FirstMerit’s leaders tried to take care of the bank’s employees and its hometown when they negotiated a blockbuster $3.4 billion buyout from Huntington announced last week, a well-placed source said.
Shareholders were the first priority in the talks, the source said, but FirstMerit’s management and 14-member board of directors pushed Huntington hard for protections for Akron.
“Ohio law says you must protect the shareholders. If you can do that and get other issues accomplished, all the better,” the source said.
The individual asked not to be named because those involved in the deal aren’t authorized to discuss it.
Banking regulations have gotten so difficult and expensive that banks like FirstMerit with $10 billion to $50 billion in assets are having a hard time competing, the insider said when asked why FirstMerit became an acquisition target after its own buying spree in recent years.
“When presented with the financial package [Huntington gave], it was very difficult to say no,” the source said.
Company officials have acknowledged there will be branch consolidations — from both banks — and layoffs after Columbus-based Huntington Bancshares acquires Akron-based FirstMerit Corp., likely in the third quarter of this year.
But while there will be layoffs throughout the combined company initially, Huntington Chairman, President and Chief Executive Steve Steinour pledged to employ 1,200 in Akron within two years. That’s the same number of workers currently employed by FirstMerit at its downtown headquarters, an operations center and branches in Akron.
That promise is included in the merger documents filed with the U.S. Securities and Exchange Commission.
The documents also show:
• Four FirstMerit directors will join the Huntington board.
• All current FirstMerit board members will become members of Huntington’s Greater Akron-Canton Regional Advisory Board.
• A new Huntington charitable foundation will be formed “dedicated to grant making, charitable contributions and support in the city of Akron” for 10 years, with contributions of $2 million yearly, or $20 million. An additional $5 million will also be given to the existing Huntington Foundation for use in the greater Canton and Flint, Mich., areas.
• An operations/call center based in the city of Akron must be established and fully operational no later than two years after the close of the deal.
• Employees laid off as a result of the sale will get priority access to job listings throughout the combined bank’s areas.
FirstMerit employees and the city of Akron are getting more out of the Huntington deal than other communities and impacted workers received in other recently completed or proposed bank mergers, the insider said.
“We far exceeded them,” the local source said. “I think we did very well for the city of Akron.”
Indeed, a review of other recent bank merger agreements shows few or none of the specific promises contained in the FirstMerit-Huntington deal.
BB&T, based in Winston-Salem, N.C., pledged $10 million to a foundation in Lancaster County, Pa., in its merger with Susquehanna Bank of Pennsylvania in August. The BB&T agreement also gives a vague promise of future employment, saying the new company “will use its reasonable best efforts to support a continued meaningful employee presence in Lancaster County.”
New York Community Bancorp’s merger in October with New York-based Astoria Financial Corp. appears to have no promises of foundation money or continued employment levels.
Cleveland-based KeyCorp also pledged $20 million to the First Niagara Foundation as part of a merger deal announced in October with Buffalo, N.Y.-based First Niagara.
The $20 million foundation specifically for Akron was a big part of the deal for the managers and directors, the local source said.
The extra $5 million pledged for Canton and Flint, Mich., may have roots from previous FirstMerit mergers.
The FirstMerit board has members representing the former Citizens Republic Bank of Flint, which was acquired by FirstMerit in 2013, and another similarly named bank, Canton-based Citizens Savings Bank, in 1995.
Huntington spokesman Bill Eiler said in addition to the money pledged, “we further intend to continue significant philanthropic investment across our footprint including when expanded to the new combined company.”
Commitment to stay
The local source doesn’t worry that Huntington could cut and run after a number of years.
“There would be no reason. …The entire time I’ve been dealing with this, I never sensed anything but commitment from Huntington. In my entire dealings with them, they are incredibly professional. They’re very, very serious about this.”
But not everyone is convinced.
A downtown Akron FirstMerit employee, who asked not to be identified for fear of losing his job, said workers are worried about their future. They also worry about the new operations center and what type of jobs will be there.
“Are they going to be the same paying jobs? We’re of the mindset they’re not. We’re taking it one step at a time,” the worker said.
The worker said he and others aren’t thrilled about thinking about job-hunting.
“I don’t know how it’s going to fare up for the city of Akron. That’s what I shake my head over. We do have a lot of good talent here.”
“We can only go by what they’re telling us now — ‘Keep an open mind and keep working hard.’ ”
Paul Cianchetti, a Tallmadge resident and shareholder of both FirstMerit and Huntington, said he is not in favor of the merger and will vote against it.
“FirstMerit has done so much for the Akron community. Huntington Bank is still going to be based out of Columbus, a hub for the banking industry. I hope I’m wrong. I really do. I don’t see it as something I would think would be a good thing for the Akron community,” Cianchetti said.
However, Cianchetti acknowledged he hadn’t considered the possibility of another bank — particularly a much larger, out-of-state company — coming to buy FirstMerit if the Huntington deal is shot down.
“It could go that way,” he said. “What’s the lesser of two evils?”
Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com. Follow her @blinfisherABJ on Twitter or www.facebook.com/BettyLinFisherABJ and see all her stories at www.ohio.com/betty.