Magazine article American Banker

Franklin CEO Says Deal's A Go, despite Questions

Magazine article American Banker

Franklin CEO Says Deal's A Go, despite Questions

Article excerpt

Some on Wall Street have raised questions about Fifth Third Bancorp's ability to complete its pending acquisition of $890 million Franklin Financial Corp., as regulators have yet to lift a moratorium on Fifth Third's doing deals.

On Thursday, Gordon E. Inman, Franklin's chairman, shot down those doubts and said the deal is very much still alive.

"This deal is going to close; we're 90% closed right now," said the indignant Mr. Inman in an afternoon telephone interview.

His Franklin, Tenn., company and Fifth Third, of Cincinnati, are in contact every day, said Mr. Inman. Franklin has already begun training employees for the transition, and its ATM machines have already been converted to the Fifth Third platform, he said.

Fifth Third is the nation's 17th-largest banking company, with $81 billion of assets. It announced its $240 million deal to buy Franklin last July 23.

Later it got into hot water with regulators over how it booked Treasury bond transactions. On Nov. 7 the Federal Reserve Bank of Cleveland and the Ohio Department of Commerce told it to put pending and future deals on hold.

The Franklin purchase is slated to close April 1, and a Fifth Third spokeswoman said the companies are working toward that date.

Mr. Inman said that they will not make it, but that Franklin's board is "willing to extend that date to accommodate Fifth Third" with regulatory issues. It has already extended once, for 60 days.

Earlier Thursday, Jason M. Goldberg, a Lehman Brothers banking analyst, speculated in a research note that if the agreement is not modified "the merger will not be consummated."

For the deal to close April 1, Mr. Goldberg said in an interview, regulators would have to amend their moratorium and Franklin shareholders and the Fed would have to approve the deal.

Though it originally seemed likely that the Fed would make a determination by the end of February, it now seems unlikely, Mr. …

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