Facing intense competition from out-of-state banks, MAF Bancorp Inc. is raising its profile in its hometown of Chicago.
The $5.9 billion-asset thrift company announced Tuesday that it is buying a longtime competitor, Fidelity Bancorp Inc., for $101 million in stock. MAF would gain five branches and $434 million of deposits, and the purchase would vault it into the top 10 in deposit share in Cook County, Illinois' largest county.
A number of MAF's competitors are aiming to bulk up in the Chicago market. Washington Mutual Inc., Fifth Third Bancorp, TCF Financial Inc., and Bank of America Corp. have all announced major expansion plans there, as have many local players, including Bank of Montreal's Harris Bank, Bank One Corp., LaSalle National Bank, and MB Financial Inc.
"There's been a flurry of activity in the past four months," said Jerry Weberling, MAF's chief financial officer. "This is an attractive market, and it's still fairly fragmented" from the days when Illinois rules restricted how many branches a bank could have and where they could be located.
While he stopped short of characterizing the decision to acquire the $699 million-asset parent of the 96-year-old Fidelity Federal Savings Bank as a defensive move, Mr. Weberling said, "it's always nice to expand your market share"
The deal is expected to close in mid-2003. Raymond Stolarczyk, Fidelity's chairman and chief executive officer, would join MAF's board.
Bradley S. Vander Ploeg, an analyst with Raymond James & Associates Inc. in Chicago, said the Fidelity purchase would leave MAF as the only large publicly traded thrift based in Chicago. MAF will continue to look for opportunities to expand, but its future deals will probably involve commercial banks, he said.
"That's not an unreasonable assumption, because they do have a small commercial banking practice that they started up a couple of years ago, so they're comfortable with that business," Mr. Vander Ploeg said. "There are a number of banks up for sale in Chicago, and MAF is one of those companies that is going to be approached by all of them."
MAF would trade 0.89 shares of its stock for each share of Fidelity. That would work out to a price of approximately $31 per Fidelity share, or 1.9 times Fidelity shareholders' equity. MAF says the deal would have a "neutral" effect on earnings next year but would boost profits by 1% to 2% in 2004.
Shares of MAF fell 1.52% Tuesday to $34.30. Fidelity's were up 11.3%, to $30.16.
