First Niagara Financial Group said Monday that it has acquired employee benefits firm Burke Group from Financial Institutions, boosting its services to small and mid-sized firms.
Financial terms of the deal were not disclosed by either party. Burke Group will operate as a separate subsidiary of First Niagara under its own name initially. However, plans call for it to adopt the First Niagara brand eventually, depending on the outcome of a name analysis.
The deal benefits all sides. The purchase adds to the Lockport-based thrift's ability to cater to business clients, a key part of its strategy, and complements services it already offers through First Niagara Risk Management, its insurance unit.
Burke has clients through out the thrift's upstate New York market, and First Niagara can now cross-sell the new services to its existing clients.
"We've been assembling some core financial services that we feel these clients want and need and we can provide in an integrated fashion," said Daniel E. Cantara, First Niagara senior vice president of financial and business services. "This kind of fills out our offerings. They provide a level of expertise we didn't have."
It also matches First Niagara's own efforts to expand its banking presence in the Rochester and Syracuse markets. The thrift entered Rochester in 1999 with a loan production office, but now has 16 branches and 250 employees in Monroe County and surrounding markets. Plans call for at least seven more branches within the next 12 to 18 months in the area, along with accompanying jobs.
For Burke Group, meanwhile, it gives it access to the greater resources and wider market of a much larger company that is in similar businesses, wants to grow them, and is more financially stable than Financial Institutions.
"The benefits that First Niagara offers us are really very unique and very exciting to us and create a tremendous opportunity to grow our business," Burke Group President Patrick Burke said.
Finally, for Financial Institutions, the deal will give it some needed cash and removes a potential distraction at a time when the company is still struggling to deal with a high load of bad debts that have hindered profits and growth. The multibank holding company had paid $3.3 million to buy Burke in October 2001 during a growth spurt, but officials now say it's not a core business.
The Warsaw-based company, which is in the process of selling $175 million in bad loans as part of an aggressive plan to deal with its problems and address regulatory concerns, had announced last month that it would look to unload Burke as part of its new strategy.
Burke said Financial Institutions' problems "didn't really affect our company," but noted that the smaller bank is in a narrower market than First Niagara.
Founded in 1989, Burke Group designs and advises on retirement and employee benefit plans, administers 401(k) and benefit plans, and provides actuarial services and compensation consulting. It serves more than 500 clients in Buffalo, Rochester, Syracuse, Ithaca, Binghamton, Utica, Schenectady and Albany, as well as in Massachusetts, Rhode Island, Pennsylvania and Ohio.
The firm has offices in Honeyoe Falls, near Rochester, and in Syracuse, and employs 43. No layoffs are planned.