Amalgamated of Chicago, founded by the Amalgamated Clothing Workers of America in 1922, has always been known for its close union ties. But it has not been majority owned by unions for decades.
How Wrobel, 71, – for nearly 40 years a key lieutenant under Chairman and majority owner Eugene Heytow – acquired Heytow’s 57.5% stake on the cheap after his death in 2010 is a story told so far. only through documents. Wrobel did not respond to multiple requests for comment.
A untimely loan taken out by Heytow, secured by its shares in Amalgamated, appears to be the key to the deal. Heytow got the loan from JPMorgan Chase in 2007, according to a filing by Wrobel with the Federal Reserve when it acquired the shares in early 2013. When Heytow died in August 2010, the loan was still outstanding.
A trust created by Wrobel and separate trusts for the benefit of his wife, Debra Wrobel, along with their three children, paid $ 4.2 million to purchase the ticket held by Chase, according to the filing, obtained through a request in under the Freedom of Information Act. (A few other investors, including Wrobel’s brother-in-law, acquired a very small portion of Heytow’s stake.)
“Immediately after the intended purchase, the (Heytow) estate will cede and transfer 102,030 of the (Merged Investments) and the ticket will be canceled and deemed satisfied,” the file said.
At the time, Amalgamated Investments’ book value was around $ 40 million, according to financial reports submitted by the bank. That would have earned the Heytow Estate’s stake worth $ 23 million, at least in terms of equity on the bank’s balance sheet. Wrobel and the other investors acquired their shares at just 18% of the company’s book value, according to the filing.
Amalgamated has never been a high-income bank, but its stable client base in unions and city governments means it doesn’t take much risk either. With stable earnings, its book value had doubled to approximately $ 80 million as of June 30, 2021. Amalgamated of New York is paying 1.2 times that amount in cash for the acquisition.
The stock gain is not the only benefit Wrobel derives from the deal. He has a consulting agreement with Amalgamated of New York in which he will be paid $ 600,000 next year to help with the transition.
At the same time, there will be job losses at the Bank of Chicago to help close the deal. In a presentation to investors, the New York-based bank said it plans to cut overhead costs for the Bank of Chicago by 25%, more than half of which is from employee salaries. There were 167 employees in Chicago as of June 30.
Wrobel told the Chicago Sun-Times when the deal was announced on September 21, there would be job losses, but there would have been more if Amalgamated had merged with a local bank.
The Heytow family appear to be getting nothing from the sale. Eugene Heytow’s ex-wife Mitzi Heytow said in a brief interview that she was not aware of any money going to her family.
Wrobel himself was once part of the Heytow family, having married Eugene Heytow’s daughter. But the two divorced in the 1980s, and Heytow never held that against Wrobel, sources say. Wrobel succeeded Bill Daley, son of the late Mayor Richard J. Daley, as president of the merger in 1993. Daley ran the bank for three years, which allowed him to familiarize himself with the industry. He is currently vice president of public affairs at San Francisco-based banking giant Wells Fargo.
Heytow was also politically connected like any banker in Chicago in his heyday – friends not only with the Daleys, but also with former Republican Gov. Jim Thompson. In addition to Amalgamated, he was a significant investor in the parent company of Oak Brook Bank. The bank, run by a man married to Heytow’s niece, was sold to MB Financial in 2006 for $ 372 million and is now part of Cincinnati-based Fifth Third.
As for the union ownership of Amalgamated? Wrobel told the Sun-Times that the unions and the Chicago Federation of Labor together own about 15% of the bank. The unions were reclaimed in 2003, he told the newspaper. With a bank book value at the time of $ 67 million, these unions most likely paid over $ 4 million for participation.