Tuesday, August 3, 2004

Fifth Third to buy Florida bank

Deal would put assets above $100B

By Jeff McKinney
Enquirer staff writer

Fifth Third Bancorp will acquire First National Bankshares of Florida Inc. in a stock deal valued at $1.58 billion, pushing its assets across the $100 billion mark for the first time.

The acquisition would give Cincinnati-based Fifth Third access to growing markets in Orlando, Daytona Beach, Boca Raton, Tampa and St. Petersburg. With Naples-based First National, Fifth Third would acquire $5.3 billion in assets, $3.9 billion in deposits, 77 branches and more than 200,000 customer accounts. The deal also would make Fifth Third Florida's 11th-largest bank with 1.5 percent of the state's deposits.

Fifth Third, which entered the Florida market 15 years ago, would boost its branches to 93 from 16, assets to $6.3 billion from $1 billion and deposits to $4.1 billion from $626 million.

"This will give us tremendous opportunity to grow revenue by making additional loans, generating more deposits, providing new commercial products and layering in our investment management services in those new markets," Fifth Third president and chief executive George Schaefer Jr. said.

The merger has been approved by the boards of both banks and is expected to be completed early next year. It would make Fifth Third the nation's 12th-largest bank with assets of $100.7 billion and deposits of about $61.8 billion, according to SNL Financial, a Charlottesville, Va.-based research firm.

The acquisition also would bring some job cuts at First National's operations, though Fifth Third officials have not determined how many.

Fifth Third would acquire 1,300 employees.

The company said it expects to cut the bank's annual costs by $50 million a year, with 75 percent of the cuts realized in 2005 and the rest by 2006. Fifth Third also is expected to take a one-time charge related to the merger of less than $100 million during that period.

Schaefer said some of the cost savings would be severance related and said it is too early to say how many positions will be eliminated. He did say Fifth Third expects cuts in overlapping operations, specifically in Naples, where both banks have their Florida headquarters. Other cuts could come in duplicated operations such as loan processing and data processing, bank officials said.

Schaefer also said Fifth Third will continue to expand in growing south and central Florida markets, adding jobs as it opens new branches.

Fred Cummings of KeyBanc Capital Markets in Cleveland said Fifth Third is paying 2.44 times First National's book value, compared with the 2.56 average for U.S. bank deals this year worth a $1 billion or more. Fifth Third's buying price includes the purchase of two pending First National acquisitions.

Fifth Third agreed to pay First National a termination fee of $50 million if the deal is not completed.

The purchase is the largest for Fifth Third since it bought Grand Rapids, Mich.-based Old Kent Financial Corp. for $5.5 billion in 2001, a deal that almost doubled its size in assets and branches.

Schaefer also said Fifth Third is interested in markets such as Chicago, Pittsburgh, St. Louis and the Southeast.

On Wall Street Monday, Fifth Third shares lost 20 cents to close at $49.19. First National stock soared $6.52, or 37 percent, to close at $24.31.


E-mail jmckinney@enquier.com

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