"Sveikinu visus Lietuvius," Michael B. Johnstone intones in a bank commercial airing on a small, low-power television station. Translation: "I greet all Lithuanians."

Mr. Johnstone, president and chief executive officer of TCF National Bank Illinois, is trying to reach people on Chicago's South Side.

The commercial's voice-over narration, entirely in Lithuanian, goes on to note how TCF's parent company in Minneapolis, TCF Financial Corp., was formed by Scandinavian immigrants just as Standard Financial Inc., the Illinois company it recently took over, was started by Lithuanian immigrants.

Mr. Johnstone's outreach to a highly specific customer base is an example of how out-of-state banking companies are trying to attract account holders in the intensely competitive Chicago market.

It also speaks to the fact that TCF cannot afford commercials on the network television affiliates in the Chicago market. Instead it depends on cheaper cable TV, radio spots, and its reputation for free checking to bring people in.

Though bank competitors have come and gone, metropolitan Chicago remains one of the most fought-over and fragmented banking markets in the nation, with nearly eight million people and an estimated 8,000 midsize businesses in the mix.

But it is not easy to move market share in a metropolitan area with one hometown banking company in the Top 10 nationally and two other local leaders owned by deep-pocketed foreign parents.

In 10 years TCF has grown to $2.3 billion of deposits in Chicago, but its market share is just 1.5%, according to Sheshunoff Information Services. The company ranks ninth in deposits and has hundreds of smaller competitors.

More than 300 banks compete in Chicago, and despite the presence of industry giants Banc One Corp., Citicorp, U.S. Bancorp, and BankAmerica Corp., none from out of state has gotten a huge chunk of market share.

"Chicago, in many ways, is the most competitive market we're in," said Stanley J. Calderon, president of the Chicago market for Columbus, Ohio's Banc One. "It's a function of the incredible number of competitors."

The hometown giant, First Chicago NBD Corp., leads with an 18% deposit market share, according to Sheshunoff. It is followed by ABN Amro North America, operating mainly under the LaSalle name, with 13.4%.

Bank of Montreal's Harris Trust and Savings Bank ranks third, with 8.6%. Then come Northern Trust Corp. and BankAmerica, at less than 5%, and nearly 20 companies scratching in the 1% to 2% range.

"The market-share leaders have separated themselves from the rest of the pack, and that is causing other players to rethink their strategies," said John J. Harris, an investment banker at ABN Amro Chicago Corp. That means small companies that fail to find acquisitions may leave the area.

In some respects, Chicago is indicative of the competition in big, urban markets nationwide, where one banking company dominates and the rest seem to fight over the scraps.

But Chicago's retail market is unique in the volume of out-of-town aspirants it attracted. In addition to the big names, they include First of America Bank Corp. and Old Kent Financial Corp. from Michigan and Firstar Corp. from Wisconsin.

Examples abound of companies that have made a big entrance into Chicago only to find that grabbing market share is easier said than done. Banc One, U.S. Bancorp (the former First Bank of Minneapolis), and Citicorp, after entering through relatively small acquisitions, have had stagnant or declining deposits shares in recent years. Others, like Comerica Inc. of Detroit, which sold its Chicago bank to ABN Amro last year, have gotten out of the market.

This month, BankAmerica Corp. announced it was ending an agreement with Jewel Stores, the city's largest grocery chain, because the banking company could no longer justify the expense of running 75 supermarket branches.

BankAmerica chief financial officer Michael E. O'Neill said his company may have underestimated the competition in the Chicago market, but he added that he doesn't believe First Chicago truly dominates, either. BankAmerica's problems stemmed from the fact that it didn't have a traditional branch network to support its supermarket offices, Mr. O'Neill said.

The San Francisco banking company has a sizable commercial banking presence by virtue of its takeover of the old Continental Illinois Bank, which specialized in wholesale banking, but a regular brick-and-mortar retail network would be costly to buy.

Banc One learned after entering Chicago that expansion does not come cheap. It paid a high price for a 1.2% deposit share by acquiring $1.7 billion-asset First Illinois Corp. of Evanston for $347 million in stock, or about 3 times book value, in early 1992. "Our hopes were to make acquisitions early on, but we had to temper that with reality," Mr. Calderon said.

Citicorp entered Chicago in 1984 and continues to be profitable, said C. Mack, president and chief executive officer of Citibank's central region. He would not disclose specific figures. "Unequivocally, we want to grow our business even further" and may even consider acquisitions, he said. "We would not rule out any mode of growth."

TCF has made four acquisitions in the past 10 years and would like to do more. Mr. Johnstone, the TCF Illinois executive, takes a slightly unconventional approach to acquisitions. He and three or four other TCF executives pile into a car and drive around looking at banks in densely populated neighborhoods.

"We drive branch to branch and make a subjective decision," Mr. Johnstone said. "We ask ourselves, 'How will our marketing play in this area?' "

The strategy is not unlike that of San Juan, Puerto Rico-based Popular Inc., which has surpassed U.S. Bancorp in Chicago deposits, with $820 million, or 0.56% of the market. Popular has been gobbling up small banks in Hispanic neighborhoods. Observers say the company will eventually expand into other parts of the city.

"You can make money in Chicago with one branch or with 200," Mr. Johnstone said. TCF was able to earn a 1.67% return on assets before the Standard Financial deal, but he said the acquisition would dilute that number.

TCF would like to double its current 49 branches, broadening its market coverage and allowing it to justify more expansive and expensive advertising, the executive said. For the time being it finds an advantage in its 280 automated teller machines, the third-largest bloc in Chicago behind First Chicago's and $4.5 billion-asset St. Paul Bancorp's.

First Chicago also has more than 200 branches in Chicago, but Mr. Johnstone remains undeterred. "This market is so fragmented," he said, "that in all our 49 branches, we could have a different set of competitors at every location.

"We're conscious of what First Chicago NBD does in the marketplace, but we don't let that bother us."

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