For immediate release

The Federal Reserve Board today announced its approval of the application by Huntington Bancshares Incorporated, Columbus, Ohio, to acquire First Michigan Bank Corporation, Holland, Michigan ("FMB"), and thereby acquire FMB's bank and nonbank subsidiaries. Attached is the Board's Order relating to this action.

Huntington Bancshares Incorporated Columbus, Ohio Order Approving Acquisition of a Bank Holding Company

Huntington Bancshares Incorporated, Columbus, Ohio ("Huntington"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act (12 U.S.C. § 1842) to acquire First Michigan Bank Corporation, Holland, Michigan ("FMB"), and thereby acquire the subsidiary banks of FMB listed in the appendix.1 Huntington also has requested the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.24 of the Board's Regulation Y (12 C.F.R. 225.24) to acquire the nonbanking subsidiaries of FMB also listed in the appendix, and thereby engage in certain trust, securities brokerage, and credit life insurance activities. Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (62 Federal Register 33,871 (1997)). The time for filing comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in sections 3 and 4 of the BHC Act. Huntington, with total consolidated assets of approximately $21.6 billion, is the 37th largest commercial banking organization in the United States, controlling less than 1 percent of the total banking assets of insured commercial banks ("total banking assets").2 Its two subsidiary banks operate in Ohio, Florida, Indiana, Kentucky, Michigan, and West Virginia. After consummation of the proposal, Huntington would remain the 37th largest commercial banking organization and control less than 1 percent of total banking assets. In Michigan, Huntington is the 10th largest depository institution, controlling $1.8 billion in deposits, representing 1.8 percent of total deposits in depository institutions in the state.3 FMB is the ninth largest depository institution in Michigan, controlling $2.9 billion in deposits, representing approximately 2.8 percent of all deposits in depository institutions in the state. On consummation of the proposal, Huntington would become the 7th largest commercial or thrift organization in Michigan, controlling deposits of $4.7 billion, representing approximately 4.6 percent of all deposits in depository institutions in the state. Interstate Banking Analysis Section 3(d) of the BHC Act, as amended by section 101 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, allows the Board to approve an application by a bank holding company to acquire a bank located in a state other than the home state of such bank holding company if certain conditions are met.4 Huntington's home state is Ohio, and Huntington proposes to acquire FMB's subsidiary banks in Michigan. The conditions for an interstate acquisition under section 3(d) are met in this case.5 In view of all the facts of record, the Board is permitted to approve the proposal under section 3(d) of the BHC Act. BHC Act Factors Huntington and FMB do not compete with each other in any geographic banking market. Based on all the facts of record, the Board has concluded that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market. The BHC Act also requires the Board to consider the financial and managerial resources of the companies and banks involved, the convenience and needs of the communities to be served, and certain other supervisory factors. The Board has carefully considered the financial and managerial resources and future prospects of Huntington, FMB, and each of their respective subsidiaries, and other supervisory factors, in light of all the facts of record. These facts include supervisory reports of examination assessing the financial and managerial resources of the organizations and recent pro forma financial information provided by Huntington. The Board notes that Huntington, FMB, and each of their respective subsidiary banks meet or exceed the "well capitalized" thresholds under applicable law and are expected to continue to do so after consummation of the proposal. Based on all the facts of record, the Board has concluded that the financial and managerial considerations, and all other supervisory factors that must be considered are consistent with approval of the proposal. The Board also has considered the effect of the proposal on the convenience and needs of the communities to be served in light of all the facts of record. The Board has long held that consideration of the convenience and needs factor includes a review of the records of the relevant depository institutions under the Community Reinvestment Act (12 U.S.C. 2901 et seq.) ("CRA"). As provided in the CRA, the Board evaluates the convenience and needs factor in light of examinations of the CRA performance records of the relevant institutions by their primary federal supervisor. An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed, on-site evaluation of an institution's overall record of performance under the CRA by its primary federal supervisor.6 Huntington's lead subsidiary bank, Huntington Bank, received a "satisfactory" rating in its most recent CRA performance examination by the OCC, as of October 17, 1996.7 All of FMB's subsidiary banks received either "outstanding" or "satisfactory" ratings for CRA performance in their most recent evaluations by their primary federal supervisor. The Board has carefully reviewed comments from a city councilman in Cleveland ("Commenter") regarding the operations of two Huntington Bank branches in the Cleveland area.8 One branch is in the Church Square shopping center, a neighborhood with predominately minority residents, and is the only branch of Huntington Bank that is closed on Wednesdays. The other branch is in Randall Mall, a mall with a predominately minority clientele, and it offers banking services only to merchants ("merchant-only services"). Commenter contends that these aspects of the branches' operations affect and treat minorities in an illegally disparate manner.9 Huntington states that although the Church Square branch is closed on Wednesdays, it is open on Saturday mornings from 9:00 a.m. until 12:00 p.m. unlike approximately one-third of Huntington Bank's full-service branches10 and that the branch operates a full-service ATM that is available 24 hours a day. Huntington also notes that its Randall Mall branch provides needed services to the mall's merchants and that mall patrons are served by cash-dispensing ATMs on the upper and lower levels of the mall.11 The Board has carefully considered all the facts of record including the comments and responses discussed above, the CRA performance examinations of the institutions involved, and management's record of compliance with applicable rules and regulations. Based on a review of the entire record, the Board concludes that convenience and needs considerations, including the CRA performance records of both organizations' subsidiary banks, are consistent with approval of the proposal.12 Nonbanking Considerations Huntington also has filed notice, under section 4(c)(8) of the BHC Act, to acquire the nonbanking subsidiaries of FMB and thereby engage in trust, securities brokerage, and credit life insurance activities. The Board has determined by regulation that each of these activities is closely related to banking, and Huntington has committed to conduct the nonbanking activities in accordance with Regulation Y.13 In order to approve the proposal, the Board also must determine that the proposed activities are a proper incident to banking, that is, that the proposed transaction "can reasonably be expected to produce benefits to the public . . . that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices."14 As part of the Board's evaluation of these factors, the Board considers the financial and managerial resources of the notificant and its subsidiaries, including any company to be acquired, and the effect the transaction would have on such resources.15 For the reasons noted above, and based on all the facts of record, the Board has concluded that financial and managerial considerations are consistent with approval of the proposal. The Board also has considered the competitive effects of the proposed acquisition of FMB's nonbanking subsidiaries. Huntington operates subsidiaries engaged in nonbanking activities that compete with certain nonbanking subsidiaries of FMB. In each case, the markets for these nonbanking services are unconcentrated, and there are numerous providers of these services. As a result, consummation of the proposal would have a de minimis effect on competition for these services, and the Board has concluded that the proposal would not result in a significantly adverse effect on competition in any relevant market. In addition, the Board expects that the acquisition would provide added convenience to FMB's customers and the public. Huntington states that FMB customers would have a wider variety of banking products and fiduciary services and would be able to take advantage of innovative delivery systems for banking services developed by Huntington. Accordingly, based on all the facts of record, the Board has determined that the balance of public benefits that the Board must consider under the proper incident to banking standard of section 4(c)(8) of the BHC Act is favorable and consistent with approval of the proposal. Conclusion Based on the foregoing and all the other facts of record, the Board has determined that the application and notice should be, and hereby are, approved. The Board's approval is specifically conditioned on compliance by Huntington with all the commitments made in connection with the proposal and with the conditions stated or referred to in this order, and on receipt by Huntington of all necessary approvals from state and federal regulators and other authorities. The Board's determination on the nonbanking activities is also subject to all the terms and conditions set forth in Regulation Y, including those in sections 225.7 and 225.25(c) of Regulation Y (12 C.F.R. 225.7 and 225.25(c)), and to the Board's authority to require such modification or termination of the activities of a bank holding company or any of its subsidiaries as the Board finds necessary to ensure compliance with, and to prevent evasion of, the provisions of the BHC Act and the Board's regulations and orders issued thereunder. The commitments and conditions relied on by the Board in reaching this decision are deemed to be conditions imposed in writing by the Board in connection with its findings and decision, and, as such, may be enforced in proceedings under applicable law. The acquisition of FMB's subsidiary banks shall not be consummated before the fifteenth calendar day following the effective date of this order, and the proposal shall not be consummated later than three months after the effective date of this order, unless such period is extended for good cause by the Board or by the Reserve Bank of Cleveland acting pursuant to delegated authority.

