First Niagara to Acquire Harleysville National Corporation, With $5.6 Billion in Assets and 83 Branches in the Philadelphia & Le
27 July 2009 - 10:39PM
PR Newswire (US)
-- $237 million acquisition to create a strong foothold in
Pennsylvania, 3.15% statewide market share and 140 branches
concentrated around Philadelphia and Pittsburgh -- -- Continuation
of strategy to selectively expand geographic footprint in
contiguous markets with attractive demographics and long-term
growth potential-- BUFFALO, N.Y., July 27 /PRNewswire-FirstCall/ --
The boards of directors of First Niagara Financial Group, Inc.
(NASDAQ:FNFG) and Harleysville National Corporation (NASDAQ:HNBC)
announced that First Niagara has agreed to acquire the
Philadelphia-area financial services company in an all-stock
transaction valued at approximately $237 million or $5.50 per
share. The acquisition of the Harleysville-headquartered bank will
provide First Niagara with $5.6 billion in assets including, $3.6
billion in loans and $4.1 billion in deposits in 83 bank branches
across nine Eastern Pennsylvania counties. The parent company of
Harleysville National Bank also operates East Penn Bank, Millennium
Wealth Management and Cornerstone Companies. "This move is a
terrific next step in our strategy to leverage our strong capital
position in markets with attractive demographics and long-term
growth potential, where we can profitably play offense. The
communities served by Harleysville are perfect complements to First
Niagara's stable and resilient markets in Upstate New York and
Western Pennsylvania," said First Niagara President and Chief
Executive Officer John R. Koelmel. "We're also excited to offer
Harleysville employees opportunities to further build their careers
with our growing company, while giving them the resources they need
to continue providing customers the high level of personalized
service they've come to expect." The companies signed a definitive
purchase agreement for the transaction, which is expected to close
in the first quarter of 2010 and be accretive to First Niagara
diluted earnings per share by approximately 14% in 2011. Under the
terms of the agreement, each Harleysville shareholder will receive
0.474 shares of First Niagara common stock for each Harleysville
share owned, representing a premium of about 37.5% based on the
Pennsylvania bank's closing price on July 24, 2009 of $4.00 per
share. The exchange ratio is based on First Niagara's five-day
average closing stock price of $11.60 on July 22, 2009. The
exchange ratio is subject to adjustment under certain circumstances
if loan delinquencies at Harleysville exceed specified amounts.
Harleysville investors receiving shares of First Niagara stock will
also benefit from the profitable bank's longstanding commitment to
its dividend. First Niagara has maintained a $0.14 per share
quarterly dividend since August 2007, throughout the recession and
the toughest financial-services industry operating environment in
generations. "We're very pleased to have found an acquirer with
experience in dealing with the integration and cultural issues that
come with any two companies combining their businesses," said
Harleysville President and Chief Executive Officer Paul D.
Geraghty, who will continue to lead his in-market team. "In First
Niagara, we have a strong and profitable partner that will allow us
to maintain our focus on community banking customers, while
offering employees and investors attractive growth prospects. This
is a great transaction for our customers, our employees, and our
shareholders." First Niagara intends to maintain all Harleysville
National and East Penn branches, as well as the Pennsylvania
company's growing commercial banking and wealth-management
business. Harleysville's workforce currently totals over 1,100
employees. First Niagara has a proven acquisition-integration track
record and remains on track to close the previously announced
purchase of 57 branches and $4.2 billion in deposits in Pittsburgh
and Western Pennsylvania from National City Bank in September. With
the addition of Harleysville, First Niagara will have a strong
franchise in Pennsylvania with 140 branches across the state. In
addition to enhancing the company's growth prospects, First
Niagara's solid presence in and around the state's two largest
cities will provide added convenience to its customers. First
Niagara expects to continue building its Upstate New York workforce
to support the company's growth across its Eastern Pennsylvania,
Western Pennsylvania, Eastern New York, Central New York, Rochester
and Western New York regional markets. First Niagara currently
employs more than 2,000 and will have approximately 2,800 employees
when its National City acquisition closes in September. Upon
closing of the Harleysville acquisition, on a pro forma basis,
First Niagara expects to maintain well-capitalized Tier 1 and Total
Risk Based Capital ratios as well as a tangible common equity ratio
in excess of 6%. In order to maintain First Niagara's
well-capitalized position, the merger agreement provides specific
protections in the event of an increase in Harleysville's loan
delinquencies prior to closing. The transaction has received
approvals from the parties' boards of directors, but remains
subject to regulatory approval and other customary closing
conditions, as well as the approval of Harleysville shareholders.
