In 1964 Julian Kulas put together a group of investors to save a small, failed savings and loan in Ukrainian Village on Chicago’s West Side. In February, First Security Federal Savings Bank, the institution that emerged from that effort, will celebrate its 40th birthday–and its last under that name.
On Monday, MB Financial Inc. announced that it was acquiring First Security Fed Financial Inc., First Security’s parent company, in a stock and cash deal valued at $139.2 million. Both companies are based in Chicago.
“Pound for pound, it’s one of the most profitable thrifts or banks in the country,” said Mitchell Feiger, president and chief executive officer of MB Financial.
First Security has $490.8 million in assets, and it is expected to increase MB Financial’s assets to more than $4.8 billion. The deal is expected to close in the second quarter.
MB Financial will gain two branches and a drive-through bank in Chicago, a branch in northwest suburban Palatine and a branch in Philadelphia. The additions will give MB Financial nearly 40 offices in the Chicago area.
The Chicago-area banks will be renamed, while the Philadelphia branch will retain the First Security name. In that area MB Financial has no offices, so there is nothing to be gained by changing its name, Feiger said.
MB Financial has made a series of acquisitions in recent years, most recently purchasing South Holland Bancorp Inc. in February 2003 for $93.1 million.
In Chicago, a market many banking analysts consider fragmented, more deals are likely, said Mike Scott, mergers and acquisitions research manager for SNL Financial, a news and data service. He called the MB Financial-First Security deal a good one for both sides.
Polish immigrants founded First Security in 1928 as Security Savings and Loan Association. It was an uninsured S&L that had been shuttered in 1964 when Kulas put together a group to purchase and reopen the bank.
“At that time there was a real need for the institution in the community,” said Kulas, now the bank’s president and CEO. “So we got the people together.”
He will join MB Financial’s board and be a consultant.
The decision to sell came after watching increased competition move into areas that First Security has long served, Kulas said. Gentrification is bringing younger people into the neighborhoods, and many of those potential customers demand more services, such as being able to bank on the Internet. The bank could have survived on its own, but MB Financial brings more resources, Kulas said.
“We wanted someone with a similar culture to ours, and they’re oriented to the ethnic communities,” he said. “They’ve been very responsive to the needs of those communities.”
Feiger said plans are already under way to add Ukrainian to the list of foreign languages available to customers calling the bank for help with their accounts.
Kulas, well known in the Ukrainian community nationally, was involved in saving a Ukrainian-run bank in Philadelphia in 1994.
Shares of MB Financial closed at $36.50, up 25 cents. First SecurityFed jumped $3.01, or 9 percent, to $34.91. Both trade on the Nasdaq stock market.
