Six months after buying two Ohio community banks, Park National Corp. announced a deal - its largest to date - for a third.
Park National, which is based in Newark, Ohio, said it had agreed to pay $306 million for Security Banc Corp. of Springfield.
The deal would create a $4.2 billion-asset company with 102 branches in 26 counties. Security, with $987 million of assets, operates three community banks with 24 branches along the bustling Interstate 70 corridor and in fast-growing western Ohio.
"Having a company this size will give us an advantage and allow us to remain competitive with the super regional banks" in the area, said C. Daniel DeLawder, president and chief executive officer of Park National. Those competitors include Fifth Third Bancorp in Cincinnati and National City Corp. and KeyCorp in Cleveland.
Though management of both companies had been acquainted for some 25 years, Security was not marketing itself when Park National approached it recently to discuss a merger, said Bill Stapleton, Security's chief financial officer. But similar cultures and Park National's financial track record made it easy to work out a deal, he said.
"We felt we had to be with a bigger organization that had the same [community bank] philosophy and same goals," he said.
Park National said it plans to use the combined resources of the two companies to invest in new technologies and products. One of its first actions will be to build an Internet banking platform for Security's customers. Park National said it also expects to add automobile leasing, home equity lines of credit, and credit cards to Security consumer menu.
"In order to remain competitive in this industry you must continue to spend money," Mr. DeLawder said.
Park National agreed to exchange 0.2844 of its own shares for each share of Security, which works out to $25.99 per Security share at Monday's closing price. The $306 million deal price is equal to 2.5 times Security's book value and will be accounted for as a pooling of interests.
The sale is expected to close in the second quarter.
Security's stock soared on news of the deal. At midday Tuesday it was trading at $23.75, up 32% from Monday's close. Park National's stock price was unchanged, at $91.375.
It has been a busy year for Park National, which bought U.B. Bancshares of Bucyrus and SNB Corp. of Greenville in April. The two companies' assets totaled $480 million.
In 1997, Park National bought First-Knox Banc Corp. for $111.9 million of stock. First-Knox had 12 branches and $561 million.
Park National said it expects few hitches in integrating the company. Security's three banks would continue to operate independently, as do those of Park National's other community banks.
That is the key to Park National's success, Mr. DeLawder said.
"Security Banc will be an autonomous community bank with the ability to respond to markets without direction from the holding company," he said. "We think that fosters an entrepreneurial spirit."
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