BANK MERGER MANIA : National City Plans to Purchase Integra for $2.1 Billion in Stock : Acquisitions: Deal reflects rapid industry consolidation. Analysts praise move, which would create assets of $50 billion.
National City Corp., a diversified financial services concern, plans to buy Integra Financial Corp. for $2.1 billion in stock in a merger that analysts praised Monday.
Cleveland-based National City and Integra, a Pittsburgh-based bank holding company, are practically neighbors, and their markets are similar, analysts said.
The combined company would have assets of $50 billion, deposits of $35 billion and stockholder equity of $4 billion.
The deal--announced on the same day as the Chemical Banking Corp.-Chase Manhattan Corp. merger--reflects rapid consolidation in the financial services industry.
“I think strategically it makes a lot of sense,” said Tony Howard, a vice president and bank analyst at First of Michigan Corp.
He noted that pushing eastward will provide “good geographical diversification” for National City, which has $35 billion in assets and more than 650 branch offices in Ohio, Kentucky and Indiana.
Integra has about $15 billion in assets and operates 264 banks in western Pennsylvania.
David A. Daberko, National City’s president and chief executive, called the purchase a “natural extension into an adjacent market that is culturally and demographically similar to our existing markets.”
It also represents a step many smaller banks are considering as a way to stay competitive, according to James M. Schutz, a securities analyst and vice president at Chicago Corp.
“An institution the size of Integra generally finds itself a bit frustrated in terms of being able to develop new products,” Schutz said. “The whole industry is evolving toward a more technological edge, and it’s going to be very hard for small banks to get into that.”
Chuck Skillington, Integra’s vice chairman, noted the bank’s desire to make use of technology.
“We want to get more into the delivery of banking services through higher technology, and it takes a lot of money to play in that game,” he said, adding that the move will also help Integra enter the corporate lending market.
Daberko declined to estimate how many of the 5,600 jobs at Integra would be cut. But he predicted the cuts would be comparable to a 21% cost-reduction plan.
The deal is expected to generate annual cost savings of $85 million. The companies expect the cost of the merger to result in about $100 million in charges.
Under the definitive agreement, National City will offer two shares of its common stock, worth $62.75, for each Integra common share in a tax-free exchange.
The stock of Integra rose $5.20 to $57.125 on the New York Stock Exchange on Monday. National City shares lost $1.125 to $30.50, also on the NYSE.
The deal, which is subject to shareholder and regulatory approval, is expected to close in the second quarter of 1996.
Integra’s units would ultimately adopt the National City name.
William F. Roemer, chairman and chief executive of Integra, would retire from day-to-day management but would remain chairman of the new National City Pennsylvania bank.
National City’s Daberko would be part of a three-person office of chairman upon completion of the merger. He would be joined by William R. Robertson, who would be deputy chairman, and Integra’s president, Leonard M. Carroll, as vice chairman.
