Huntington Bancshares said Monday it had agreed to buy First Michigan Bank Corp. and its network of 90 offices for $908 million in stock.

Analysts deemed the deal expensive, as Columbus, Ohio-based Huntington would pay three times book value and 18 times estimated 1997 earnings. (The premium over First Michigan's market price was much lower, perhaps indicating a new turn in bank valuations. See back page.)

The announcement also brought new attention to $21.6 billion-asset Huntington as a takeover candidate itself.

Huntington officials defended their acquisition as strategically important. Their Holland, Mich.-based target would triple Huntington's Michigan offices, while First Michigan's $3.6 billion of assets would boost the $2.1 billion Huntington had in the state as of March 31.

"Huntington is definitely committed to being an investor-owned, independent company, and this acquisition demonstrates this," said Zuheir Sofia, Huntington's president and chief operating officer.

Planning to merge First Michigan's banks into their lead subsidiary, Huntington National Bank, the leaders of the Ohio holding company are taking competitive aim at Old Kent Financial Corp. of Grand Rapids, Mich., and First of America Bank Corp. of Kalamazoo.

The acquisition is Huntington's largest ever. Most of its assets are in Ohio and Kentucky, with smaller amounts in Florida, Indiana, Michigan, and West Virginia.

First Michigan earned $42.2 million last year, for a 1.27% return on assets.

"Huntington's performance has been very solid," said Michael Moran, an analyst with Roney & Co. in Detroit. "But at this pricing level, Huntington is capitalizing on its strong currency, which is fueled in part by takeover speculation."

Huntington said it could cut $19 million, or 15%, of First Michigan's expenses, in 1998 by merging computer systems and cutting administrative costs, including an undetermined number of First Michigan's 1,600 jobs.

Huntington would also close five or six branches while scaling back others and encouraging customers to use the phones, teller machines, and computers that are hallmarks of Huntington's high-technology delivery strategy.

"First Michigan's customer profile is poised to take advantage of Huntington's technology, which will provide opportunities to improve efficiency and fee income," said Huntington chairman Frank Wobst.

The deal, expected to close in the third quarter, would add slightly to earnings in 1998 and would increase profits by 4% in 1999, the company said. It estimates taking a $35 million pretax merger-related charge in the third quarter.

First Michigan has the decentralized management style of a super community bank and is an active lender to small and midsize businesses. Commercial and agricultural loans accounted for 27% of its total in 1996.

In January, the company issued a statement that it had been in merger discussions with an unnamed company, but those discussions had been terminated. Mr. Moran said the suitor was National Australia Bank, which owns Michigan National Corp.

David M. Ondersma, chairman and chief executive officer of First Michigan, who is slated to become Huntington's Michigan region chairman, said future technology costs were a factor in the decision to sell.

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