First Niagara, the Buffalo, N.Y.based banking company that bought troubled Harleysville National Bank, formerly the biggest bank based in suburban Philadelphia, three years ago, has raised millions for a series of high-profile development projects around the Philadelphia area that Harleysville alone would have had a tough time funding.
First Niagara is lead lender for Carl Dranoff's next South Broad Street apartment project, 85-unit Southstar Lofts; for Ron Caplan's project to convert the long-vacant AAA building on Market Street West into apartments; and for Victory Brewing Co.'s new $33 million brewery and restaurant complex in Parkesburg, Pa., on the western edge of the Philadelphia area in Chester County.
The bank is also finishing work on a multi-million-dollar project to expand a Philadelphia-area nonprofit's New Jersey facilities.
"Harleysville was a great community bank. But it couldn't have done the AAA transaction," Robert Kane, the ex-PNC Bank officer who heads First Niagara's Philadelphia region, told me. "That property had sat there. There had been plans to make it a hotel, to make it condos," back in the mid-2000s real estate bubble. More recently, "Philadelphia's apartment business has expanded, it's a great location." So Kane's team took the proposal by Caplan's Philadelphia Management Corp. to his company's real estate syndication group, which brought in TD Bank as a supporting lender and financed the deal.
Victory, by contrast, was a past Harleysville customer; the two companies "have grown proportionately," and First Niagara's Capital Markets group syndicated the $33 million credit.
Sometimes the loss of a local company turns out to be net gain, for the region if not its immediate headquarters town.
The North Penn area, the historically German-populated complex of upper Montgomery County townships and boroughs that maintained business and community institutions vigorously separate from Philadelphia until recently, regretted the loss of Harleysville National Bank and the subsequent sale of major employer Harleysville National, the mutual insurance company, to Nationwide Insurance.
But if First Niagara is making deals other banks aren't ready to finance, that sale looks like a net gain for the Philadelphia area. And Michael Browne, the Harleysville Insurance boss who made $19 million in that company's sale, says Nationwide has committed to expanding that business in its hometown, as well.