Published Tuesday, June 8, 1999 Mahoning National is headquartered in Youngstown and owns Mahoning Bank, which has a branch in Brookfield Township.
In a deal valued at $307 million Sky Financial Group Inc. said it reached a definitive deal to buy Mahoning National in a tax-free stock swap. Under the deal, Mahoning National shareholders will get 1.66 shares of Sky Financial for each share of Mahoning National common stock. Based on Sky Financial's closing price of $29.31 on Friday, the deal represents an exchange value of $48.68 for each common share of Mahoning National.
Sky Financial has been on a buying frenzy as it announced in December it was buying First Western Bancorp in New Castle. That deal is expected to be completed on Aug. 7. First Western owns First Western Bank.
Like First Western Bank, Mahoning Bank will be folded into Sky Bank.
"As the financial services industry continues to consolidate, the addition of Mahoning National to the Sky Financial group enhances our franchise and our ability to build shareholder value,'' said David R. Francisco, chairman and chief executive officer of Sky Financial "Our pending acquisitions are proceeding at or ahead of schedule, positioning us well for the addition of the high-performing Mahoning National into our strong eastern Ohio, western Pennsylvania bank.''
One part of the deal with Mahoning National that has raised eyebrows is that Sky Financial said it expects to complete the deal by year end. The deal requires approval by regulatory agencies which often take their time in scrutinizing bank purchases.
Getting all the regulatory approval and completing all the internal changes needed at Mahoning National, such as computers, within less than six months is aggressive, local stock brokers said.
"I'm stunned that they think they could complete it that quickly,'' said David DeForest, a stock broker with Butler Wick & Co.'s Sharon office.
Marvin Manes, a broker with McDonald & Co.'s Canfield, Ohio, office, said the hurry to complete the deal could be related with computers.
"I think there's a rush to comply with the Y2K situation,'' he said.
The Y2K problem, which stands for Year 2000, exists because some computers originally programmed to recognize only the last two digits of a year could interpret 2000 as 1900, causing failures such as billing problems or utility outages. Banks, like other institutions, are under a federal mandate to resolve any Y2K problems before year end.
Otherwise, the deal gets a thumbs up from local stock brokers who said they believe Mahoning National shareholders are getting a good price for their stock.
"I think it's a great deal for Mahoning National shareholders,'' said Matt Lazaroff, a broker with Raymond James Financial Services' Sharon office.
The deal gives Sky Financial a bigger share of the Ohio market where they already have a large branch network, Lazaroff said.
Sky Financial's buyout of Mahoning National is part of a trend to consolidate the banking industry.
As part of the Mahoning deal it's expected the merger will yield a $6.5 million pre-tax savings in expenses, Sky Financial reported. The savings will come from, among other things, improved branch efficiencies and support functions. Sky Financial didn't say whether there would be layoffs at Mahoning National as a result of the deal.
But Sky Financial did say a $7.4 million merger-related charge would be taken in the quarter in which the merger is completed.
When Sky Financial completes its purchase of Mahoning National it will have assets of $7.7 billion with 230 branches in Ohio, western Pennsylvania, West Virginia and Michigan.
