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FirstMerit's deal for Citizens Republic in Michigan sent a message that acquisition prospects in Chicago are weaker than first thought — and deal forecasters back to the drawing board.
September 18
Wintrust Financial (WTFC) in Rosemont, Ill., continues to find acquisition opportunities
The $17 billion-asset company announced late Tuesday that it would buy the $390 million-asset HPK Financial for $27.5 million in cash and stock. The deal is expected to close in the fourth quarter.
"This transaction provides a wonderful opportunity to expand our presence to the vibrant Hyde Park neighborhood of Chicago and helps us continue on our path to become Chicago's Bank," Edward Wehmer, Wintrust's president and chief executive, said in a press release.
The company's Hyde Park Bank and Trust appears to be a healthy bank. At June 30, nonperforming assets made up 2.1% of total assets. The bank was also well-capitalized and profitable.
Wintrust has been a busy acquirer in a particularly quiet market for deals. In September 2011, it bought the $263 million-asset Elgin State Bancorp in Illinois for $13.8 million. In the last year it has also announced seven deals for failed banks, branches or an array of ancillary businesses.
Wehmer has said repeatedly that he visits one acquisition target or so each week, but is unable to make most of the deals work.
Wintrust "seemed to be the most active in seeking in acquisition targets," Brad Milsaps, an analyst with Sandler O'Neill, wrote in a note to clients earlier this month after a trip to Chicago, where he met with several of the city's largest publicly traded banks. "However, the company continues to find that in most cases it cannot create any value from purchasing these banks once the company completes due diligence and marks the loan portfolio."
The deal comes on the heels of comments by Paul Greig, the chief executive of FirstMerit (FMER) in Akron, Ohio, that he couldn't find anything "particularly attractive" to buy in Chicago. FirstMerit entered the city in 2009 and had once been bullish on expanding its operations there through acquisitions. Instead, the company said last week that it would buy Citizens Republic (CRBC) in Flint, Mich.
