70 offices of joined Huntington-Sky Financial operation would shut

12/22/2006

A combined Huntington Bancshares Inc. and Sky Financial Group Inc. would become the Toledo area's largest bank - and the state's third largest - but it is unclear how many of the 70 branches to be shuttered would be local.

Also uncertain is the fate of Sky operations in Bowling Green, where 275 employees work at headquarters and in various offices. Sky, the largest northwest Ohio-based bank, has more than 500 employees in metro Toledo, including at the 10-story downtown bank building at Madison Avenue and Huron Street.

But the two firms said yesterday that about 70 of 750 branches they now operate separately will be closed across the six-state region if Huntington, of Columbus, is able to take over Sky.

The firms expect the $3.6 billion stock and cash transaction, subject to regulatory and shareholder approval, to be finalized next summer. The deal, expected to save $115 million annually, was announced Wednesday.

But overlap of operations and proximity of branches mean cuts will be needed. Executives say such decisions haven't been made, but acknowledged yesterday that the two banks have 100 branches within a mile of each other.

Among those are one Huntington office and two of Sky in downtown Toledo.

Others include those on Monroe Street between Detroit and Upton avenues, in the Westgate area, and on Heatherdowns Boulevard in Toledo; in Arrowhead Park in Maumee; on Sandusky Street in Perrysburg; off Airport Highway in Springfield Township; and in Bowling Green, downtown and on north Main Street.

"We're going to do what's best for clients and make sure we provide them with the best financial centers to serve them with," said Sharon Speyer, president of Sky Bank's northwest Ohio district, who would remain in that role at the combined bank.

Some Sky customers in downtown Toledo said they were unconcerned that the area's largest homegrown bank holding company would no longer exist.

"As long as the money's there, I don't care," said Toledoan Joy Wilcox.

But customers wondered whether practices with checking and other accounts will change along with the name to Huntington, how long the conversion will take, and if it will result in erroneous fees.

"I think it's pretty hard for them [banks] to be local anymore," said Lisa Stewart of Port Clinton.

Executives of each bank briefed analysts, investors, and reporters yesterday on the deal.

In the first day of trading after the announcement, Wall Street reacted by rewarding Sky and punishing Huntington on the Nasdaq National Market.

In heavy trading, Sky closed at $27.69 a share, up $3.40, as more than 9.6 million shares exchanged hands instead of the 280,000-share normal volume. normally. Huntington closed at $22.96 a share, down $1.74.

It's a good deal for Sky shareholders, who will get a 25 percent premium on their stock, but combining the two banks will be tough even with the Bowling Green banking firm's merger expertise, said Kevin Reevey, first vice president of equity research for Ryan Beck & Co.

"This is a large deal for both institutions," he said. "I think it's going to be hard to pull off."

Some upper-level managers from Sky could leave and found a bank charter or two in Toledo or even Bowling Green, which wouldn't offset potential job losses but would salvage a local presence, said Jeff Davis, an analyst with FTN Midwest Securities Corp.

Sky customers will benefit from Huntington's more advanced online banking capabilities and broader array of trusts and wealth-management options, and the Bowling Green bank brings with it insurance and branches in Pittsburgh and western Pennsylvania, officials said.

The combined bank's board would have 10 members from Huntington and five from Sky, and most top appointments have been decided, the banks said.

The two share a philosophy of local decision-making, and retention bonuses will be awarded to help keep key people in place, executives said.

Retention bonuses, severance, and other such personnel costs will account for 30 percent to 35 percent of the $200 million in charges for the merger, they said.

"There won't be a big change," said Marty Adams, Sky's chairman, president, and chief executive.

Added Mr. Adams, who will become Huntington's president and chief operating officer: "It really only provides more opportunity for our employees."

Contact Julie M. McKinnon at:

jmckinnon@theblade.com

or 419-724-6087.