Charter One Financial to acquire Haverfield Corp. for 1.84 times revenue

Weekly Corporate Growth Report, May 5, 1997

The Deal: Charter One Financial has agreed to buy Haverfield Corp., an StL, in a stock swap that is currently valued at $54 million, or $27/ share. Charter One will pay $27 in its common shares for each share of Haverfield. On the news, Haverfield rose 75 to $24.25, while Charter one remained unchanged at $4250/ share.

Discussion: Not including a one-time SAIF assessment in the third quarter of 1996, earnings of Haverfield seem to have recovered quite nicely from a sharp drop in 1994 that was the result of a declining mortgage market and rising interest rate environment. Due to a weak demand for mortgages, Haverfield has cut its staff and other expenses and has begun emphasizing consumer lending. It is trying to capitalize on its strong financial position by introducing or expanding products and services such as home equity lines, mutual funds, annuities and insurance products.

Charter One Financial owns Charter One Bank, a federally chartered savings bank based in Cleveland, Ohio. The bank provides consumer and business banking services to certain major markets in Ohio. Much of the company's growth over the past few years has been from mergers and acquisitions.

Charter One's profits are expected to continue to improve during 1997. The trend in its various measures of operating performance is clearly positive. The company's growth record sets it apart from a great majority of the thrift industry, as it continues to consistantly increase earnings over the long run.