$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.