LaSalle in Talks to Acquire Talman Home Federal S&L

LaSalle National Corp. is discussing the possibility of acquiring the troubled Talman Home Federal Savings and Loan Association, a union that would create the second-biggest branch network in Chicago.

An agreement has not been reached, and other financial institutions also have looked at Talman, sources said.

ABN-Amro Is |Shopping'

Talman, a profitable but capital-deficient thrift, has been on the auction block for more than a year and has retained Salomon Brothers to find a buyer.

Julie Wright, a spokeswoman for LaSalle's parent, ABN-Amro Holdings NV of Holland, said the company is "shopping" for an acquisition in Chicago and confirmed it has looked at Talman. But she denied that acquiring Talman was "a done deal."

Thomas J. Gobby, vice president at Talman, said, "We're talking to a lot of people," but declined comment on LaSalle.

Tripling the Branch Network

Acquiring Talman, with $5.8 billion in assets, would allow LaSalle, with $7.4 billion in assets, to more than triple its branch network in Chicago.

LaSalle has 19 branches in the Windy City, while Talman has 37. Citicorp Savings, a unit of Citicorp, has the largest retail presence in Chicago with 60 branches.

Aggressive Expansion

Because Illinois thrifts have enjoyed more liberal branching laws than banks, "if you want to buy a branch network, you buy an S&L," said Joe LaManna, a banking analyst at William Blair & Co., Chicago.

Although Talman is profitable, the company has a negative net worth because of the extensive amount of goodwill it carries on its books. It has a market value of $48.5 million based on 9.7 million shares outstanding.

LaSalle has aggressively expanded in recent years. The company almost doubled in size last year with its acquisition of Exchange Bancorp, a Chicago banking company. In 1988, it acquired Lane Financial Corp., a $1.6 billion asset bank holding company in suburban Chicago.

LaSalle last year earned $76 million, representing a healthy 1.15% return on assets. Its parent, ABN-Amro Holdings, is the 23rd-largest bank in the world with $210 billion in assets.

Negative Capital Ratio

Talman, the nation's 30th largest thrift, was part of a government-supervised "phoenix" program in the early 1980s that combined weak thrifts into larger ones.

Because of the $550 million in goodwill on its books that no longer counts as capital, Talman has a risk-based capital ratio of negative 2.96%.

It's been up for sale since last year, when a group of Chicago investors led by Harrison I. Steans backed out of acquiring the thrift because of lower-than-expected profit projections.

It nevertheless earned $15 million last year and $6.8 million in the first quarter. Talman is a traditional thrift with the bulk of its balance sheet consisting of home mortgages and consumer deposits. Its chairman, Theodore H. Roberts, is a well-regarded Chicago banker.

Table : LaSalle Would Gain Big Retail Franchise LaSalle Talman National Home Corp. FederalAssets $7.4 $5.9 billion billionIllinois rank 5(*) 2([dagger])Branches 19 451990 earnings $76 $15 million million

Return onassets 1.15% 0.22%Employees 2,497 NA

(*) Among bank holding companies ([dagger]) Among thrifts Sources: American Banker, SNL Securities

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.