Northwest to buy NexTier for $20 million
NexTier Bank of Butler, whose problem loans have ballooned over the last three years, on Wednesday agreed to be acquired by Northwest Bancshares Inc. for $20.3 million in cash.
The deal has been structured so that Northwest can walk away if NexTier's problem loans increase above a certain level.
About 10 percent of NexTier's $376 million loan portfolio is classified as nonperforming, which means borrowers are more than 90 days behind in payments, according to a Securities and Exchange Commission filing yesterday. That included $29.2 million in nonperforming loans in Arizona and other markets, and $8.5 million in Pennsylvania.
In the first quarter ended March 31, NexTier lost $368,000 and wrote off $2.7 million in problem commercial and industrial loans, according to a report filed with the Federal Deposit Insurance Corp.
NexTier's nonperforming loans of $37.6 million as of March 31 were 6.7 percent of total assets, up from 0.35 percent at the end of 2006. Northwest can walk away from the deal should NexTier's delinquent loans exceed $48 million.
Under terms of the deal, the parent of Northwest Savings Bank is offering $200 a share for privately owned NexTier. The deal must be approved by NexTier shareholders and regulators and is expected to close by year's end, the banks said in a statement.
"We are pleased to announce the merger with NexTier and the expansion of our network north of Pittsburgh," Northwest CEO Wiilliams J. Wagner said.
By acquiring NexTier, Northwest Savings will expand to 39 offices in Butler, Armstrong and Allegheny counties. NexTier has 12 offices in Butler, three in Allegheny and one in Armstrong.
"We are extremely excited with the prospect of becoming part of the Northwest Bancshares team," NexTier Bank CEO Donald Shamey said in a statement.
Officials could not be reached for additional comment.
With the addition of NexTier's $345 million in deposits in Butler County, Northwest Savings Bank's market share there would rise to No. 2, behind PNC Financial Services Group Inc., up from No. 8, according to the SEC filing. With $34 million in deposits in Allegheny County, Northwest will move up to No. 8 in market share from its No. 11 spot.
Founded in 1896 and headquartered in Warren, Warren County, Northwest has assets of $8 billion and operates 171 offices in Pennsylvania, New York, Maryland, Ohio and Florida.
NexTier has assets of $583.7 million. As of March 31, it has $60.5 million in total residential mortgages, $189 million in total nonresidential mortgages and $43 million in commercial and industrial loans, according to the most recent FDIC data.
Founded in 1878 by S.J. Irvine Sr., the bank originally was known as Citizens National Bank.
After Citizens Bank of Pennsylvania acquired Mellon Bank in the Pittsburgh area in 2001, Citizens National fought in court with Citizens Bank over use of the Citizens name. In a settlement reached between the two banks in 2005, Citizens National agreed to change its name to NexTier.
The fourth generation Irvine, Margaret Irvine Weir, in 2000 became the bank's president. Weir's father, S.J. Irvine III, is NexTier's chairman. The company employs 221.