First Niagara Bank, through its parent company First Niagara Financial Group Inc., revealed Tuesday that it has firmed up negotiations to acquire 57 National City branches with deposits totaling to $4.2 billion from the PNC Financial Services Group for a 1.3% deposit premium. These branches are all located in Western Pennsylvania.
As part of the agreement, First Niagara will get $3.2 billion in cash as well as $839 million of performing consumer and business loans. These figures will be a welcome addition to the bank’s portfolio of $5.9 billion in deposits and $9.3 billion in assets as of December 31.
“The transaction enables us to strategically expand our franchise, leverage our strong financial position, and enhance shareholder value,” First Niagara CEO John Koelmel earlier declared in statement.
The deal is expected to raise First Niagara’s earnings per share by 20% in 2010.
PNC’s move to divest itself of these branches is part of a regulatory restriction imposed when the $5.58 billion National City acquisition deal closed in November of last year. The Pittsburgh-based bank would have likely faced anti-trust issues because of its concentration in the region.
On the other hand, First Niagara’s foray into Western Pennsylvania marks a significant boost in the bank’s operations which have largely been based in New York. Prior to the closing of this deal, First Niagara had some 113 branches and four Regional Market Centers spread out across upstate New York. Also catering to their customers’ needs are about 2,000 employees and 139 ATMs.
With an additional 400,000 customer accounts, the acquisition immediately puts First Niagara in the number-three spot in deposit market share in the Pittsburgh – Erie – Warren area.
First Niagara also stated that it plans to retain about 500 employees for its Western Pennsylvania branches, with the creation of 200 more jobs in the offing.