Bank holding company Community Bank System, Inc.'s (CBU) subsidiary Community Bank, N.A. agreed Friday to acquire 19 retail banking branches of HSBC Bank USA, N.A., a unit of HSBC Holdings plc (HBC,HSBA.L) and First Niagara Financial Group, Inc. (FNFG) in order to strengthen its existing core upstate New York markets.
The deal will also see DeWitt, New York-based Community Bank System assume about $955 million in deposits at a blended deposit premium of 3.22 percent, and nearly $218 million in loans at 16 HSBC bank branches and 3 First Niagara Bank, N.A. branches. The deal is expected to close in the third quarter 2012.
"This acquisition is consistent with our long-term growth strategy and leverages a strong competency developed during previous successful branch acquisitions. We believe this is a very attractive transaction which will be additive to the existing strength of our core markets and which will be additive to shareholder value through expected earnings accretion of 4 percent to 5 percent in 2013," Community Bank President and CEO Mark Tryniski said in a statement.
Separately, Financial Institutions, Inc.'s (FISI) affiliate Five Star Bank agreed to acquire eight HSBC and First Niagara retail banking branches to grow its market share throughout Western and Central New York. The deal will also see Warsaw, New York-based Financial Institutions assume about $376 million in deposits at a premium of 4.0 percent, and nearly $94 million in loans at four branches of HSBC and four branches of First Niagara.
Earlier, financial services company KeyCorp's (KEY) subsidiaryv KeyBank N.A agreed on January 12 to acquire 37 retail banking branches of HSBC in order to strengthen its upstate New York banking franchise, assuming about $2.4 billion in deposits and nearly $400 million in loans.
Separately, First Niagara said it now has completed agreements to divest a total of 64 branches with about $3.8 billion in deposits and $713 million in loans at a weighted average deposit premium of 4.2 percent. The divestitures are expected to be completed subsequent to the closing of First Niagara's HSBC-branch acquisition.
The divestiture of the branches follows an agreement reached in November between First Niagara and the Department of Justice following its customary antitrust review of a deal by First Niagara to acquire 195 HSBC branches.
First Niagara agreed with DoJ to divest 26 bank branches in the Buffalo and Western New York area in order to get approval for the First Niagara-HSBC deal. First Niagara then also noted that it expects to additionally divest certain branches in selected locations that are outside its strategic focus.
First Niagara agreed in late July 2011 to acquire 195 Upstate New York and Connecticut branches and $15.0 billion of deposits from HSBC Bank for a total consideration of about $1 billion. The deal is expected to be completed early this year.
In Friday's regular trading session, CBU is currently trading at $28.55, down $0.15 or 0.52% on a volume of 2,125 shares, while HBC is trading at $42.00, up $0.63 or 1.52% on a volume of 0.13 million shares, and FNFG is trading at $9.47, up $0.02 or 0.21% on a volume of 0.11 million shares. FISI is trading at $16.24, down $0.01 or 0.06% on a volume of 1,589 shares.
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