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From Banking and Finance Law Daily, August 1, 2016

Fed approves merger of Ohio-based Huntington, First Merit

By Lisa M. Goolik, J.D.

The Federal Reserve Board has approved the proposed merger of financial holding company Huntington Bancshares Incorporated and FirstMerit Corporation and is subsidiary, FirstMerit Bank, N.A. FirstMerit Bank would be merged into Huntington’s subsidiary bank, The Huntington National Bank. Once merged, Huntington will become the largest insured depository organization in Ohio, controlling more than 15 percent of the total amount of deposits of insured depository institutions in that state. Huntington has agreed to sell 13 branch location to lessen the merger’s effect on competition.

Huntington announced shareholder approval of the deal in June 2016. The banks anticipate completing the merger, which was made public in January, in the third quarter of 2016. The merger has already received the approval of the Department of Justice, but remains subject to the approval of the Office of the Comptroller of the Currency.

Effects on competition. Section 3 of the Bank Holding Company Act prohibits the Fed from approving a proposal that would result in a monopoly or would substantially lessen competition, unless the Fed finds that the anticompetitive effects of the proposal are clearly outweighed in the public interest by the probable effect of the proposal in meeting the convenience and needs of the communities to be served.

Huntington is headquartered in Columbus, Ohio, with a network of more than 750 branches and more than 1,500 ATMs across six Midwestern states, while FirstMerit is headquartered in Akron, Ohio, with 368 banking offices and 400 ATM locations in Ohio, Michigan, Wisconsin, Illinois, and Pennsylvania. Their subsidiary banks compete directly in 27 banking markets in Michigan, Ohio, and Pennsylvania.

Of primary concern were the banking markets in Akron, Ashland County, Ashtabula County, and Canton, all in Ohio, and Cadillac, Mich. To address these concerns, Huntington has committed to divesting 13 branches in the Akron, Astabula County, and Canton markets. The Fed found the presence of credit unions in the Ashland County and Cadillac banking markets lessened the merger’s effect.

Needs of the community. The BHC Act also requires that the Fed consider the convenience and needs of the communities to be served and to take into account the records of the relevant depository institutions under the CRA. After reviewing all the facts of record, including the banks’ CRA records and records of compliance with fair lending and other consumer protection laws, information provided by Huntington and FirstMerit, the Fed concluded that the proposal would result in public benefits that outweighed any potentially adverse effects, consistent with approval.

Financial and managerial resources. The Fed also concluded that considerations relating to the financial and managerial resources and future prospects involved in the proposal were consistent with approval. The Fed stated that Huntington and Huntington Bank are both well capitalized and would remain so on consummation of the proposed transaction. In addition, Huntington, FirstMerit, and their subsidiary depository institutions are each considered to be well managed, and the directors and senior executive officers of Huntington have substantial knowledge of and experience in the banking and financial services sectors. The Fed also noted that Huntington has conducted comprehensive due diligence and is devoting sufficient financial and other resources to address all aspects of the post-integration process for the merger.

Financial stability. The Fed also considered the risk to the stability of the banking or financial system and concluded the transaction would not appear to result in meaningfully greater or more concentrated risks to the stability of the U.S. banking or financial system.

Companies: FirstMerit Bank, N.A; FirstMerit Corporation; Huntington Bancshares Incorporated; The Huntington National Bank

MainStory: TopStory BankHolding BankingOperations FederalReserveSystem IllinoisNews MergersAcquisitions MichiganNews OhioNews PennsylvaniaNews WisconsinNews

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