Huntington Bancshares Inc.
) is set to strengthen its Michigan branch network by acquiring
11 branches in Central and East Michigan from
Bank of America Corp.
). The deal is expected to close in mid-2014.
According to the terms of the deal, Huntington will assume
deposits worth $450 million, for a 3.5% deposit premium. However,
the deal does not include loan balances.
Owing to the transaction, Huntington will spread its wings in
several parts of Michigan including Midland, Alma, Port Huron,
Gratiot and Richmond. Further, it will add offices in stores of
Meijer, Inc. - a retail chain based in Michigan. Upon closure of
the deal, its total number of Michigan branches will stand at
Why the Deal?
The latest deal comes as part of Huntington's strategy to boost
its footprint in the Michigan market. Apart from a series of
public-private alliances in Michigan, the company initiated a
strategic collaboration with Meijer in 2012 in order 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
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.
Banks are always striving to gain more access to customers.
Strategic locations provide easy accessibility to customers and
from a bank's perspective, increased footprint automatically
increases its deposit and loan portfolio, which in turn enhances
Huntington's latest branch acquisition followed the completion of
the bank's merger with Camco Financial Corp. in Mar 2014. Given
its decent fundamentals, we look forward to such acquisitions by
the bank, which will enhance its long-term growth prospects.
Further, we remain optimistic following the Federal Reserve's
approval of Huntington's 2014 capital plan. The company is now
allowed to hike its dividend by 20% to 6 cents per share and
repurchase common shares worth up to $250 million. This
definitely enhances inventors' confidence in the stock.
Huntington currently carries a Zacks Rank #3 (Hold).
Peoples Bancorp Inc.
) is a better-ranked Midwest bank. It currently carries a Zacks
Rank #1 (Strong Buy).
BANK OF AMER CP (BAC): Free Stock Analysis
HUNTINGTON BANC (HBAN): Free Stock Analysis
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WASH FEDL INC (WAFD): Free Stock Analysis
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