First Financial Corp. of Wisconsin accelerated its push into neighboring Illinois this week, agreeing to buy United Federal Savings Bank of Galesburg for $53.2 million in cash.
When completed, the acquisition will double First Financial's Illinois assets to $1.6 billion. And it will mark the exit of Westinghouse Electric Corp., United Federal's owner, from the thrift business less than two years after it entered.
Westinghouse's thrift activities, overseen by the Westinghouse Financial Services division, fell victim to a downsizing program prompted by real-estate-related losses.
Further Goals in Illinois
The company's Illinois thrift business - 19 offices spread from downstage to within about 60 miles of Chicago - was profitable and was viewed as an attractive match with First Financial.
The Wisconsin company's chairman and chief executive officer, John C. Seramur, said he is not through shopping in Illinois.
"We have a significant presence in the Wisconsin market, and it is our objective to duplicate that presence in Illinois," said Mr. Seramur.
First Financial, based in the central Wisconsin town of Stevens Point, has $3.6 billion in assets.
It has 94 banking offices in Wisconsin and Illinois and has been growing rapidly through acquisitions of failed thrifts from the Resolution Trust Corp. Its principal subsidiary is First Financial Bank, the No.1 thrift in Wisconsin.
In March, the Wisconsin company bought eight Peoria branches of Chicago-based Talman Home Federal Savings and Loan Association. Within days, the thrift acquired two Pekin, Ill., offices of Olympic Federal Savings Association.
United Federal Bank would add $885 million in assets and $675 million in deposits to First Financial's Illinois presence.
Target List Shrinking
Further expansion into Illinois may become difficult, experts said, as the number of eligible takeover targets shrinks.
By dealing with the RTC, First Financial has been able to buy a t bargain prices, though its own stock is trading at only 1.15 times book value.
Excluding a special gain stemming from an accounting change, First Financial earned about $5.5 million in the first quarter for an annualized return of roughly 0.7% on assets. United Federal earned about 0.6% on assets in the same period.
Mr. Seramur said First Financial would finance its acquisition through a stock offering and the possible issuance of debt. The deal is expected to close by yearend.
The $53.2 million purchase price is a low 1.1 times United Federal's book value.
First Financial assured shareholders the deal would not be dilutive. That assessment was shared by analysts.
"The acquisition is not going to hurt First Financial; in fact, it will be somewhat positive," said Michael Milunovich of Robert C. Baird & Co. in Milwaukee.
First Financial has yet to decide whether branches will be closed or employees laid off at United Federal, Mr. Seramur said.
First Financial has diversified from a mortgage orientation into issuing credit cards, student loans, and home equity loans - equaling about 10% of total assets.
"The company is a hybrid between a bank and a thrift," said Richard Lane, an analyst at Cleary Gull Reiland & McDevitt Inc., Milwaukee.