DeWITT — Community Bank System, Inc. (NYSE: CBU) of DeWitt announced plans today to acquire 19 HSBC and First Niagara branches later this year for a deposit premium of 3.22 percent.
The HSBC locations are among those involved in First Niagara Bank’s planned acquisition of HSBC’s upstate New York branch network. First Niagara, based in Buffalo, announced plans in July to acquire 195 HSBC locations in upstate New York, Westchester County, and Connecticut.
First Niagara leaders said at the time they would ultimately divest some branches in the deal.
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The branches Community Bank is acquiring include 16 current HSBC locations in Gowanda, Springville, Westfield, Palmyra, Newark, Geneseo, Watkins Glen, Avon, Watertown, Plattsburgh, Oswego, Fulton, Lowville, Adams, and Alexandria Bay and three current First Niagara locations in Geneva and Canandaigua.
The deal, expected to close during the third quarter, will bring Community Bank about $218 million in loans and $955 million in deposits.
“We’re excited by this opportunity to further strengthen Community Bank’s service footprint across our existing upstate New York market area,” Community President and CEO Mark Tryniski said in a news release. “This acquisition is consistent with our long-term growth strategy and leverages a strong competency developed during previous successful branch acquisitions. We believe this is a very attractive transaction which will be additive to the existing strength of our core markets and which will be additive to shareholder value through expected earnings accretion of 4 percent to 5 percent in 2013.”
Community Bank has $6.5 billion in assets and more than 170 branch offices in upstate New York and Pennsylvania. The banking company also operates subsidiaries in employee benefits, insurance, investment management and advising, and wealth management.
Separately today, Five Star Bank of Warsaw announced it will acquire four current HSBC branches and four current First Niagara branches in Albion, Batavia, Brockport, Elmira, Elmira Heights, Horseheads, Medina, and Waterloo. The deal is expected to close by the end of the third quarter.
Including an agreement announced last week to sell 37 HSBC locations to Cleveland–based KeyBank, First Niagara now has plans in place to sell 64 branches with about $3.8 billion in deposits and $713 million in loans. First Niagara expects to bring on no more than $11 billion in deposits with the HSBC deal.
Once the deal closes and the divestitures are complete, First Niagara will have 430 branches, $30 billion in deposits, $38 billion in assets, and more than 6,000 employees in New York, Pennsylvania, Connecticut, and Massachusetts.
“Now having the targeted level of divestitures under contract, in addition to last month’s capital raise of $1.1 billion, we are able to move forward to complete the conversion of the HSBC branches with even more pace and a sharper focus,” First Niagara President and CEO John Koelmel said in a release. “While both outcomes were more challenging than anticipated, given the difficult realities of today’s market and economy, we have successfully positioned the company for even better days ahead.”
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