Northwest Bancshares Inc. of Warren, Pa., has called off its deal to buy NexTier Inc. of Butler, Pa., at the urging of regulators after Northwest's consumer-compliance program was called into question.
Northwest said Monday that it expects to receive a formal enforcement order from the Federal Deposit Insurance Corp. concerning its compliance program. The $8.1 billion-asset company said it was "taking steps to promptly address the issues identified by the FDIC" after a recent regularly scheduled exam, but did not provide specifics.
Northwest in May said that it had agreed to buy the $558 million-asset NexTier for $20.3 million. With the deal, which was expected to close this quarter, Northwest would have expanded in affluent Butler County near Pittsburgh.
Northwest also said Monday that it plans to buy back up to 10% of its outstanding common stock. Northwest has been sitting on capital since converting to a fully public company from a mutual holding company last year, raising $668 million.
Under rules set by the Office of Thrift Supervision, Northwest is barred from repurchasing shares until Dec. 18, a year after converting. Northwest had made clear its intent to use capital on acquisitions, but it is unlikely it will be able to do that while under a regulatory order.
"The repurchase of common shares … continues to be an integral part of our capital management program," Northwest's chief executive, William Wagner, said in a press release.
The companies did not return calls seeking comment. An FDIC spokesman said the agency does not comment on open and operating institutions.
