Magazine article American Banker

Old Pals to Bring Pa.'s 1st Colonial, Keystone Together

Magazine article American Banker

Old Pals to Bring Pa.'s 1st Colonial, Keystone Together

Article excerpt

Two Pennsylvania community banks that seemed bound to become competitors have decided to combine instead in a deal to create the largest locally owned player in the Lehigh Valley-Pocanos region.

The acquisition of the 106-year-old First Colonial Group Inc. of Nazareth by the 75-year-old Keystone Savings Bank would produce a company called Keystone Nazareth Bank and Trust Co. with 36 branches and $1.6 billion of assets. It would have an 11% share of the $10.4 billion deposit market in its four-county area of operation, second only to the Charlotte-based Wachovia Corp.'s 22%, according to Federal Deposit Insurance Corp. statistics.

Keystone has been trying to build its commercial loan portfolio for the past year, but market considerations were not the only thing that pushed the deal along. A year before it was announced, two of the companies' key executives -- Scott V. Fainor, First Colonial's president and chief executive officer, and Eugene Sobol, Keystone's chief operating officer and treasurer -- resumed a friendship that began nearly 20 years ago.

"Gene and I worked together at Merchants National Bank of Allentown in the 1980s," Mr. Fainor, 41, said Thursday, the day First Colonial, the parent of Nazareth National Bank and Trust Co., and Keystone, of Bethlehem, announced the deal.

After Mr. Fainor took the helm at First Colonial, he began bumping into Mr. Sobol at trade group functions and service organization meetings, he said. Though Keystone and First Colonial were not yet direct competitors, Mr. Fainor said he and Mr. Sobol realized that their expansion plans had them on a collision course. …

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