Ohio's Sky Financial Group Inc. said Monday that it would buy Mahoning National Bancorp of Youngstown, Ohio, for $307 million of stock.

The deal, valued at 3.2 times Mahoning's book value and 20 times its estimated 1999 earnings, is the third announced by Bowling Green-based Sky Financial in the past seven months. It would strengthen the $4.7 billion- asset company's presence along the Pennsylvania border, giving it the top commercial-bank market share in Mahoning County.

"If you look at the map, this deal makes a lot of sense," said Marty E. Adams, Sky Financial's president and chief operating officer. "Mahoning National is a high-performing bank that will fit well with our existing franchise."

Mahoning National, with $809 million of assets and 20 branches, reported a return on assets of 1.73% at yearend 1998 and a 19.18% return on equity.

"This is not a fix-em-up sort of deal," said Brock Vandervliet, an analyst at Keefe, Bruyette & Woods Inc. in New York. "Sky is picking up a well-run organization."

Sky Financial was formed last October by a merger of equals between MidAm Inc. of Bowling Green and Citizens Bancshares of Salineville, Ohio. Since then, it has announced plans to buy First Western Bancorp of New Castle, Pa., for $434 million and Wood Bancorp of Bowling Green for $59 million. Those deals are expected to close in the third quarter.

If all three deals close, Sky Financial would have $7.7 billion of assets and the top market share in six counties in northeastern Ohio and western Pennsylvania.

Shares of Sky Financial were trading at $27.062 in late trading Monday, down 7.7%. Mahoning's stock was trading at $42, up 33%.

The market has punished some aggressive acquirers in recent months, fearful that the companies are biting off more than they can chew. In fact, Sky Financial's stock fell almost 20% after it announced the First Western deal, and it took months to recover.

Still, analysts were upbeat about this deal.

"Investors are generally cautious about known acquirers," Mr. Vandervliet said, "but Sky has a strong track record in making deals work."

"These guys are very good at getting cost reductions out of mergers," said Kenneth F. Puglisi, a Chicago-based principal of Sandler O'Neill & Partners. "Based on that record, I put a pretty high degree of confidence in them."

Sky Financial said it expects to cut $6.5 million-or 30%-from Mahoning's expenses. In addition, said Mr. Adams, the acquirer's chief operating officer, as many as three Mahoning National branches could be combined with Sky Bank offices.

Mr. Adams said Sky Financial will continue to look for merger partners.

"We believe that acquisitions are one of our core business lines," he said. "We want to grow banking and fee-based products, and we also want to continue buying banks."

Mr. Vandervliet said Sky Financial's management team "is clearly capable of running a larger company." He added, however, that the company would be cautious about doing deals that would jeopardize its strong return on equity. The company reported a 23.35% ROE for the first quarter.

"They have spent so much time and effort building their returns, I don't see them doing something that is going to force them to take a step back,"he said.

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