Huntington Bancshares in Talks to Buy FirstMerit--Sources

Huntington Bancshares is in advanced talks to acquire FirstMerit Corp., according to people familiar with the matter, a tie-up that would combine the two Ohio-based banks.

Akron, Ohio-based FirstMerit is expected to be sold at a premium to its roughly $2.67 billion market capitalization, one of the people said. The deal could be announced as soon as late Monday, these people said. FirstMerit is scheduled to report its fourth-quarter earnings on Tuesday.

As with all deal discussions, talks could fall apart at the last minute.

The largest U.S. lenders are effectively prohibited by regulators from doing big deals, but regional banks have steadily consolidated since the financial crisis. These banks face pressure on their profits from regulatory costs and low interest rates, factors that have played a role in some of this consolidation.

Any deal could help the Midwestern banks boost their overlapping footprints as well as spread the increasingly expensive costs of government regulations, such as compliance, over a broader revenue base.

Columbus, Ohio-based Huntington, with $71 billion in assets, is one of the smaller banks to be subject to the Federal Reserve's "stress tests," which apply to firms with at least $50 billion in assets. FirstMerit had $25.2 billion in assets as of Sept. 30.

Huntington was in advanced deal talks to buy another regional bank, First Niagara Financial Group Inc., in October, people familiar with the matter said. KeyCorp was the eventual buyer of First Niagara.

Write to Emily Glazer at [e-mail] and Rachel Louise Ensign at [e-mail]

(END) Dow Jones Newswires

January 25, 2016 19:05 ET (00:05 GMT)

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