Huntington Bancshares said Tuesday it will acquire 60 Barnett Banks Inc. branches in Florida, part of the divestiture associated with Barnett's merger with NationsBank Corp.
Huntington, based in Columbus, Ohio, agreed to pay a $523 million premium for $2.6 billion of deposits.
The branches are mostly in the Tampa-St. Petersburg area and come with $1.6 billion of commercial and consumer loans and 212,000 customer relationships.
Huntington already has $1.4 billion of deposits and 50 branches in Florida. The acquisition would move the company up to No. 7 from No. 12 in Florida deposits and give it a foothold in the Tampa market.
The $25.6 billion-asset Huntington said the deal would have a slightly positive impact on 1998 earnings.
With the purchase premium equal to about 20% of deposits, "that's certainly on the high end," said Joseph Duwan, an analyst with Keefe, Bruyette & Woods Inc.
"But this is Florida and they are getting the critical mass in Florida that they did need," Mr. Duwan said.
"We view this purchase as an excellent opportunity to acquire market share in locations that complement Huntington's current market position in Florida," said Frank Wobst, Huntington chairman and chief executive officer.
The deal resulted from a divestiture agreement between NationsBank and Florida and U.S. officials who were concerned about excessive deposit concentration and anticompetitive effects following the Charlotte, N.C., banking company's $15.5 billion acquisition of Jacksonville-based Barnett.
U.S. Department of Justice officials said Tuesday said they would not block the merger if NationsBank would divest $4.1 billion of deposits, or about 124 branches. That figure included Barnett's previously announced agreement to sell $1.1 billion to SouthTrust Corp. of Birmingham, Ala.
Another $400 million of deposits will be sold, NationsBank said.
Florida Attorney General Robert A. Butterworth made a similar announcement about approving the Barnett merger and laid out a detailed set of guidelines for NationsBank, which included retaining certain employees, keeping all Florida call centers open, assisting displaced employees, limiting fees to customers, and making certain commitments to small- business and community lending.
In choosing Huntington, NationsBank was "very selective as to who they sold to," said Jeffrey Grady, executive director of Community Bankers of Florida. "They were not going to dilute what they're acquiring by selling to someone they view as a good competitor."
Mr. Grady and his group lobbied Attorney General Butterworth to ensure that community banks were allowed to bid on the branches.
The community bankers would have preferred that NationsBank sell the offices in multiple bunches that small institutions could digest. But Mr. Grady said he does not view Huntington as a major threat.
Other observers said Huntington's bigger size makes it more of a market factor, but it will be hard to challenge "big superregionals that been there for a while" such as NationsBank, First Union Corp., and SunTrust Banks Inc., said Samuel Beebe, an analyst with William R. Hough & Co., St. Petersburg.
Huntington, which has exported to Florida one of the industry's more aggressive computer and telephone banking and automated branch strategies, will also face strong competition from smaller companies such as $3 billion-asset BankAtlantic Bancorp of Fort Lauderdale.
"I think there are great opportunities for home-based banks," said BankAtlantic chairman and CEO Alan B. Levan. "BankAtlantic has competed against large regional banks for some time and the influx of new competitors like Huntington doesn't change our strategy at all."
Mr. Levan said he too plans to enter Tampa through branching or acquisition.
