Northwest Bancshares is preparing to wrap up its big branch deal in the Buffalo Niagara region.
The Pennsylvania-based bank expects to finish acquiring 18 First Niagara Financial Group branches for about $78.2 million before the end of the current quarter. The branches have deposits of $1.7 billion and loans of about $511 million, and with the new locations will come 185 additional employees and 70,000 customers.
“Things are going extremely well,” said William Wagner, Northwest’s president and CEO. “We are moving along very quickly, because it was a compressed time frame.”
Northwest in April announced its agreement to buy the 18 branches. The Pennsylvania Department of Banking and Securities has approved the purchase, but the deal still needs the approval of the Federal Deposit Insurance Corp.
The branches are being divested as part of KeyCorp’s deal for First Niagara, in order to satisfy anti-trust concerns. Northwest will move up to No. 4 in the Buffalo Niagara market, from No. 7 now, based on its projected increase in deposits.
Northwest reported a $7 million net loss in the second quarter, as it took steps to prepare for the deal, and absorbed the cost of closing 24 branches in other markets.
Northwest recorded $467,000 in acquisition costs related to the First Niagara branch acquisition, and $2.9 million in restructuring costs from the 24 branches it closed elsewhere. Northwest expects to generate $5 million in annual savings from carrying out those consolidations.
The bank also took a $37 million penalty from prepayment of $715 million in Federal Home Loan Bank borrowings, a one-time expense that positions Northwest to save $24 million annually once the deal for the First Niagara branches is complete.
Northwest this year has shortened its name from Northwest Savings Bank, and rebranded Jamestown Savings Bank locations as Northwest. It has also stepped up its advertising in the Buffalo Niagara market, as other banks have done with a major merger looming.
Wagner said the bank wants to communicate to customers that it is a full-service financial institution, not just a thrift.