Sep 13, 2009 5 min read

The new signs are finally up. First Niagara Financial Group Inc., which owns First Niagara Bank of New York, this week completed its acquisition of 57 western Pennsylvania bank branches, including $3.9 billion of deposits and $757 million of performing loans from National City Bank, a subsidiary of The PNC Financial Services Group Inc.

In this area, First Niagara purchased the downtown Uniontown National City main office, the drive through office in downtown and other National City branches in western Pennsylvania.

The U.S. Department of Justice (DOJ) required PNC Corp., which last year bought National City Bank for $5.2 billion in stock, to sell off 61 offices as part of its takeover of National City. PNC also sold four other offices in Titusville and the Meadville area. Farmers National Bank of Emlenton acquired one National City office and Marquette Savings Bank of Erie acquired three offices, according to Fred Solomon, PNC spokesman.

First Niagara Financial Group Inc. in April signed a definitive purchase agreement to acquire the National City Bank deposits and offices. First Niagara paid $54 million for the deposits, or about 1.3 percent or the total $4.2 billion. First Niagara also took over about $839 million in performing business and consumer loans.

This acquisition immediately provides the upstate New York-based First Niagara more than 400,000 customer accounts in the combined Pittsburgh, Erie and Warren regions.

“This is very exciting for the First Niagara team,” John Koelmel, president and CEO, said.

“We expect to generate at least 200 additional jobs in Western Pennsylvania and Upstate New York to support our continued growth,” he added.

First Niagara retained the 500 management and staff employees at the National City offices it purchased, he added.

First Niagara used the long Labor Day weekend to convert former National City customers to First Niagara clients.

In addition, all First Niagara customers can also bank at 69 ATMs across the area.

“We are very pleased to begin serving more than 200,000 customers across western Pennsylvania,” Koelmel said. “Our ability to complete this transaction and re-open these branches as First Niagara locations, in less than five months, is a tribute to our employees, especially the more than 500 new Pennsylvania-based colleagues who we welcome into the First Niagara family.”

At the election of First Niagara and pursuant to the securities purchase agreement previously entered into between National City, PNC and First Niagara, First Niagara issued, and National City purchased, $150 million of 12 percent senior notes maturing Sept. 10, 2014. First Niagara has the ability to prepay this debt in whole or part prior to the maturity date without penalty.

First Niagara was advised by the investment banking firm of Goldman, Sachs & Co. and by the law firm of Luse Gorman Pomerenk & Schick.

With the addition of the acquired branches, First Niagara now has approximately $13.2 billion in assets and provides financial services to individuals, families and businesses through 170 branches and five Regional Market Centers across Upstate New York and Western Pennsylvania.

Koelmel is optimistic about broadening business and adding new customers, one reason why First Niagara is keeping the current management team.

“To make it work, we have to have a great team and one that is excited and energized. This is a team that is a little bit like a caged tiger. They have had their hands tied a bit of late on what they could do while the National City situation sorted itself out. This is a team that has a lot of potential energy and enthusiasm.

“We are not the cure for the economic challenges facing the region, but we are pleased to at least be taking a better direction to add meaningfully to our employee base. Today we are 2,000 strong and that will put us at 2,700 employees by the end of the year,” Koelmel said.

The agreement, he added, “Enables us to put the First Niagara flag in the ground.”

Other offices First Niagara is acquiring include National City’s branches at Laurel Mall north of Uniontown; 318 W. Main St., Monongahela; 200 W. Beau St., Washington; 22 E. Pike St., Houston; 3500 Extension Ave., Finleyville; 256 Third St., California; 632 W. Main St. and 100 Country Side Plaza, Mount Pleasant; and 713 Peer St., Smithton.

“The people of western Pennsylvania and neighboring upstate New York share common cultures and values, a tremendous work ethic and an unwavering commitment to their communities,” Koelmel said. “Given the similarities in the economic, demographic and competitive profiles of the regions, we believe First Niagara’s business model will succeed in our newest markets.”

First Niagara, he said, prides itself on its personalized approach to its customers.

“We have a saying. We’re big enough and small enough. That means we are big enough to deliver products and services and small enough to deliver it in a personalized fashion, small enough to deliver it in very responsive fashion,” Koelmel said.

The acquisition, he said, is anticipated to increase its earnings per share by 20 percent by the end of 2010. Earnings are anticipated to be about 75 cents per share and the increase will raise that “conservatively” to 90 cents, he said.

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.