Columbus, OH-based Huntington Bancshares Incorporated (HBAN) is set to further strengthen its Michigan branch network by acquiring 13 branches in East Michigan from Bank of America Corporation (BAC). These branch additions follow the deal inked last month to acquire 11 branches in Michigan from Bank of America.
The deal is expected to close in the latter half of 2014. According to the terms of the deal, Huntington will assume deposits worth $500 million, for a 3.5% deposit premium. However, the deal does not include loan balances. Considering the prior acquisition deal, the company will assume deposits of almost $1 billion from Bank of America.
The deal will enable Huntington to cater to the Monroe and Flint markets through 11 locations while the Holland and Muskegon branch locations further add to its present network there. Notably, upon completion of the deal, Huntington will operate through more than 700 locations.
The latest deal comes as part of Huntington's strategy to boost its footprint in Michigan, which is believed to be a lucrative market for the company. Apart from a series of public-private alliances in Michigan, the company initiated a strategic collaboration in 2012 with Meijer, Inc. – a retail chain based in Michigan, in order to establish in-store locations. The company is currently running 40 in-store branches and aims to set up more than 80 branches in Meijer's Michigan stores by 2020.
For a major regional bank like Bank of America, the deal seems to be an effort to shed a number of branches to save costs. Notably in Jan 2014, the company inked a deal to vend around 23 branches located in Arizona and Nevada to Washington Federal Inc. (WAFD).
On Huntington’s part, a strong capital position should help it continue such acquisitions going forward.
Huntington currently carries a Zacks Rank #3 (Hold). MidWest One Financial Group, Inc. (MOFG) is a better-ranked Midwest bank. It currently carries a Zacks Rank #1 (Strong Buy).0