Star Banc Buying 53 Banc One Branches

Star Banc Corp. said Tuesday it would buy 53 Banc One Corp. branches, with $1.3 billion of deposits, for an undisclosed sum.

Jerry A. Grundhofer, chairman, president, and chief executive of Star Banc, said the "low-risk transaction" meshed with the bank's acquisition strategies.

Analysts said the deal was also in line with Banc One's plan to divest underperforming stores in small markets and concentrate on metropolitan areas.

"Banc One and Star Banc are very smart bank holding companies," said Joseph A. Stieven, analyst with St. Louis-based Stifel, Nicolaus & Co. "Just because one can't get the profit returns they want on the smaller markets doesn't mean someone else can't turn around a profit."

Mr. Stieven said the premium paid for the deposits would be a modest one, given that the branches have an average of only $25 million of deposits. On Jan. 23, Fargo, N.D.-based Community First Bankshares completed its acquisition of 37 offices in Arizona, Colorado, and Utah from Banc One. Community First paid a $38 million-deposit premium, he noted.

"It's a low-risk deal for Star Banc because branches are less expensive than buying an entire bank company or establishing a de novo branch," said A.G. Edwards analyst Diana Yates.

Star Banc, which is behind Banc One, National City Corp., and KeyCorp in deposit market share in Ohio, said it has maintained a commitment to "community banking." David Moffett, Star Banc's executive vice president and chief financial officer, said that though the branches are a stepping stone into new markets, they aren't a step toward acquiring more bank companies in these areas.

"We like community banking a lot," Mr. Moffett said. "Through these branches we can get a good customer base and organize the branches into regions."

When the deal is completed at the end of the second quarter, the $14 billion-asset Star Banc will be in towns such as Portsmouth, Fremont, Sandusky, and Middlefield.

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