Community Bank System near Syracuse has a deal to scoop up eight KeyCorp branches in western New York villages that the Cleveland-based megabank is deserting.
Community Bank System, DeWitt, said this week that it has agreed to buy the branches and about $161 million of deposits.
The $1.3 billion-asset bank also has the option to buy $24 million in loans.
The companies refused to disclose the terms of the agreement.
"We've been talking to each other for quite some time," said Sanford A. Belden, president and chief executive officer of DeWitt-based Community Bank System.
Community Bank System is the second New York banking company in the past two weeks to agree to buy castoff branches from KeyCorp-and it probably won't be the last.
KeyCorp is selling off 140 branches and closing another 140 in mostly rural areas of its 11-state network. The bank's strategy is to focus on 28 urban markets from Seattle to Portland, Maine.
The Community Bank System deal is just "one small piece" of that strategy, said Bill Murschel, a spokesman for $67.6 billion-asset KeyCorp.
Late last month KeyCorp agreed to sell 35 New York State branches to Albank Financial Corp., a $4 billion-asset thrift company based in Albany. Albank would get more than $500 million in new deposits and an option to purchase $53 million in small-business, consumer, and mortgage loans.
The branches Community Bank System would buy include four that are the only bank outposts in four villages.
The deal would also give it a stronger grip on banking in the Olean area.
Mr. Belden said Community Bank System would keep all of the branches open and hire the 50 KeyCorp branch employees, who were "key to this deal."
Some analysts had called the Albank deal pricey; the price is a 7% premium on deposits. And Kevin Timmons, a bank analyst at First Albany Corp. in Albany, said he surmises that Community Bank System paid even more, probably about 8%.
He noted that the branches in the latest deal have more deposits that those Albank is buying - $20 million, on average, versus $15 million.
But Mr. Timmons said premiums of 7% to 8% on deposits seem the norm these days for branch purchases in upstate New York, as well as nationally.