KeyCorp has agreed to acquire First Niagara Financial Group in a cash and stock deal worth about $4.1bn.

Buffalo, New York-based First Niagara operates with 394 banking offices in New York, Pennsylvania, Connecticut and Massachusetts. The bank oversees $39bn in assets and $29bn in deposits.

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The combined entity will manage nearly $99.8bn in deposits, $83.6bn in loans and operate with 1,366 branches across 15 states.

With about $135bn in assets, the combined bank will be the 13th largest commercial bank in the US.

As per the agreed terms of the deal, First Niagara shareholders will receive 0.68 KeyCorp shares and $2.30 in cash for each First Niagara common share.

Three members of the First Niagara board of directors are expected to join the KeyCorp Board upon closing of the deal by the third quarter of 2016.

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The transaction has already secured the nod from the two companies’ boards of directors, and is now subject to regulatory approvals and approval by KeyCorp and First Niagara shareholders.

Commenting on the deal, KeyCorp chairman and CEO Beth Mooney said: "Key and First Niagara are a powerful combination, driven by a shared commitment to the clients and to the communities we serve.

"This transformational opportunity will bring compelling and complementary capabilities to our shared 3 million clients, while driving meaningful synergies and enhancing shareholder value. KeyBank and First Niagara both have values-based cultures and a long-term commitment to and experience with the region."