First Empire State Corp. said Tuesday it will buy OnBancorp Inc. for about $872 million in stock and cash, forming the largest bank in Upstate New York.
First Empire, based in Buffalo, said it will pay 0.161 share, or $69.50 in cash, for each OnBancorp share. The bank said 60 to 70 percent of OnBancorp shares must be exchanged for stock.
After the purchase, the bank will have $19.2 billion in assets and 255 branches in New York, northeastern Pennsylvania and New York City. First Empire, whose biggest investor is Warren Buffett’s Berkshire Hathaway Inc., is among hundreds of banks buying their rivals to boost profit and slash costs.
“First Empire is a good, very smart buyer,” said Timothy Parton of Fleming Capital Management, which owns about 61,000 shares. “They’ve done a terrific job growing the business.”
First Empire is paying 2.7 times OnBancorp’s book, or net asset, value and 19 times its earnings for the past year.
Based in Syracuse, N.Y., OnBancorp is the parent of OnBank & Trust Co. in New York and Franklin First Savings Bank in Wilkes-Barre, Pa.
