Few in Chicago—or anywhere—will have made a higher return in bank investing over the past decade than the chairman and CEO of Amalgamated Bank of Chicago when that bank completes its $98.1 million sale before yearend.
Robert Wrobel, who began his career 49 years ago at Amalgamated and rose to bank president beginning in 1993, and his family own 55.2% of the stock in the bank’s parent, Amalgamated Investments, according to a filing with the Federal Reserve. They are in line to collect more than $54 million in cash when the sale to the parent of New York-based Amalgamated Bank (no affiliation) is completed.
But that’s not the real story. Wrobel and his family have turned an investment of just $4.2 million in early 2013 into that $54 million haul, a return of nearly 13 times their money in just eight years.
Amalgamated of Chicago, founded by the Amalgamated Clothing Workers of America in 1922, always has been known for its close union ties. But it hasn’t been majority-owned by unions in 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 following his death in 2010 for now is a tale only told through documents. Wrobel didn’t respond to multiple requests for comment.
An ill-timed loan Heytow took out, secured by his stock in Amalgamated, appears to be the key to the deal. Heytow obtained the loan from JPMorgan Chase in 2007, according to a filing Wrobel made with the Federal Reserve when he acquired the stock in early 2013. When Heytow died in August 2010, the loan still was outstanding.
A trust set up by Wrobel, and separate trusts benefiting his wife, Debra Wrobel, as well as their three children, paid $4.2 million to purchase the note held by Chase, according to the filing, obtained via a Freedom of Information Act request. (A few other investors, including Wrobel’s brother-in-law, acquired a very small portion of the Heytow stake.)
“Immediately following the contemplated purchase, the (Heytow) estate will assign and transfer 102,030 of the (Amalgamated Investments) shares and the note will be forgiven and deemed to be satisfied,” the filing read.
At the time, the book value of Amalgamated Investments was about $40 million based on financial reports submitted by the bank. That would have made 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 never has been a high-earning bank, but its stable customer roster of unions and municipal governments has meant it doesn’t take a lot of risk, either. With steady earnings, its book value doubled to about $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 isn’t the only benefit Wrobel is receiving from the deal. He has a consulting agreement with Amalgamated of New York in which he’ll be paid $600,000 next year to help with the transition.
At the same time, there will be job losses at the Chicago bank to help the deal pencil out. In an investor presentation, the New York-based bank said it planned to cut 25% of the Chicago bank’s overhead costs, more than half of which are worker salaries. There were 167 employed in Chicago as of June 30.
Wrobel told the Chicago Sun-Times when the deal was announced on Sept. 21 that there would be some job losses, but there would have been more had Amalgamated merged with a local bank.
The Heytow family appear to be getting nothing from the sale. Mitzi Heytow, the ex-wife of Eugene Heytow, said in a brief interview that she wasn’t aware of any money coming to her family.
Wrobel himself once was a 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 Amalgamated president in 1993. Daley ran the bank for three years, and it gave him his introduction into the industry. He currently is vice chairman of public affairs for San Francisco-based banking giant Wells Fargo.
Heytow was as politically connected as any banker in Chicago during his heyday—friends not just with the Daleys, but also former Republican Gov. Jim Thompson. In addition to Amalgamated, he was a substantial investor in the parent of Oak Brook Bank. That bank, run by a man married to Heytow’s niece, sold to MB Financial in 2006 for $372 million and now is part of Cincinnati-based Fifth Third.
As for union ownership of Amalgamated? Wrobel told the Sun-Times that unions and the Chicago Federation of Labor together own about 15% of the bank. The unions were brought back into ownership in 2003, he told the newspaper. With a bank book value back then at $67 million, those unions quite likely paid more than $4 million for the stake.