PhillyDeals: Harleysville bank sale pays late dividends in the Philadelphia area

The Victory brewery, financed by First Niagara. Victory CEO Michael Covaleski (right) tours the site with U.S. Rep. Pat Meehan.
The Victory brewery, financed by First Niagara. Victory CEO Michael Covaleski (right) tours the site with U.S. Rep. Pat Meehan. (Michael Covaleski (right) tours the site with U.S. Rep. Pat Meehan.)
Posted: March 14, 2013

What the Philadelphia area lost when troubled Harleysville National Bank, the biggest bank based in suburban Philadelphia, was sold to First Niagara Financial Group three years ago, it may be getting back with interest as the Buffalo-based lender uses its deeper pockets to finance bigger projects here.

First Niagara is lead lender for Philadelphia developer Carl Dranoff's next South Broad Street apartment project, the 85-unit Southstar Lofts; for Ron Caplan's effort to expand the long-vacant AAA Building on Market Street into apartments, and for Downingtown-based Victory Brewing Co.'s second brewery complex, in Parkesburg, western Chester County.

"Harleysville was a great community bank. But it couldn't have done the AAA transaction," said Robert Kane, the ex- PNC Bank officer First Niagara hired to run its new Philadelphia region.

Kane's team took the proposal by Caplan's Philadelphia Management Corp. to his company's real estate syndication group, which brought in TD Bank as a second lender. Dranoff also is new to First Niagara.

Victory was a past Harleysville customer. First Niagara's capital-markets group syndicated the $33 million credit.

On Wednesday, First Niagara plans to make public another local deal: a $17.7 million refinancing of Villanova-based nonprofit Devereux's bond debt in Pennsylvania and Colorado. Devereux runs residential treatment programs, often in former mansions in affluent neighborhoods. Kane says the deal will shave three percentage points off Devereux's debt and erase $500,000 from yearly costs.

Not 'down a hole'?

Ex-U.S. Rep. E.G. "Bud" Shuster (R., Pa.) has been retired from Congress since 2001, when he gave up his Altoona-area seat (now occupied by son Bill Shuster) and his place on the powerful House Transportation Committee after an ethics review of his fund-raising and spending.

But Bud Shuster and his bipartisan support for highway-building and funneling fuel taxes to road work are remembered, and missed, among people who build public projects for their living.

The former congressman was in Philadelphia on Saturday, receiving from the hand of Pennsylvania's former governor, Democrat Ed Rendell, the Ellipse Award (for Excellence in Lifetime Leadership for the Public Service Environment) from Philadelphia engineering and design firm Pennoni Associates.

Past recipients include such key figures in the local business/government axis as investor and ex-city official Walter D'Alessio, Peco boss Denis P. O'Brien, Aqua America boss and Philadelphia Convention and Visitors Bureau board chair Nicholas DeBenedictis, Bucks County beer baron/ SEPTA board chairman and Pennsylvania Turnpike Commission member Pasquale "Pat" Deon, Liberty Property Trust boss (and Inquirer part-owner) William P. Hankowsky, as well as Rendell.

"The award recognizes people who support or make an impact on infrastructure," said Peter Coote, general counsel at Pennoni.

"The cynical view would be we're doing this solely for the purpose of getting more work. But we believe the nation's infrastructure needs more attention," Coote added. Other government spending may be a drag on the economy. But "every federal dollar spent on infrastructure is multiplied. It creates huge public benefits."

The bipartisan image of Rendell hailing Shuster makes the point, Coote concluded: "We're trying to get the Tea Party to recognize infrastructure spending isn't just going down a hole. It's an important investment."


Contact Joseph N. DiStefano at 215-854-5194, JoeD@phillynews.com, @PhillyJoeD.

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