Profitable and well-capitalized Upstate New York-based bank to use additional liquidity to expand commercial and consumer lending in new and existing markets
Workforces across both Western Pennsylvania and Upstate New York to be expanded with the addition of 200 jobs
Option to issue $150 million in stock and debt will maintain strong capital position
First Niagara Financial Group, Inc. has signed a definitive purchase agreement to acquire $4.2 billion of deposits and 57 Western Pennsylvania bank branches from National City Bank, a subsidiary of The PNC Financial Services Group, Inc. for a deposit premium of 1.3%. In addition to $3.2 billion in cash, First Niagara will also receive approximately $839 million of performing business and consumer loans.
This acquisition immediately provides Upstate New York-based First Niagara more than 400,000 customer accounts and the number-three deposit market share position in the combined Pittsburgh, Erie and Warren regions. Divestiture of these branches was a regulatory condition of PNC’s purchase of National City in December of 2008.
The acquisition, which is expected to close in September 2009, is anticipated to be accretive to earnings per share by approximately 20% in 2010. This transaction represents a continuation of the company’s growth strategy and is the latest in a series of acquisitions that First Niagara has undertaken over the past decade.
First Niagara anticipates that approximately 500 employees in Western Pennsylvania, most of whom work in the branches to be acquired, will join First Niagara. In addition, 50 to 75 new jobs will be created in and around Pittsburgh to support the newly acquired branches and lending teams. In addition, to support First Niagara’s new branch network in Pennsylvania, the company expects to add 100 to 125 positions in Upstate New York.
Under a separate agreement with PNC and National City, First Niagara has the option to issue a combination of common stock and debt at closing in order to maintain its strong capital levels. Under terms of the agreement, the aggregate amount of stock and debt would not exceed $150 million, and the number of common shares would not exceed 6.8 million. For additional details and metrics associated with the transaction, visit www.fnfg.com.
The branch acquisition has received approvals from the parties’ boards of directors and remains subject to regulatory approval and other customary closing conditions.
First Niagara was advised by the investment banking firm of Goldman, Sachs & Co. as well as the law firm of Luse Gorman Pomerenk & Schick. PNC was advised by the investment banking firm of Sandler O’Neill and Partners and the law firm of Wachtell, Lipton, Rosen & Katz.
D.C.