By order of the Board of Governors,16 effective September 2, 1997. (signed) Jennifer J. Johnson Jennifer J. Johnson Deputy Secretary of the Board

Appendix A. FMB subsidiary banks to be acquired by Huntington, all in Michigan: (1) FMB-First Michigan Bank, Zeeland; (2) FMB-First Michigan Bank-Grand Rapids, Grand Rapids; (3) FMB-Lumberman's Bank, Muskegon; (4) FMB-Northwestern Bank, Boyne City; (5) FMB-State Savings Bank, Lowell; (6) FMB-Commercial Bank, Greenville; (7) FMB- Sault Bank, Sault St. Marie; (8) FMB-Security Bank, Manistee; (9) FMB-Community Bank, Dowagiac; (10) FMB-Oceana Bank, Hart; (11) FMB-Reed City Bank, Reed City; (12) FMB-Maynard Allen Bank, Portland; (13) FMB-Old State Bank, Fremont; and (14) FMB-Arcadia Bank, Kalamazoo. B. FMB nonbanking subsidiaries to be acquired by Huntington, all in Holland, Michigan: (1) FMB-Trust, and thereby engage in trust company functions, pursuant to section 225.28(b)(5) of Regulation Y (12 C.F.R.225.28(b)(5)); (2) FMB Brokerage Services, Inc., and thereby engage in securities brokerage services, pursuant to section 225.28(b)(7)(i) of Regulation Y (12 C.F.R. 225.28(b)(7)(i)); and (3) First Michigan Life Insurance Company, and thereby engage in underwriting and brokering life, health, and accident insurance directly related to extensions of credit made by Huntington or any of its subsidiaries, pursuant to section 225.28(b)(11)(i) of Regulation Y (12 C.F.R. 225.28(b)(11)(i)).

