based in Joliet, Ill.

Deerbank will be folded into NBD's Illinois commercial bank charter. Mr. Johnson said it has not been determined whether Deerbank's president and chief executive, Wayne V. Ecklund, will have a role in the merged entity.

Deerbank is the parent company of Deerfield Federal Savings and Loan Association. The thrift earned $2.02 million in the quarter ended Sept. 30, for annualized returns of 1.07% on average assets and 13.7% on average equity. NBD earned $147.7 million in the same period, for returns of 1.31% on average assets and 18% on average equity.

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