First Niagara was advised by the investment banking firms of
Sandler O'Neill and Partners and Keefe Bruyette and Woods, as well
as the law firm of Luse Gorman Pomerenk & Schick. Harleysville
was advised by the investment banking firm of J.P. Morgan and the
law firm of Dechert LLP. Transaction Summary - Outlined below is a
summary of details and metric associated with the transaction:
Purchase price per share $5.50 Transaction value $237 million
Exchange ratio 0.474 shares of First Niagara common stock for each
share of Harleysville stock, subject to certain adjustments
Multiples 37.5% premium to closing price on July 24, 2009 0.50x
book value 1.13x tangible book value 0.8% core deposit premium
First Niagara will file a registration statement, a proxy
statement/prospectus and other relevant documents concerning the
proposed transaction with the Securities and Exchange Commission
(the "SEC"). Shareholders are urged to read the registration
statement and the proxy statement/prospectus when it becomes
available and any other relevant documents filed with the SEC, as
well as any amendments or supplements to those documents, because
they will contain important information. You will be able to obtain
a free copy of the proxy statement/prospectus, as well as other
filings containing information about First Niagara and
Harleysville, at the SEC's Internet site (http://www.sec.gov/).
Copies of the proxy statement/prospectus to be filed by First
Niagara also can be obtained, when available and without charge, by
directing a request to First Niagara Financial Group, Inc.,
Attention: Anthony M. Alessi, Investor Relations, 6950 South
Transit Road, P.O. Box 514, Lockport, New York, 14095-0514, (716)
625-7692, or to Harleysville National Corporation, 483 Main Street,
Harleysville, Pennsylvania 19438, Attention: Noel Devine (215)
256-8851 ext 61703. Harleysville, First Niagara and their
respective directors and executive officers may be deemed to be
participants in the solicitation of proxies from the shareholders
of Harleysville in connection with the acquisition. Information
about the directors and executive officers of Harleysville and
their ownership of Harleysville common stock is set forth in
Harleysville's most recent proxy statement as filed with the SEC,
which is available at the SEC's Internet site (http://www.sec.gov/)
and at Harleysville's address in the preceding paragraph.
Information about the directors and executive officers of First
Niagara is set forth in First Niagara's most recent proxy statement
filed with the SEC and available at the SEC's Internet site and
from First Niagara at the address set forth in the preceding
paragraph. Additional information regarding the interests of these
participants may be obtained by reading the joint proxy
statement/prospectus regarding the proposed transaction when it
becomes available. Investor Conference Call - Executives from First
Niagara will host a conference call with investors and the
financial community at 10 a.m. Eastern Time today to discuss this
transaction. Those wishing to participate in the call may dial
toll-free 1-877-709-8150. A replay of the call will be available
for until August 10, 2009 by dialing 1-877-660-6853, account number
240, ID number 329186. An investor presentation on this transaction
is also available at First Niagara's website http://www.fnfg.com/.
Media Conference Call -First Niagara 's President & CEO John
Koelmel will host a media conference call at 11:00 a.m. Eastern
Time today. Journalists can participate by dialing 1-877-269-7756.
About Harleysville - Harleysville National Corporation, with assets
of $5.6 billion and deposits of $4.1 billion, is the holding
company for Harleysville National Bank (HNB). Investment Management
and Trust Services are provided through Millennium Wealth
Management and Cornerstone, divisions of HNB, with assets under
management of $2.5 billion. Harleysville National Corporation stock
is traded under the symbol "HNBC" and is commonly quoted under
NASDAQ Global Select Market . For more information, visit the
Harleysville National Corporation website at
http://www.hncbank.com/. About First Niagara - First Niagara
Financial Group, Inc., through its wholly owned subsidiary First
Niagara Bank, has assets of $11.6 billion and deposits of $6.2
billion at June 30, 2009. First Niagara Bank is a
community-oriented bank providing financial services to
individuals, families and businesses through 113 branches and four
Regional Market Centers across Upstate New York. In April 2009, the
company announced plans to add another 57 branches in Pittsburgh,
Warren and Erie, Pa., additional deposits of $4.2 billion and
additional loans of $839 million in an acquisition that is expected
to close in September 2009, pending regulatory approval. For more
information, visit http://www.fnfg.com/. Forward-Looking Statements
- This press release contains forward-looking statements with
respect to the financial condition and results of operations of
First Niagara Financial Group, Inc. including, without limitations,
statements relating to the earnings outlook of the Company. These
forward-looking statements involve certain risks and uncertainties.
Factors that may cause actual results to differ materially from
those contemplated by such forward-looking statements include,
among others, the following possibilities: (1) changes in the
interest rate environment; (2) competitive pressure among financial
services companies; (3) general economic conditions including an
increase in non-performing loans that could result from an economic
downturn; (4) changes in legislation or regulatory requirements;
(5) difficulties in continuing to improve operating efficiencies;
(6) difficulties in the integration of acquired businesses; and (7)
increased risk associated with an increase in commercial
real-estate and business loans and non-performing loans.
DATASOURCE: First Niagara Financial Group, Inc. CONTACT: Anthony M.
Alessi, Investor Relations Manager, +1-716-625-7692, ; Leslie G.
Garrity, Corporate Communications Manager, +1-716-316-1781, , both
of First Niagara Financial Group, Inc. Web Site:
http://www.fnfg.com/
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