Magazine article American Banker

Sky of Ohio's Metro Play in Mellon Country

Magazine article American Banker

Sky of Ohio's Metro Play in Mellon Country

Article excerpt

Sky Financial Group Inc. is finally moving downtown.

The Bowling Green, Ohio, company, whose bank branches are mostly on the outskirts of major cities, announced a deal late Tuesday for a Pittsburgh-area community banking company that would give $9.5 billion-asset Sky its first significant presence in a major city.

The seller, $1 billion-asset Three Rivers Bancorp of Monroeville, Pa., has 20 branches in Allegheny County, including six in Pittsburgh. Sky's chairman, Marty E. Adams, said that the deal, scheduled to be completed in the fourth quarter, would make the Pittsburgh metropolitan market Sky's largest.

"We are on the fringe of a number of metropolitan markets," including Cleveland, Pittsburgh, and Columbus, Ohio, Mr. Adams said. The plan has been to expand into those cities, and this acquisition "was a perfect complement to that strategy," he said.

In the second-largest bank deal announced so far this year, Sky would pay $156.5 million in a cash and stock for Three Rivers, which has 25 branches. The price would be 1.9 times Three Rivers' book value.

Analysts said that they view the deal favorably, and that now is a good time to move into Pittsburgh.

Jon G. Arfstrom, an analyst with Royal Bank of Canada's RBC Capital Markets Inc. in Minneapolis, said the market was thrown into turmoil when its largest bank company, Mellon Financial Corp., sold its retail operations last year to Citizens Financial Group Inc., a Providence, R.I., subsidiary of Royal Bank of Scotland Group PLC.

Sky is "getting some relatively decent market share in a fairly good (area) of Pittsburgh," Mr. Arfstrom said.

Three Rivers is the parent of Three Rivers Bank and Trust, which the Johnstown-based USBancorp Inc. (now Ameriserv Financial Inc.) spun off in April 2000. It entered downtown Pittsburgh in July 2001, when it bought the $139 million-asset Pennsylvania Capital Bank. …

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