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Northwest Bancshares Gets Regulatory Nod to Buy Branches
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Northwest Bancshares, Inc. (NWBI - Free Report) recently obtained necessary regulatory approvals from the Pennsylvania Department of Banking and Securities and the Federal Deposit Insurance Corporation for its proposed acquisition of 18 branches of First Niagara Financial Group Inc.
The transaction which is now anticipated to close on Sep 9, 2016 was announced in April this year as part of KeyCorp.’s (KEY - Free Report) agreements with the Department of Justice (DOJ) and the Fed, which was entered in relation to their review of KeyCorp's merger deal with First Niagara. Notably, the KeyCorp-First Niagara merger was closed on Jul 29, 2016. Systems and client conversions are projected to be completed by the fourth quarter of 2016.
Warren, PA-based Northwest Bank, through the acquisition of the First Niagara branches will be able to strengthen its footprint in Western New York as the 18 branches, with $1.7 billion in deposits and $0.5 billion in loans are located in the Buffalo Federal Reserve banking market. Notably, the bank has been operating in the Buffalo market for around 15 years.
A Strategic Deal
During the announcement of the deal Northwest had stated that it expects the acquisition to be accretive to earnings per share by around 25% in 2017. Also it will enhance the company's efficiency and improve deposit mix.
Northwest highlighted that a major aspect of this transaction is Northwest’s aim to replace $715 million of long-term debt with lower cost deposits. This will lead to an increase in net interest margin and facilitate the company’s assets to remain below the Dodd-Frank threshold of $10 billion. The company also mentioned that this move of cash deployment considerably lowers the reinvestment risk usually tied with purchasing deposits.
William J. Wagner, Chairman, President and CEO of Northwest Bancshares had stated, "We are excited to announce this opportunity to significantly increase Northwest's presence in a geographic region that we know well and find extremely attractive. The offices we are purchasing are excellent facilities in exceptional locations, with deposit balances averaging $96 million per branch."
Bottom-line
Northwest has grown considerably over the past several years through organic and inorganic routes. Notably, the company has closed over 37 bank transactions including 14 branch purchases since its initial public offering in 1994. The completion of the latest deal will certainly boost Northwest’s growth prospects.
Currently, Northwest carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the finance space include Meta Financial Group, Inc. (CASH - Free Report) and First Defiance Financial Corp. , each sporting a Zacks Rank #1 (Strong Buy).
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Northwest Bancshares Gets Regulatory Nod to Buy Branches
Northwest Bancshares, Inc. (NWBI - Free Report) recently obtained necessary regulatory approvals from the Pennsylvania Department of Banking and Securities and the Federal Deposit Insurance Corporation for its proposed acquisition of 18 branches of First Niagara Financial Group Inc.
The transaction which is now anticipated to close on Sep 9, 2016 was announced in April this year as part of KeyCorp.’s (KEY - Free Report) agreements with the Department of Justice (DOJ) and the Fed, which was entered in relation to their review of KeyCorp's merger deal with First Niagara. Notably, the KeyCorp-First Niagara merger was closed on Jul 29, 2016. Systems and client conversions are projected to be completed by the fourth quarter of 2016.
Warren, PA-based Northwest Bank, through the acquisition of the First Niagara branches will be able to strengthen its footprint in Western New York as the 18 branches, with $1.7 billion in deposits and $0.5 billion in loans are located in the Buffalo Federal Reserve banking market. Notably, the bank has been operating in the Buffalo market for around 15 years.
A Strategic Deal
During the announcement of the deal Northwest had stated that it expects the acquisition to be accretive to earnings per share by around 25% in 2017. Also it will enhance the company's efficiency and improve deposit mix.
Northwest highlighted that a major aspect of this transaction is Northwest’s aim to replace $715 million of long-term debt with lower cost deposits. This will lead to an increase in net interest margin and facilitate the company’s assets to remain below the Dodd-Frank threshold of $10 billion. The company also mentioned that this move of cash deployment considerably lowers the reinvestment risk usually tied with purchasing deposits.
William J. Wagner, Chairman, President and CEO of Northwest Bancshares had stated, "We are excited to announce this opportunity to significantly increase Northwest's presence in a geographic region that we know well and find extremely attractive. The offices we are purchasing are excellent facilities in exceptional locations, with deposit balances averaging $96 million per branch."
Bottom-line
Northwest has grown considerably over the past several years through organic and inorganic routes. Notably, the company has closed over 37 bank transactions including 14 branch purchases since its initial public offering in 1994. The completion of the latest deal will certainly boost Northwest’s growth prospects.
Currently, Northwest carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the finance space include Meta Financial Group, Inc. (CASH - Free Report) and First Defiance Financial Corp. , each sporting a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>