Using a familiar growth strategy, $2.9 billion-asset Community Bank System Inc. of DeWitt, N.Y., has announced a deal to buy 36 branches in southwestern upstate New York from FleetBoston Financial Corp.
The sale price was not disclosed.
The deal, which is expected to close in the fourth quarter, would add $484 million of deposits and about $240 million of loans to Community Banks New York business. The 174 Fleet employees would all be offered jobs with Community Bank, according to Sanford Belden, president and chief executive officer.
We continue to view the community banking business were in as a growth business, Mr. Belden said. And we want to continue to look for constructive opportunities for growth.
In upstate New York, Community Bank is No. 2 in market share, lagging only M&T Bank Corp. of Buffalo. Much of this market share has been built through branch acquisitions. In 1995, the company bought 15 branches from what was then Chase Manhattan Corp. In 1997, it acquired eight from Clevelands KeyCorp and 15 from the former Fleet Financial Corp.
Community Bank also recently expanded into Pennsylvania. Last month, it bought $644 million-asset First Liberty Bancorp in Jermyn for $99 million.
The 36 Fleet branches are in 11 New York counties, mainly in the southwestern and Finger Lakes regions. Most are in or near towns where Community Bank already has a presence. After the sale Community Bank would rank first or second in deposits in 69 of the 100 towns where it does business, Mr. Belden said.
It is common for large banking companies to unload small-town branches that do not fit their growth plans. Just last month, Seattles Washington Mutual said it was selling 13 rural and small-town branches in Oregon to Klamath First Bancorp in Klamath Falls, Ore.
Community bankers say they are often able to operate these branches more profitably because their overhead is generally lower than that of the larger companies. Mr. Belden said that branch deals are easier than whole-bank purchases because there are no back-office or infrastructure issues to deal with.
You are, in fact, getting exactly what you want the revenue-producing parts of the business, he said.