ROCHESTER, NY – Spanish financial giant Santander has agreed to sell seven of its branches in the Allentown area of Pennsylvania to Community Bank, a Rochester, New York-based community bank. This transaction is expected to be a significant step for Community Bank in expanding its presence within the Greater Lehigh Valley region.

Transaction Details and Background 

Through this acquisition, Community Bank will gain approximately $600 million in deposits and $33 million in branch-related loan assets. Santander will receive approximately $48 million in cash, which represents an 8% deposit premium for the transaction. Both parties anticipate the deal will be finalized in the fourth quarter of this year.

This divestiture is seen as part of Santander's evolving business strategy in the United States. Santander is currently focusing on transforming into a digitally-centric national bank. As part of this strategy, last month it opened the first physical U.S. branch of its digital-only subsidiary, Openbank, in Miami.

Alongside its digital transformation, Santander is working to reorganize its existing branch network and optimize its retail banking presence. In fact, Santander plans to close 18 of its 400 U.S. branches by August. This accounts for approximately 4.5% of the Spanish-headquartered bank's U.S. branches, primarily concentrated in the Northeast region.

Swati Bhatia, Head of Retail Banking and Transformation at Santander and CEO of Openbank U.S., stated in a press release, "As we expand our presence nationally in the U.S., we are making adjustments to reallocate and optimize our branch network for the future." She further emphasized that Santander continues to invest in its branches by introducing new state-of-the-art formats, such as its latest flagship models. Bhatia added, "Investment in both digital and physical spaces will ensure Santander can best serve its customers in the years to come."

Bhatia described Community Bank as "a very well-regarded bank known for its excellent customer service." She stated, "We enter this agreement knowing our valued and long-standing clients will be well taken care of as we continue our transformation in the U.S."

Community Bank's Growth Strategy 

With assets totaling $16 billion, Community Bank will add new branches in Allentown, Bethlehem, Coopersburg, Easton, Emmaus, and Whitehall in Pennsylvania's Greater Lehigh Valley region through this acquisition. This will increase Community Bank's total number of branches in the area to 12.

Community Bank has stated that the acquired branches will continue to operate, and employees at those branches will retain their employment. Furthermore, the transaction is expected to be "slightly accretive to earnings."

In addition, Community Bank's subsidiary, Nottingham Investment Services, plans to purchase related asset management relationships from Santander Securities LLC, a Santander affiliate. This was confirmed through documents filed with the Securities and Exchange Commission (SEC).

Community Bank currently operates approximately 200 customer facilities across upstate New York, northeastern Pennsylvania, Vermont, and western Massachusetts. This acquisition of Santander branches is expected to play a significant role in Community Bank's expansion beyond its existing core markets into new regions and in broadening its customer base. This is seen as part of a strategy for regional banks to secure competitiveness and foster growth in a rapidly changing financial market environment.

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