A $1.8 billion-asset Chicago banking company that three months ago was looking for a buyer said it is seeking community banks to buy instead.

Midcity Financial Corp., the parent of three Chicago-area banks and banks in Dallas and Oklahoma City, in early January said it had hired New York-based Donaldson, Lufkin & Jenrette to explore a merger or sale.

At the time Midcity said it believed it could maximize shareholder value and avoid the high cost of starting Internet banking services by selling itself. But after reviewing the weak stock prices of potential acquirers, the company decided it could benefit its shareholders more by staying independent.

"With the current low valuations in the financial service industry, we believe that our strong capital base provides a platform for future acquisitions," said E.M. Bakwin, Midcity's chairman and chief executive officer. The company's equity increased 15.1% last year, to $153.8 million. Midcity said Donaldson Lufkin is now helping it look for banks to buy.

- Craig Woker

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.