Magazine article American Banker

Northwestern and First Union Agree to Sell 36 Branches as Part of Merger

Magazine article American Banker

Northwestern and First Union Agree to Sell 36 Branches as Part of Merger

Article excerpt

In connection with their proposed merger, First Union Corp. of Charlotte, N.C., and Northwestern Financial Corp. of Greenboro, N.C., have signed agreements to sell 36 branch offices.

In recent years, banking companies planning large mergers have agreed to sell off branches in overlapping markets in order to ease potential regulatory concerns about the competitive effects of a given bank merger.

However, regulators generally require that the divestitures be completed simultaneously with the mergers, so banks have to act quickly to reach agreements to sell off the overlapping offices.

First Citizens Bank & Trust Co. of Raleigh, N.C., is buying 34 of the 36 Branches, while the remaining two are being acquired by First Bank of Troy, N.C.

First Union said negotiations are under way to sell two additional offices. Of the 38 branches, 14 belong to First Union and the remainder to Northwestern. The branches' $286 million in total deposits represents 4.5% of the combined deposits of First Union and Northwestern.

Terms of the branch sales were not disclosed. However, First Union estimated that it will realize a nonrecurring after-tax gain of $14 million from the sales. The company said it has historically offset a portion of nonrecurring income by taking securities losses or other actions.

Employees of the branches being sold will be offered employment by the purchasing banks.

First Union agreed to acquire Northwestern in March in a deal valued at about $310.5 million.

The combination of the $7.9 billion-asset First Union and the $2.8 billion-asset Northwestern will create North Carolina's second largest bank holding company, edging past Wachovia Corp. of Winston-Salem.

First Union and Northwestern now rank third and fourth respectively in North Carolina. NCNB Corp. of Charlotte is the state's largest bank holding company.

The New York State Banking Board has allowed Bath National Corp. of Bath, N.Y., to acquire First National Bank of Wayland, N.Y.

Bath National has assets of $78.5 million, while First National of Wayland has $19.5 million in assets.

In its decision, the New York State Banking Board noted that although both banks operate in Steuben County, the acquisition would have no significant impact on competition or on banking concentration. Their nearest offices are 23 miles apart, the board stated.

Shareholders of Raceland Bank & Trust Co. of Raceland, La., have accepted a merger proposal from Louisiana Bancshares Inc. in Baton Rouge.

Raceland Bank has $213 million in assets, while Louisiana Bancshares, the state's largest bank holding company, has $2. …

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