Key and USB ink merger deal

Union State Bank, Rockland County”™s second-largest commercial bank, has been acquired by KeyCorp, effective July 27. The acquisition will cost Key approximately $547 million in cash and stock and double its presence in the Hudson Valley.

The two signed a definitive agreement under which Key would acquire USB Holding Company Inc. (NYSE: UBH). Union State Bank has 31 branches in the lower Hudson Valley, assets of approximately $3 billion, loans of $1.6 billion and $2 billion in deposits.

Its new owner, KeyCorp (NYSE:KEY), will add USB”™s branches to its 32 existing Hudson Valley branches, expanding Key”™s presence in the region. Thomas Hales, U.S.B. Holding Co. chairman and CEO, said, “This transaction provides an opportunity for USB Holding Company shareholders to receive an attractive value for their shares, and it brings Key”™s high commitment to service and world-class products to our communities. While we explored many alternatives, including remaining independent, we feel combining with Key is in the best interest of our clients and employees. Like Union State Bank, Key also has a long and established history of commitment to its communities.”

Cleveland-based KeyCorp is one of the nation”™s largest bank-based financial services companies with assets of approximately $94 billion. Nationwide, the company has 954 retail branches in 13 states and reported a 2006 net income of $1.06 billion.

Thomas Geisel, Key”™s Northeast regional president, said the wide range of services that Key can offer current Union State Bank depositors will have a significant positive impact on the region. “Our 32 branches in the upper part of the valley, combined with USB”™s branches in the lower part, was one of the determining factors and predominant reason Union Savings Bank was so attractive to us. We have services USB does not offer: a strong wealth-management and trust franchise, a branch-based brokerage

 

group and a strong expertise in business, with a  particular focus on  women-owned businesses. This addition of USB”™s 31 branches to our franchise allows us to expose their clients to our expanded lines of business.”

While Thomas Hales, USB”™s chairman and CEO, and Raymond Crotty, president and chief operating officer, will be retiring, Geisel is fully expecting USB”™s “staff of talented people to remain with the organization. We are determined to pull this together and do it seamlessly.”

The first order of business, says Geisel, is to close on the agreement, which is expected to happen within six months. “After that time, we will be in the conversion process. Our logo, a red key, will not appear until after the first of the year.”

Both boards approved the acquisition. By January, Key expects to double its presence in the Hudson Valley. Key currently has nearly 1,500 ATMs located throughout the area.

Key is planning to move its Hudson Valley district offices from Orange County”™s city of Newburgh to make way for the new SUNY Orange campus. Its new headquarters will be located in the Dutchess County town of Poughkeepsie in Oakwood Commons on Route 9, to open some time in early 2008. The move will merge 50 employees under one roof and add a new retail branch on the main floor of the Oakwood Commons building.