Huntington Bancshares, aiming to increase its presence in central Florida, said it will pay $134 million in cash and stock to buy Citi- Bancshares.
Citi-Bancshares has $524 million of assets and is based in the retirement community of Leesburg - a new market for $20.6 billion-asset Huntington.
The purchase, expected to close in the first quarter, would bring the Florida assets of Columbus, Ohio-based Huntington to $1.7 billion.
Since May 1995, Huntington has pursued a strategy in Florida of buying high-performing consumer banks. Huntington hopes to build on its deposit base and market its fee businesses, such as trust and insurance, to its new customers.
Because of the dearth of big acquisition candidates in Florida - Citi- Bancshares is the biggest independent in the Leesburg area - Huntington agreed to pay a healthy premium of 2.6 times book value.
Analyst Fred Cummings of McDonald & Company Securities in Cleveland pointed out that Huntington would be paying about 16.8 times Citi- Bancshares' expected 1996 earnings.
"That's just a rich price," Mr. Cummings said.
But Kenneth Hemauer, an analyst with Baird & Co. in Milwaukee, said the price is in line with those in other central Florida deals.
Citi-Bancshares is "a decent-size company operating in a nice market," he said.
Huntington officials said the takeover deal, their fifth in Florida, was in keeping with the bank's blueprint. Following its midwestern "snow bird" customers, Huntington entered Florida about 10 years ago with trust offices. Now, it's focusing on expanding the retail bank in the middle of the state.
"We felt it was important for us to stay within a geographic area" instead of scattering outposts across the state, said Milton Baughman, senior vice president for mergers at Huntington.
Kenneth W. Mullis, Citi-Bancshares' president and chief executive, said the sale is necessary because technology costs will rise too high for such a small company.
Because Huntington has no banking customers in Citi-Bancshares' market, Mr. Mullis said, there would be "minimal" layoffs among the his company's 200 employees. That was one reason it decided to sell to Huntington, he said.
"Huntington said ... 'We cannot come in and cut expenses - you all run a very lean company,'" Mr. Mullis said.
Mr. Cummings noted that Huntington is rapidly expanding in the Florida market at a time when other midwestern institutions are leaving. KeyCorp of Cleveland sold its $1.5 billion-asset thrift to First Union Corp. early this year, and FirstMerit Corp. of Akron, Ohio, plans to close the sale of its $137 million-asset Florida operation to SouthTrust Corp. by the end of the year.
However, Huntington's size in Florida is paltry compared with First Union and Barnett Banks Inc., which have Florida assets of $39 billion apiece.