Footnotes 1 Huntington intends to merge FMB's subsidiary banks with and into its lead subsidiary bank, The Huntington National Bank, Columbus, Ohio ("Huntington Bank"). The merger is subject to the approval of the Office of the Comptroller of the Currency ("OCC"), the primary federal supervisor of Huntington Bank, under the Bank Merger Act (12 U.S.C. § 1828(c)). Huntington also has requested the Board's approval to exercise an option to purchase up to 19.9 percent of the voting shares of FMB. The option would terminate on consummation of this proposal. 2 National asset and ranking data are as of March 31, 1997. 3 In this context, depository institutions include commercial banks, savings banks, and savings associations. State deposit and ranking data are as of June 30, 1996. 4 Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding company's home state is the state in which the operations of the bank holding company's banking subsidiaries were principally conducted on July 1, 1966, or the date on which the company became a bank holding company, whichever is later. 5 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). Huntington is adequately capitalized and adequately managed. In addition, on consummation of the proposal, Huntington would control less than 10 percent of the total amount of deposits of insured depository institutions in the United States and less than 30 percent of the total amount of deposits of insured depository institutions in Michigan. Michigan does not have a statewide concentration limit or a minimum age requirement. All other requirements of section 3(d) of the BHC Act also would be met on consummation of the proposal. 6 The Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act ("Agency CRA Statement") (54 Federal Register 13,742, 13,745 (1989)) provides that a CRA examination is an important and often controlling factor in consideration of an institution's CRA record and that reports of these examinations will be given great weight in the applications process. 7 Huntington's other subsidiary bank, Huntington State Bank, Alexandria, Ohio, received an "outstanding" rating from the Federal Reserve Bank of Cleveland, as of August 24, 1994. Examiners found no evidence of illegal discrimination or practices to discourage applications for credit on a prohibited basis at either of the Huntington subsidiary banks. 8 Commenter also contends that Huntington's failure to close its Cleveland offices in observance of Martin Luther King Day creates an atmosphere that is hostile to African Americans. Huntington states that, despite the closing of government offices, Martin Luther King Day is an active business day in Cleveland and that its holiday closing policy is adjusted in other cities to reflect Huntington Bank's perception of customer demand, local custom, and competitive considerations, and includes input from community groups. Huntington also notes that Huntington Bank treats Martin Luther King Day the same as other holidays such as President's Day and Veteran's Day, and offers its employees the opportunity to take the day off or receive compensatory time. 9 Commenter notes that Huntington Bank has erroneously designated two limited-service branches as full-service branches in its CRA public file. Huntington has amended its description in the public CRA file of branch services to reflect the limited nature of these two branches. Commenter also asserts that these branches are in controlled-access buildings which makes it difficult for area residents, who predominately are minorities, to obtain banking services. Huntington responds that the branches are located in privately owned nursing and retirement centers to provide banking services to residents and staff on a part-time basis. Huntington has a nondiscrimination policy for establishing such facilities. Huntington also notes that a full-service branch of Huntington Bank is located within walking distance of the two limited-access branches. 10 Huntington states that its experience shows that the Saturday morning business hours are advantageous to individuals who do not work in the area and can only bank and shop on Saturdays. 11 Huntington's Randall Mall branch office was opened at the request of mall management after the departure of another bank that had reduced its original full-service presence to a merchant-only office. The branch office is located in the interior of the mall and lacks the design features necessary to function as a full-service branch, such as access to the mall exterior, a drive-through facility, and an exterior drive-up ATM. 12 The Board has provided a copy of Commenter's submission to the OCC, the primary federal supervisor of Huntington Bank. 13 See 12 C.F.R. 225.28(b)(5), (7)(i), and (11)(i). 14 See 12 U.S.C. § 1843(c)(8). 15 See 12 C.F.R. 225.26; see also The Fuji Bank, Limited, 75 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve Bulletin 155 (1987). 16 Voting for this action: Vice Chair Rivlin and Governors Kelley, Phillips, and Meyer. Absent and not voting: Chairman Greenspan.

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1997 Orders on banking applications