Harleysville Recapitalized with the Benefit of First Niagara Loan
07 Dezember 2009 - 2:00PM
Business Wire
First Niagara Financial Group, Inc. (NASDAQ: FNFG) which agreed
to acquire Harleysville National Corporation (NASDAQ:HNBC) in July
2009 in an all-stock transaction valued at approximately $237
million, will lend up to $50 million as part of a recapitalization
plan to ensure that Harleysville and its bank subsidiary meet the
general regulatory capital ratios to be designated “well
capitalized” under federal banking laws.
Thirty-five million of the $50 million facility was borrowed
from First Niagara and contributed to Harleysville National Bank as
Tier One Capital, allowing it to meet the ratios of a “well
capitalized” bank for the first time since September 2008. Coupled
with operational improvements initiated by Harleysville National
Bank, as well as an enhanced and strong liquidity position, the
capital injection enables the company to better serve the needs of
its customers by increasing its lending capacity.
Harleysville’s regulatory capital ratios as of December 7, 2009
included total risk-based capital of 10.44%, Tier 1 risk-based
capital of 9.17% and a Tier 1 leverage capital of 6.49%. The
general regulatory minimums for well capitalized designation are
10% for total risk-based capital, 6% for Tier 1 risk-based capital
and 5% for a Tier 1 leverage capital.
In connection with the capital infusion, The Office of the
Comptroller of the Currency informed Harleysville that it is
extending the deadline for compliance with previously announced
“individual minimum capital ratios” from June 30, 2009 to March 31,
2010, subject to continued compliance with “well capitalized”
ratios achieved upon receipt of the First Niagara loan proceeds.
First Niagara’s acquisition of Harleysville is expected to close
prior to the IMCR-compliance deadline, subject to regulatory and
shareholder approval, in the first quarter of 2010.
First Niagara is also prepared to buy up to $80 million in
commercial and commercial real estate loan participations from
Harleysville and allow Harleysville to originate loans on behalf of
First Niagara via a correspondent relationship, both of which will
further enhance Harleysville’s regulatory capital ratios and boost
lending activities.
“This capital infusion is significant for our bank, our
customers and the communities we serve,” Harleysville President and
Chief Executive Officer Paul D. Geraghty said. “Boosting our
capital places Harleysville National in a strong position to serve
its communities until we complete our transaction with First
Niagara and reignite the growth of this franchise in Southeastern
Pennsylvania and the Lehigh Valley.”
First Niagara President and Chief Executive Officer John R.
Koelmel said, “After working closely with the Harleysville’s team
in recent months, we’re even more bullish about the value of this
transaction, the strength of the franchise, and the opportunity we
have in this region. We’re pleased to be able to leverage First
Niagara’s exceptional capital position to immediately ensure the
availability of credit for Harleysville’s customers in advance of
the completion of this acquisition in the first quarter of
2010.”
About Harleysville –
Harleysville National Corporation, with assets of $5.2 billion, is
the holding company for Harleysville National Bank (HNB).
Harleysville National Corporation stock is traded under the symbol
"HNBC" and is commonly quoted under NASDAQ Global Select Market®.
For more information, visit the Harleysville National Corporation
website at www.hncbank.com.
About First Niagara –
First Niagara Financial Group, Inc., through its wholly owned
subsidiary First Niagara Bank, had assets of $14.1 billion and
deposits of $9.9 billion at September 30, 2009. First Niagara Bank
is a community-oriented bank providing financial services to
individuals, families and businesses through 171 branches and five
Regional Market Centers across Upstate New York and Western
Pennsylvania. In July 2009, First Niagara announced its plans to
acquire Harleysville National Corporation and its $5.2 billion in
assets and 83 branches in the Philadelphia area, subject to
regulatory and Harleysville shareholder approval. Just recently,
the thrift holding company applied to the Federal Reserve Board to
become a bank holding company and on December 3 announced its
application to become a commercial bank.
For more information, visit www.fnfg.com.
Forward-Looking Statements
- This press release contains forward-looking statements with
respect to Harleysville National Corporation and its proposed
merger with First Niagara. These forward-looking statements involve
certain risks and uncertainties. Factors that may cause actual
results to differ materially from those contemplated by such
forward-looking statements include, among others, the following
possibilities: (1) that governmental approvals of the merger may
not be obtained, may be delayed, or that adverse regulatory
conditions may be imposed in connection with governmental approvals
of the merger changes in the interest rate environment; (2) that
the growth opportunities and cost savings from the merger may not
be fully realized or may take longer to realize than expected; (3)
that operating costs, customer losses and business disruption
following the merger, including adverse effects of relationships
with employees, may be greater than expected; and (4) if the merger
agreement is terminated, Harleysville National Corporation will
have a limited time to repay the loan from First Niagara and there
can be no assurance that Harleysville National Corporation will be
able to raise funds sufficient to repay the loan from First Niagara
if the merger agreement is terminated.
Shareholder Information-
First Niagara will file a registration statement, a prospectus that
will also serve as the proxy statement for the vote of the
stockholders of Harleysville National Corporation, and other
relevant documents concerning the proposed transaction with the
Securities and Exchange Commission (the “SEC”). Shareholders are
urged to read the registration statement and the proxy
statement/prospectus when it becomes available and any other
relevant documents filed with the SEC, as well as any amendments or
supplements to those documents, because they will contain important
information. You will be able to obtain a free copy of the proxy
statement/prospectus, as well as other filings containing
information about First Niagara and Harleysville, at the SEC’s
Internet site (http://www.sec.gov). Copies of the proxy
statement/prospectus also can be obtained, when available and
without charge, by directing a request to Harleysville National
Corporation, 483 Main Street, Harleysville, Pennsylvania 19438,
Attention: Noel Devine (215) 256-8851 ext 61703, or to First
Niagara Financial Group, Inc., Attention: Anthony M. Alessi,
Investor Relations, 6950 South Transit Road, P.O. Box 514,
Lockport, New York 14095-0514, (716) 625-7692.
Harleysville, First Niagara and their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from the shareholders of Harleysville in
connection with the acquisition. Information about the directors
and executive officers of Harleysville and their ownership of
Harleysville common stock is set forth in Harleysville’s most
recent proxy statement as filed with the SEC, which is available at
the SEC’s Internet site (http://www.sec.gov) and at
Harleysville’s address in the preceding paragraph. Information
about the directors and executive officers of First Niagara is set
forth in First Niagara’s most recent proxy statement filed with the
SEC and available at the SEC’s Internet site and from First Niagara
at the address set forth in the preceding paragraph.
Additional information regarding the interests of these
participants may be obtained by reading the joint proxy
statement/prospectus regarding the proposed transaction when it
becomes available.
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