Looking to strengthen its position in central New York, Niagara Bancorp of Lockport said Wednesday that it would buy Cortland-based CNY Financial Corp. for $87.9 million of cash.

Niagara, the $1.7 billion-asset parent of Lockport Savings Bank, would pay $18.75, or 1.3 times book value, for each share of CNY stock. CNY's subsidiary, $296 million-asset Cortland Savings Bank, would continue to operate under its own name and board of directors.

The deal would combine two of upstate New York's oldest financial institutions. Lockport Savings was founded in 1870, and Cortland Savings, which operates three branches in Cortland County, was founded in 1866.

"In pairing with Cortland Savings Bank … we immediately broaden our services capabilities and enter a new market with an established brand name and product line," said William E. Swan, Niagara's president and chief executive officer.

The deal, which is expected to close in the second quarter, is the second announced by Niagara in 1999. In August the company said it would buy $77 million-asset Albion (N.Y) Federal Savings and Loan Association. This deal is expected to close in the first quarter.

-Alan Kline

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