Dive Brief:

• Santander has agreed to sell seven branch locations in the Allentown, Pennsylvania, area to Rochester, New York-based Community Bank, the lender said Wednesday.
• Community Bank expects to assume roughly $600 million in deposits and purchase nearly $33 million in branch-related loans. It will pay a deposit premium of 8%, or roughly $48 million, as cash consideration to Santander, the bank said in a press release.
• The transaction is expected to close in the fourth quarter.

Dive Insight:

With the deal, $16 billion-asset Community Bank will expand its footprint in the Greater Lehigh Valley in Pennsylvania – adding branches in Allentown, Bethlehem, Coopersburg, Easton, Emmaus and Whitehall. That will bring its footprint in the valley to 12 locations.

The acquired branches will remain open, while the employees will be retained, Community Bank noted. The acquirer expects the transaction to be “slightly accretive to earnings,” it said.

Additionally, Community Bank’s subsidiary, Nottingham Investment Services, plans to purchase related wealth management relationships from Santander’s affiliate, Santander Securities LLC, according to a Securities and Exchange Commission filing Wednesday.

Meanwhile, Santander is looking to transform into a national “digital-first” bank with branches. Santander opened its digital-native subsidiary, Openbank’s first U.S. physical location in Miami last month. 

But it’s also refining its branch footprint and retail presence Santander plans to close 18 of its 400 U.S. locations by August. The affected branches in the Northeast comprise 4.5% of the Spanish bank’s roughly 400 U.S. locations.

“As we grow our presence nationally, we are making refinements to our physical presence to reposition and optimize our footprint for the future,” Swati Bhatia, Santander’s head of retail banking and transformation and CEO for Openbank in the U.S., said in a statement.

Bhatia noted that the Spanish bank is investing in its branches by rolling out new, state-of-the-art formats, like its latest flagship model.

“The investments we are making in both digital and physical will help ensure Santander is best positioned to deliver for our customers for years to come,” Batia added.

Bhatia dubbed Community Bank a “highly rated bank, known for its top-caliber customer service.”

“We enter into this agreement knowing that our valued, long-standing customers will be well taken care of, as we continue our transformation in the United States,” she said. 

Community Bank has nearly 200 customer facilities across upstate New York, northeastern Pennsylvania, Vermont and western Massachusetts.