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CHARLOTTE, N.C. (AP) — Bank of America Corp. said Monday it will purchase LaSalle Bank Corp. from ABN Amro North America Holding Co. for $21 billion, filling a big hole in its nationwide branch network by becoming Chicago’s largest bank. “Although we don’t desire to be in every MSA in the U.S., Chicago is attractive to us,” Bank of America chairman and chief executive Ken Lewis said during a call with analysts. For the past several months Lewis has expressed the his bank’s interest in the Chicago market, particularly the strength of LaSalle, in speeches and conference presentations. “The opportunity arose and we acted,” Lewis said. The deal initially was announced by ABN Amro Monday when the Dutch bank agreed to sell itself to Barclays for nearly $91.2 billion. The net cost to Charlotte-based Bank of America will be $16 billion after a return of $5 billion in excess capital. Bank of America said it expects the deal to immediately enhance its earnings per share and added that it expects around $800 million in after-tax cost savings. Restructuring costs also are expected to be around $800 million, the bank said. Investors and Wall Street offered mixed reaction, sending shares of Bank of America down 38 cents or nearly 1 percent to $50.66 in morning trading on the New York Stock Exchange. Analysts at Friedman, Billings, Ramsey & Co. said “we like this deal, particularly as this strengthens BofA in the third largest deposit market in the U.S.” Still, they continued their “outperform” rating on the stock. Chicago-based LaSalle is a top-20 U.S. bank holding company, with $113 billion total assets. The combination of LaSalle and Bank of America creates a leading banking franchise in metropolitan Chicago, the No. 3 banking market in the United States, and in Michigan. Together the banks would surpass current market leader JPMorgan Chase & Co. and set up a battle with that bank, the nation’s third-largest. In the last four years, Bank of America has grown its retail presence in Chicago from a single financial center to 56 locations. Once combined with LaSalle’s 141 Chicago area offices, Bank of America will have more than 14 percent of the deposit market share in metropolitan Chicago. The purchase will significantly deepen Bank of America’s Chicago presence and add LaSalle’s 17,000 commercial banking clients, 1.4 million retail customers, 411 banking centers and 1,500 ATMs in the Chicago area, Michigan and Indiana. It also will mark Bank of America’s retail branch entry in Michigan, where it will have 264 offices and be the largest bank with a 23 percent deposit market share. Bank of America also will acquire LaSalle’s six offices in Indiana. All LaSalle branches will be rebranded with the Bank of America name. “Bank of America will be the brand, as it is throughout the rest of America,” Lewis said. The purchase also lets Bank of America once again test a federal law that prohibits banks from acquiring 10 percent of U.S. deposits through acquisition. In 2004, the bank acquired FleetBoston Financial. The purchase of credit card issuer MBNA Corp. a year ago added millions of names to its ledger, and the bank is counting on an offer of free online stock trading to add even more. Once it completes its acquisition of wealth management company U.S. Trust, a deal the bank made in November, Bank of America will manage about $261 billion in assets for the very rich — more than any other U.S. bank. In all, Bank of America had $1.46 trillion in assets at the end of 2006, second only to chief rival Citigroup Inc. — the nation’s largest financial services company with $1.88 trillion in assets. Last month, when the Federal Reserve Board approved Bank of America’s plan to buy wealth manager U.S. Trust, it said the bank held $612 billion in deposits, or 9.1 percent of the U.S. total. With LaSalle’s approximately $60 billion deposits and U.S. Trust’s $9.4 billion deposits, the bank would appear to be slightly over the 10 percent threshold. Bank officials said they are confident they can meet the requirements. “We will not plan on changing our retail deposit strategy,” Lewis said. The U.S. Trust purchase is set to close July 1. Bank of America’s purchase of LaSalle is expected to close later this year. ——— On the Net: Bank of America Corp.: http://www.bankofamerica.com LaSalle Bank Corp.: http://www.lasallebank.com
Posted 4/23/2007
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