First Niagara Financial Group Inc. agreed to acquire New Alliance Bancshares Inc. for some $1.5 billion in stock, giving the Buffalo-based bank a foothold in New England.

New Alliance holders will receive stock, cash or a combination of the two at a ratio of 1.1 shares of First Niagara for each of their shares. That values New Alliance at $14.09, a 24% premium to Wednesday's closing price.

New Alliance shares recently were up 18% at $13.39. First Niagara closed Wednesday at $12.78 and was inactive premarket.

The combined bank will have more than $29 billion in assets, including more than $14 billion in loans and $18 billion in deposits.

New Alliance has $8.7 billion in assets and 88 branches in eight Connecticut and Massachusetts counties. Its New Haven headquarters will serve as First Niagara's New England regional market center. Three of its directors will be added to First Niagara's nine-member board when the deal closes--expected in the second quarter.

First Niagara has $21 billion in assets and 255 branches in upstate New York and Pennsylvania. It expects the deal to add to earnings next year and boost them some 5% in 2012.

Both companies reported largely improved second-quarter results, like many regional banks did for the period, as the sector benefits from setting aside less money to cover potential future losses.

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