Huntington on Track to Become Ohio’s Largest Bank
COLUMBUS, Ohio – Huntington Bancshares acquisition of FirstMerit Corp. would make the combined Huntington Bank, once it integrates FirstMerit Bank, the largest in Ohio, surpassing KeyBank.
Largest, Huntington explained Tuesday, based on deposit market share. Fifth Third has earning assets of some $125 billion, which would still exceed the larger Huntington.
Pro forma, the assets of the combined entity would be nearly $100 billion ($71 billion for Huntington, $25.5 billion at FirstMerit), but with KeyCorp’s acquisition of FirstNiagara Financial Group, which has $39 billion in assets, the Cleveland-based provider of financial services would be larger.
Huntington was reported to be interested in FirstNiagara, based in Buffalo, N.Y., but KeyCorp’s bid won. FirstNiagara has a presence in northwestern Pennsylvania.
Acquiring FirstMerit would extend Huntington Bank’s Midwest footprint into Illinois and Wisconsin. Huntington has a presence in six states: Ohio, Michigan, Indiana, northern Kentucky, the northern panhandle of West Virginia and western Pennsylvania.
FirstMerit’s presence in Pennsylvania is limited to four offices in Lawrence County, all in or near New Castle.
In the agreement Huntington and FirstMerit announced Tuesday – transaction value put at $3.4 billion — Huntington will pay FirstMerit stockholders 1.72 common shares and $5 for each FirstMerit common share.
The price of $20.14 a share, which includes a heft premium, is based on where Huntington shares closed Monday, $8.80
Markets reacted as is usual when a larger bank holding company announces the acquisition of a smaller one. First Merit shares gained $1.25, or 8.45%, while common shares of Huntington lost 75 cents, or 8.52%.
FirstMerit, based in Akron, serves the Cleveland/Akron/Canton market and, as The Plain Dealer reports, “The sale of FirstMerit will almost surely mean significant local job loss. FirstMerit employs about 4,000, with about 2,000 of those at the Akron headquarters, according to the city of Akron.”
In a conference call with reporters and analysts, Huntington said it expects to reduce expenses of the combined company by $2 billion in cost savings, “roughly equal to 40% percent of FirstMerit’s [annual] expenses.”
That translates into eliminating jobs, especially FirstMerit back office support and data processing, and severance expense for Huntington. An undetermined number of branches will be closed in northeastern Ohio because 39% of FirstMerit offices are within one mile of a Huntington branch.
The FirstMerit offices will take the Huntington name.
Huntington said it doesn’t know yet which of its branches will be closed and which First Merit offices upon completion of the acquisition in the third quarter.
Copyright 2022 The Business Journal, Youngstown, Ohio.