$4.4-Million Bank Merger Gets Initial OK : Huntington to Acquire Mid-Cities for Cash, Stock
The parent company of Huntington National Bank in Huntington Beach has reached a tentative agreement to acquire Mid-Cities National Bank of Bellflower in a cash-and-stock merger valued at nearly $4.4 million.
The transaction is subject to a definitive agreement and to approvals from regulators and the shareholders of both entities, a process that could take 6 months to complete.
The merger would create a bank with three branches and $125.7 million in assets.
Both banks have been profitable, though 7-year-old Huntington National has grown faster than the 6-year-old Mid-Cities.
‘The Ideal Marriage’
“This seems like the ideal marriage from our standpoint,” said Robert Green, executive vice president of Huntington National. “We’re looking to expand. They’re in good proximity to us but not too close to be stumbling over each other’s business.”
George Keulen, a Mid-Cities director and chairman of its acquisition committee, said the “two banks together are stronger than each of us individually right now.”
Kirk Bashore, president of Huntington National and its parent, HNB Financial Group, said Mid-Cities has had a solid deposit base but has not been able to make as many loans as it would like to. He did not elaborate.
With $41.6 million in deposits, Mid-Cities has turned just $18 million or so into loans, Keulen said. Typically, banks like to lend at least 75% or more of their deposits, which would amount to more than $31 million in the case of Mid-Cities.
“We (Huntington National) have a strong loan demand and could be making more loans if we could increase our core deposits,” Green said.
$17.50 a Share
Under the tentative agreement, Mid-Cities shareholders would get the equivalent of $17.50 a share. Up to 45% of the amount would be in cash, the rest in HNB stock.
With current values, Mid-Cities shareholders would get 1.5 shares of HNB stock for each share of Mid-Cities stock.
The agreement calls for Bashore to remain president of the bank and the holding company. Mid-Cities is operating with a temporary president. The Bellflower bank expects to place two of its people on HNB’s board, which has six members.
HNB, with two branches in Huntington Beach and consolidated assets of $80.5 million, reported net income of $754,000 for 1988. Mid-Cities, a one-office operation with $45.2 million in assets at the end of the year, posted net income of $254,000 last year.