Latest Bank Merger Could Further Rattle Banking in Chester County
The banking landscape of Chester County is about to change again, thanks to Ohio-based KeyCorp’s $4.1 billion deal to buy the First Niagara Financial Group. The bank merger will create the 13th largest commercial bank in the United States and is expected to be finalized sometime in the third quarter of next year.
The move could lead to First Niagara closing up to 20 branches in the Chester County region, with branches in Downingtown, West Chester, Thorndale, Exton, Parkesburg, Kennett Square, Malvern, and Devon on the list.
The agreement highlight that each share of First Niagara will mostly be paid in KeyCorp stock plus $2.30 per share in cash. In total, the deal values First Niagara shares at around $11.40 per share, based on KeyCorp’s closing price on Thursday last week. This values the stock at a premium of around 10% percent, based on First Niagara’s $10.38 share price that day.
The announcement of the purchase caused First Niagara shares to rise by 4 cents to $10.42 in morning trading on Friday, while KeyCorp’s shares fell sharply, dropping 6.3 percent to $12.53.
With nearly 400 locations throughout New York, Pennsylvania, Connecticut and Massachusetts, the New York-based First Niagara has $39 billion in assets and $29 billion in deposits. With the combined assets and deposits of KeyCorp, the merged institution will have an impressive 1,300 bank branches spread out across 15 states, with $99.8 billion in deposits and $83.6 billion in loans.
This new deal comes hot on the heels of North Carolina-based BB&T Corp. announcing its plans to purchase Allentown’s National Penn Bancshares Inc. That deal was valued at close to $1.8 billion, and along with the purchase of Susquehanna Bank earlier in the year, will give BB&T a branch network and deposit base which rivals Wells Fargo’s.
While these various recent mergers will impact the local market, for now, it is too early to tell what exactly that effect will be.
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