National City Buys Mid America Bank
Kane, James, Daily Herald (Arlington Heights, IL)
Byline: James Kane Daily Herald Business Editor
The rapid reshaping of the Chicago banking market continued apace Tuesday as National City Corp. announced plans to take over MAF Bancorp for $2.9 billion and move up to the No. 4 market position.
The two banks have roughly similar numbers of offices and deposits in the market. Clarendon Hills-based MAF ranks 11th in Chicago and fifth in Milwaukee in market share, while National City ranks 13th here and isn't in Milwaukee.
MAF, which was founded 85 years ago and operates as Mid America Bank, has $11.1 billion in assets and 82 branches, including $5.7 billion in Chicago area deposits at 58 branches.
MAF shareholders will receive stock worth $56 per share, a 39.5 percent premium over the Monday closing price. The stock rose $14.29 Tuesday, or 35.6 percent, to close at $54.44.
"We got recognition of what the organization is like and what we have built up over the years," said Allen Koranda, MAF chairman and CEO.
The terms value MAF at 19.2 times expected 2007 earnings and 1.8 times book value.
"National City paid a big price," agreed Gerard Cassidy, an analyst at RBC Capital Markets. "We don't have much doubt it will achieve its targeted cost savings. The earnings impact depends on how successfully MAF grows."
MAF has about 2,100 employees, with the 500 headquarters and back office jobs the ones most threatened by consolidation. Koranda said National City's size means that many of those employees are likely to have opportunities to stay on, though sometimes in new jobs.
The merger is the second announced involving a large Chicago- area bank in less than two weeks. On April 23, Bank of America Corp. announced plans to buy LaSalle Bank Corp. from Dutch bank ABN Amro Holding NV for $21 billion. Royal Bank of Scotland PLC, which owns Charter One bank in Chicago, may seek to overturn that deal, however. …