First Niagara Bank announced Thursday that it purchased NewAlliance Bank for $1.5 billion. The merger made First Niagara one of the nation’s 25 largest banks.
The new First Niagara Bank will claim $29 billion in assets. The move makes the institution even stronger in the Northeast. NewAlliance, unlike some banks purchased by larger companies, was not in financial trouble. The banks considered the transaction, which was approved unanimously by executives from both companies, mutually beneficial. The transaction is expected to become official in the second quarter of 2011.
First Niagara Expands Across Northeast
First Niagara is a large regional bank with headquarters in Buffalo, N.Y. Before the NewAlliance merger, the institution ran 254 branches across the Northeast U.S., with locations centered in Buffalo, Philadelphia and Pittsburgh, Pa. The bank is moving aggressively to acquire fresh cachet in the region, as it also bought Pittsburgh-based National City Bank in April 2009 and Philadelphia-centered Harleysville Bank in July 2009.
The addition of NewAlliance Bank will expand First Niagara’s footprint into the densely populated state of Connecticut. First Niagara will add 87 branches across Connecticut and southern Massachusetts. Post-merger, First Niagara has 340 branches across four states.
“First Niagara’s strategy for creating shareholder value is to deliver profitable growth by ‘playing offense’ and entering new markets that complement our geographic footprint with companies that enhance our strong business model,” said John R. Koelmel, First Niagara president and CEO. “We and NewAlliance share many strategic and cultural strengths, and by joining forces with them and their talented leadership team, we add another attractive and well-positioned franchise with tremendous upside potential in a region with very strong demographics.”
NewAlliance Teams up With a Bigger Bank
NewAlliance wasn’t struggling — in fact, its bank health rating was almost as good as it gets. The New Haven, Conn.-based institution was one of the state’s largest, and according to NewAlliance CEO Peyton Patterson, its success was what made it an attractive purchase for First Niagara.
“We are very proud that NewAlliance’s exceptional balance sheet, credit quality and overall franchise strength enabled us to put a deal together that allows our shareholders to participate in a tremendous longterm growth opportunity, while also providing them immediate value,” Patterson said.