KeyCorp is in advanced talks to buy First Niagara Financial, according to a person familiar with the matter.
The deal may value Buffalo, New York-based First Niagara at a modest premium, the Wall Street Journal
First Niagara hired JPMorgan Chase & Co. to explore a possible sale earlier this year, people familiar with the matter said last month. The lender, with almost 400 branches in New York, New Jersey, Pennsylvania, Connecticut and Massachusetts, has a market value of almost $3.6 billion, based on the number of shares outstanding at the end of the third quarter.
A deal could be announced as soon as Friday, the Journal said. Spokesmen for Cleveland-based KeyCorp and First Niagara didn't immediately respond to requests for comment.
New York Community Bancorp, which was reported last month to be among possible buyers for First Niagara, on Thursday agreed to purchase Astoria Financial Corp. in a deal valued at about $2 billion. Toronto-Dominion Bank and Huntington Bancshares Inc. were also mentioned as potential suitors, according to a Sept. 22 DealReporter story.
First Niagara was the worst-performer in the KBW Bank Index last year before it was removed from the 24-company group. The company has grappled with rising costs, including an increase in reserves to address a "process issue" that affected some deposit accounts, and has said that expenses would climb as it spends money to improve technology systems.
Regional bank takeovers are picking up after a slowdown in deals following the financial crisis. Lenders including BB&T Corp. and CIT Group Inc. have scooped up smaller firms to expand business lines and geographic markets as record low interest rates squeeze lending margins.
