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First Niagara wraps up divestitures; Announces deals to sell 27 more branches

Two regional community banking companies with Western New York operations are snapping up 27 more branches from First Niagara Financial Group, as the Buffalo-based bank unveiled more sales in advance of buying HSBC Bank USA's upstate network.

First Niagara said Friday that it would sell the branches, with about $1.4 billion in deposits and $315 million in loans, to Community Bank System and Financial Institutions.

The announcements wrap up the divestitures First Niagara intends to make as a result of the HSBC deal, moving it closer to its own goals.

The branches being sold include six in Western New York -- in Erie, Cattaraugus, Chautauqua, Genesee and Orleans counties -- as well as in the Rochester, Southern Tier and North Country regions. The local offices are in Albion, Batavia, Medina, Springville, Gowanda and Westfield.

The sales include 20 branches that First Niagara is acquiring from HSBC as part of its larger purchase of 195 HSBC locations, as well as seven of its own offices.

DeWitt-based Community Bank will buy 19 branches with $955 million in deposits and $218 million in loans, while Warsaw-based Financial Institutions' Five Star Bank will acquire eight, with $376 million in deposits and $94 million in loans.

Community Bank currently operates 34 branches in Erie, Chautauqua, Cattaraugus and Allegany counties, and also owns the Nottingham Advisors money management firm in Williamsville and a brokerage firm in Lockport. It also has an administrative center in Olean.

Overall, it has 170 branches from Western New York to the northern Adirondacks, as well as northeastern Pennsylvania.

"We're excited by this opportunity to further strengthen Community Bank's service footprint across our existing Upstate New York market area," President and CEO Mark E. Tryniski said.

Five Star has 50 branches in Western and Central New York, with $2.3 billion in assets. It has three Erie County offices.

"Five Star Bank is well-positioned to continue its success by maintaining and growing its market share throughout Western and Central New York," said President and CEO Peter G. Humphrey.

Customers will not see any changes to their accounts or loans until after the transactions are completed, and the banks said they will continue to collaborate "to ensure a smooth transition for the businesses and individuals they serve."

All branch employees, except certain people who will be retained by HSBC or First Niagara, will be offered jobs with Community Bank or Five Star.

The news follows last week's announcement that First Niagara would sell 37 HSBC branches to KeyCorp's KeyBank, with $2.4 billion in deposits and $400 million in loans.

That $110 million deal included 26 Buffalo-area locations in Erie, Niagara and Orleans counties that First Niagara was ordered to sell to avoid antitrust concerns, as a condition of winning approval from the U.S. Justice Department. The other 11 are in Monroe County.

In all, First Niagara has now signed agreements to sell 64 branches with $3.8 billion in deposits and $713 million in loans, at an average price of 4.2 percent, or about $160 million.

The branch sales have been expected as part of First Niagara's $1 billion deal, announced in late July, to acquire HSBC's entire branch network north of New York City, plus a handful of branches in southwestern Connecticut. That deal vaults First Niagara into the No. 1 market share across upstate New York's key cities and nearly doubles its branch network across the region to more than 200. It's expected to close in April, if regulators approve.

Following all the deals, First Niagara will have nearly 430 branches, with $38 billion in assets, $30 billion in deposits, and more than 6,000 employees in New York, Pennsylvania, Connecticut and Massachusetts.

Community Bank agreed to buy 16 HSBC branches; Five Star is buying four HSBC and four First Niagara branches.

Both deals are expected to close by the end of the third quarter.

In Western New York, the latest branches being sold include:

*HSBC branch at 24 N. Buffalo St. in Springville is being sold to Community Bank.

*HSBC branch at 76 W. Main St. in Gowanda is being sold to Community Bank.

*HSBC branch at 70 E. Main St. in Westfield is being sold to Community Bank.

*HSBC branch at 102 N. Main St. in Albion is being sold to Five Star Bank.

*First Niagara branch at 401 W. Main St. in Batavia is being sold to Five Star Bank.

*First Niagara branch at 327 Main St. in Medina is being sold to Five Star Bank.