Merger talks between First Niagara Financial Group and New Haven-based NewAlliance Bancshares started in late 2009, just as the Buffalo bank was wrapping up its acquisition of a Philadelphia commercial lender, BuffaloNews.com reports.
A new regulatory filing with Securities and Exchange Commission is shedding light on how the deal between NewAlliance Bank and First Niagara came to fruition.
According to the newspaper, First Niagara CEO John R. Koelmel first approached NewAlliance CEO Payton Patterson in last December to inquire about a possible acquisition.
At the time, First Niagara’s $237 million purchase of Harleysville National Corp. in southeastern Pennsylvania was still pending, and was not slated to close until April 2010.
Still, Koelmel met with NewAlliance CEO Peyton R. Patterson, although the discussions were characterized as “very informal” and “no deal terms were discussed,” according to the documents. Nevertheless, those initial talks led to the merger agreement the two banks reached just nine months later.
In August, First Niagara agreed to pay $1.5 billion in cash and stock to buy NewAlliance, creating a banking behemoth with more than $29 billion in assets. As part of the deal, NewAlliance’s 88 branches, including one recently opened in downtown Hartford, are expected to be converted and rebranded as First Niagara locations.
The boards of both banks approved the merger on Aug. 18. The deal is due to close April 1, 2010.
Since then, Waterbury-based Webster Bank has also been rumored to be on First Niagara’s radar.
Meanwhile, Bloomberg News reports First Niagara’s Koelmel says he is taking a “hard look” at increasing the dividend.
“We’ve got excess capital, and we’re committed to managing it,” Koelmel said Tuesday in an interview. “If we can’t put it to use and achieve a more optimal return, then we’ll put it back to shareholders.”
First Niagara has paid out a quarterly dividend of 14 cents per share since 2007. Koelmel said his policy is to pay 50 percent of earnings back to shareholders, and in recent quarters the dividend has surpassed that ratio.
At 11:30 a.m., NewAlliance was up 11 cents to $12.55. First Niagara was up 9 cents at $11.62.
