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Bank merger expected to occur in Jan. 2010

Published October 06. 2009 05:00PM

A corporate profile released today by First Niagara Corp. of Lockport, N.Y. states it expects its acquisition of Harleysville National Corporation to occur in January 2010.

Harleysville National Corporation is the parent company of East Penn Bank and Harleysville National Bank.

A filing with the U.S. Securities and Exchange Commission indicates that East Penn and Harleysville banks will retain their present names.

The deal involves the acquisition of $4.1 billion of Harleysville's deposits by First Niagara. It includes 83 bank branches across nine Eastern Pa counties.

The acquisition was initially announced on July 27. At the time, it was reported that the total assets of Harleysville totals $5.6 billion, which includes the $4.1 in deposits.

The two corporations signed a definitive purchase agreement for the transaction, which is expected to close in January.

Under the terms of the agreement, each Harleysville shareholder will receive 0.474 shares of First Niagara common stock for each Harleysville share owned, representing a premium of about 37.5 percent based on the Pennsylvania bank's closing price on July 24, 2009 of $4 per share.

The exchange ratio is based on First Niagara's five-day average closing stock price of $11.60 on July 22, 2009.

The exchange ratio is subject to adjustment under certain circumstances if loan delinquencies at Harleysville exceed specified amounts.

Harleysville suffered in large part due to the collapse of the building boom, especially in Montgomery County.

The bank's share price plummeted from a peak of $28 in 2004 to $4 in July.

The merger announcement increased the share price slightly for Harleysville, with yesterday's closing stock price being $5.66.

The price per share for First Niagara closed at $13 yesterday.

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