Northwest deal out; NexTier planning to stay independent
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Butler-based NexTier Bank is busy finalizing a three-year strategic plan to remain independent following news Monday that its pending takeover by Northwest Savings Bank was called off after hitting a roadblock with regulators.
"We're going forward as NexTier Bank," President Margaret Irvine Weir said in an interview.
The $570 million-asset bank with 15 offices in the region is no longer interested in being acquired, she said.
Warren, Pa.-based Northwest Bank, which struck a deal in May to buy NexTier for about $20 million in cash, said regulators would not approve the acquisition because of problems with Northwest's "consumer compliance program" uncovered during its most recent examination by the Federal Deposit Insurance Corp.
The $8 billion-asset Northwest "is taking steps to promptly address the issues," the bank said in a brief statement. Northwest "expects to receive a formal enforcement order concerning its compliance program," the release said.
Northwest CEO William Wagner declined to elaborate, saying he was prohibited from discussing details of a regulatory exam.
The FDIC also declined comment.
In a general sense, Mr. Wagner said, regulators "come in and look at the level of oversight in interpreting and applying government regulations, and apparently they weren't pleased with the level of oversight."
He declined to say whether the deal for NexTier could be revived.
"I think NexTier is a good organization with good people, and I'm disappointed it didn't happen," he said.
In a news release Monday, Ms. Weir said it had become clear that Northwest would not receive regulatory approval in time to allow the transaction to close by the end of year, which was the original plan.
"Therefore, it is in the best interest of NexTier and its stockholders and customers to formally terminate the merger agreement," said Ms. Weir, part of the Irvine family that founded the bank and holds a majority stake in the privately held institution.
NexTier has been struggling with bad loans and will still need to raise capital to meet regulatory requirements.
"We are talking to investors and plan to make an announcement in 60 to 90 days about that," Ms. Weir said.
She said NexTier had strengthened its competitive position over the last six months by working down problem assets, lowering nonperforming loans by about 38 percent.
The announcement that the merger was dead had an upside for 57 NexTier employees, who had been told they would be losing their jobs in the merger.
"We've gone back and said, 'Never mind,'" Ms. Weir said. The bank employs a total of about 240 people.
Ms. Weir said customers also reacted favorably to the news.
"I've received many calls and e-mails from our customer base on how delighted they are we are staying in business."
First Published November 9, 2010 12:00 am