By ALLISSA KLINE
Business First

First Niagara Financial Group Inc. is fanning out this week to new markets.

The bank announced July 27 that it plans to nearly double its total assets with the acquisition of Harleysville National Corp., the largest bank headquartered in the Philadelphia area. Expected to close early next year, the move gives the Pendleton-based bank its fourth geographical corner in the New York-Pennsylvania region.

"It's clear we've pitched our tent across Upstate New York, as well as across Pennsylvania," First Niagara President John Koelmel said. "We couldn't be more proud to have those four corners, (which are) emblematic of the strength of our franchise today."

The agreement - an all-stock transaction of 83 bank branches valued at $237 million, or $5.50 per share - is expected to close in early 2010, just a few months after the bank wraps up its acquisition of 57 former National City Corp. branches in western Pennsylvania. The latest deal, which still must be approved by banking regulators and Harleysville shareholders, will add $5.6 billion to the bank's current $11.6 billion in total assets.

Two law firms, however, say the price is too low. Brodsky & Smith LLC of Bala Cynwyd, Pa., and Levi & Korinsky LLP of New York City are investigating the agreement on behalf of some shareholders.

First Niagara officials, however, have not been deterred, company spokesperson Leslie Garrity said.

"We're not surprised by this tactic, which is not uncommon," she said. "We are very comfortable with the process First Niagara, Harleysville and both company's advisers used to negotiate a fair offer."

Like the National City acquisition, the Harleysville purchase is expected to open up job opportunities in Western New York as back-office duties move closer to the company's headquarters. But the numbers won't be as high as the National City-related jobs, Koelmel said.

"It won't be 100 or 150 (jobs), but it still will be an additional bump in jobs, and we couldn't be happier about affording local talent those opportunities," he said.

Koelmel also noted that it's not clear yet what will happen to two Harleysville subsidiaries, Millennium Wealth Management and Cornerstone Companies.

"We need to fully vet those businesses and better understand the opportunity to fully optimize those businesses," he said.

About 10 percent of Harleysville's expenses will be cut, which means some of its 1,100 employees will lose jobs, Koelmel said.

Tom Alonso, a banking analyst at Fox-Pitt Kelton Cochran Caronia Waller who follows First Niagara, said the only surprise about the Harleysville deal is the timing.

"I thought they probably would have waited until after (National City) closed and then be on the lookout" for other mergers and acquisition opportunities, Alonso said. "But they're in a good position. They did two good strategic deals and will potentially do more down the road."