Richard F. Chormann knew that size would be an issue for First of America Bank Corp. from the moment he took over as chairman of the $22 billion-asset company in 1996.

The choices were clear, he said in a recent interview: Boost the bank's stock price and make a big acquisition, or sell out at a high price.

"I am a firm believer as we enter the 21st century, size is going to be important," he said in a recent interview.

Last week's announcement that National City Corp. would pay $7.1 billion to buy Kalamazoo, Mich.-based First of America was, for Mr. Chormann, an inevitable outcome of his strategy.

After two years of cost-cutting and exploring potential acquisitions, the 60-year-old Mr. Chormann said, he recommended to First of America's board in October that it seek a buyer.

The board agreed, and through its investment banking adviser, Merrill Lynch & Co., a handful of Midwest banking companies were contacted.

"We did this in a very controlled environment," Mr. Chormann said. "We selected those companies we thought would be good for our shareholders, good for our employees, and had the capacity to do this."

Mr. Chormann declined to say who the other bidders were, but sources named Banc One Corp., Columbus, Ohio; Norwest Corp., Minneapolis; and National Australia Bank, the owner of Michigan National Bank, Farmington Hills.

Rumors had heated up this year that First of America and Comerica Inc. of Detroit would join forces, but Mr. Chormann said there was no truth in that talk.

In the past, First of America had itself been a very acquisitive company. At one point in the 1980s, it held 50 banking charters as a result of all the deals it had done, Mr. Chormann said.

But by the mid-1990s, Mr. Chormann said, he felt the company needed to take a break from piecemeal acquisitions. He wanted to concentrate on improving the share price.

This was accomplished in part by shedding unprofitable branches and businesses.

The plan was to use the healthier stock price to do one big deal.

"I don't think smaller acquisitions provided the adequate avenue needed to get to the size we need to be in a relatively short period of time," Mr. Chormann said. He wanted to find a company to acquire with $7 billion to $10 billion of assets.

But no deal materialized.

At that point, Mr. Chormann decided it was time to sell. Fortunately, First of America's board agreed.

With its lucrative bid and its commitment to add 700 jobs in Kalamazoo, as well as to establish a $30 million charitable foundation there, National City met all of First of America's criteria for a deal.

In addition, Mr. Chormann said, he found a kindred spirit in National City chairman David A. Daberko. They held similar views about the industry, he said, and he felt Mr. Daberko would treat customers and employees with respect. "We have very similar philosophies," Mr. Chormann said. Mr. Daberko "not only believes in doing things right but doing the right thing."

The two men had met a few months earlier. Mr. Daberko spent last summer traveling around the Midwest, visiting more than 20 bank chief executives about possible mergers. At that point, Mr. Chormann wasn't ready to sell.

But once the decision was made, Mr. Chormann said, he wanted to complete the process quickly for fear that word would leak out.

It took 10 days for National City and First of America to reach an agreement, according to National City chief financial officer Robert G. Siefers. Cleveland-based National City made a bid based on its own estimates about First of America. National City had assessed various companies it wanted to buy, including the Kalamazoo bank. When it was allowed to look into First of America's books, National City found its assumptions were correct. Mr. Chormann "had turned the company into a well- operating machine" during the past two years, Mr. Siefers said.

Mr. Chormann said he doesn't believe companies the size of First of America will be able to survive. The costs of investing in technology, marketing, and employee recruitment are rising, he said, and it makes sense to spread these costs over a bigger company.

John J. Harris, an investment banker at ABN Amro Chicago Corp., said he believes small community banks can survive but that midsize banking companies that try to compete on a regional basis must get bigger. "Once you get beyond a very narrow community focus or a very narrow business focus and try to be a full-service bank over an entire region, it's hard to compete," he said.

Had First of America not found a buyer this year, Mr. Chormann said, he would have continued his cost-cutting campaign. In the past couple of years, the company has sold a number of small-town branches, its $1.1 billion-asset Florida thrift, and pieces of its mortgage banking and credit card businesses.

Mr. Chormann said he also had planned a major review of First of America's branch network. The company was exploring ways to replace traditional branches with automated ones. This may still be done under National City, which has set out to reduce the size of its own branch network.

For Mr. Chormann, who has spent his entire career at First of America, the decision to sell stirred emotions. "But I'm paid to recommend to the board what needs to be done for the 30,000 shareholders and the customers and the employees of this company," he said.

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