First Niagara Financial Group Inc., which agreed in July to buy Harleysville National Corp. for $237 million, is lending the Montgomery County bank as much as $50 million, Harleysville National said today.
So far, Harleysville National borrowed $35 million of that, which was used to shore up its capital base, which has been battered by loan losses. The $35 million infusion allowed the bank to meet the regulatory requirements of a well-capitalized bank for the first time since September 2008.
The cash infusion convinced the Office of the Comptroller of the Currency, which ordered Harleysville in the spring to raise money for its balance sheet by June 30, 2009, to extend that deadline to March 31, 2010, Harleysville said, adding that the sale to First Niagara is expected to be completed before the new deadline.
First Niagara is also prepared to buy up to $80 million in commercial and commercial real estate loans from Harleysville National and to allow Harleysville National to begin making loans on its behalf in the Philadelphia region. - Harold Brubaker