October 9, 2012
NBT acquires Alliance Bank
$233.4 million merger will create company valued at $7.5 billion
Joe McIntyre/staff photographer
An Alliance Bank branch on the corner of Court and Main streets in downtown Cortland. The bank is merging with Norwich-based NBT Bancorp. The banks do not expect any branch closings in the deal awaiting shareholder approval.
Norwich-based NBT Bancorp Inc. has reached a deal to acquire Alliance Financial Corp., which has two bank branches in Cortland, the two financial institutions announced Monday in a press release.
The $233.4 million merger was unanimously approved by the boards of directors for each company and awaits regulatory and shareholder approval. The finalized deal is expected by spring.
Both companies’ primary subsidiaries, NBT Bank, N.A. and Alliance Bank, N.A. are nationally-chartered community banks that are over 150 years old.
Job cuts among support and backroom employees are planned, said Martin Dietrich, president and CEO of NBT Bancorp Inc.
In general, customer service employees will still have jobs, Dietrich said, but he made no guarantees.
The number of job cuts is unknown, he said.
Alliance employs 330 people and NBT has 1,700 employees.
Two members of the Alliance’s board of directors will join NBT’s board.
NBT has 135 branches in New York, Pennsylvania, Vermont, Massachusetts and New Hampshire. Alliance Bank has 28 locations in Central New York, including two in Cortland and one each in Cincinnatus, Cortlandville and Marathon. There is also a branch in Groton.
Dietrich noted that while the two bank’s branches border one another, they are not close enough to overlap.
“We don’t anticipate any bank closings due to overlap,” Dietrich said. “It’s about as perfect a fit as you could imagine.”
When the merger is finished, investors who own Alliance common stock will receive the rights to nearly 2.2 shares of NBT common stock.
Under the deal, Alliance shares are valued at $48, which is based on the average closing stock price for NBT shares during the five-day trading period ending Oct. 5.
NBT’s average closing stock price was $22.04.
The expense of dealing with added regulations due to the Dodd-Frank Bill, a bill that aims to reform Wall Street and end “too big to fail,” was cited as both an impetus and an advantage to merging, in a conference call Monday for news media held by Dietrich and Jack H. Webb, president and CEO of Alliance Financial Corp., which is based in Syracuse.
The federal regulations place a heavy burden on community banks that had nothing to do with the recent financial crisis, Dietrich said.
“It (merging) creates more scale from which to absorb those costs,” he said.
“We did have to get bigger,” Webb agreed. That’s why Alliance marketed itself to a handful of banks; ultimately, NBT was chosen, he said.
Day-to-day banking will not be affected very much by the merger, Dietrich said.
“We expect the changes to be very nominal,” he said. “They’ve got a pretty darn good model there.”
After the merger, the combined banks will be valued at $7.5 billion, Dietrich said. NBT was worth $6 billion in June and Alliance is worth $1.4 million, according to a press release.
Dietrich sidestepped the question of what the Alliance Bank Stadium in Syracuse would be called going forward.
“We intend to continue the types of activities they (Alliance) did to make them successful,” he said.
“I am a baseball fan,” Dietrich joked.
In early morning trading, Alliance stock was down 4 cents to $45.75; NBT was also down 4 cents to $21.46.
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