First Niagara has completed its purchase and conversion of 57 National City bank branches in Pittsburgh, Warren and Erie, Pa., the company announced Tuesday.
As part of the deal, First Niagara will also receive $3.9 billion in deposits and $757 million in performing loans, as well as 500 new employees and 69 automated teller machines. The completed deal also brings more than 200,000 customers and 400,000 bank accounts to First Niagara.
In April, First Niagara agreed to buy the National City branches for $54.1 million. National City is a subsidiary of Pittsburgh-based PNC Financial, which had to make the deal with First Niagara as part of an agreement with federal regulators. Regulators said PNC had to sell the branches in western Pennsylvania when it acquired National City because of its market share concentration in the region.
Also a part of the deal, National City has purchased $150 million of senior debt notes issued by First Niagara. The notes pay 12 percent and mature on Sept. 10, 2014, but First Niagara has the ability to prepay the debt without penalty.
President and CEO John Koelmel said the process of converting the branches to First Niagara was just about done Wednesday. Koelmel was in Pittsburgh for the conclusion of the process, which was completed just five months after First Niagara made the initial announcement of the National City purchase.
“It has gone very well. Everyone involved in this process has done a great job,” Koelmel said.
The branches opened Tuesday morning under the First Niagara logo, while the ATMs were ready to go on Saturday. Koelmel said online banking was ready for National City customers by Sunday, with thousands signing up. But there was one obstacle the First Niagara transition ran into.
The First Niagara call center was overwhelmed with customers calling, Koelmel said, a result of the 200,000 customers joining the bank. But the problems have been addressed, and otherwise the transition has been good, he said.
Koelmel added that while 99 percent of the transition work was done in Pittsburgh, the real work is on its way. That work is making the new First Niagara branches profitable and growing the bank’s business.
The National City deal is just the first Pennsylvania deal that First Niagara has finished. In July, First Niagara continued its surge into the state with its announcement to buy Harleysville National Corp. for $237 million. The Philadelphia-based Harleysville includes 83 branches, $5.6 billion in assets, $3.6 billion in loans and $4.1 billion in deposits. First Niagara Financial Group said the deal is subject to both regulatory and Harleysville shareholder approval.
Koelmel said the Harleysville deal is expected to close sometime in February 2010.
Contact reporter Joe Olenick at 439-9222, ext. 6241.
Business
BANKING: First Niagara completes National City deal
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