As KeyCorp prepares to wrap up its deal for First Niagara Financial Group, community groups are eager to get to work with Key on a $16.5 billion lending and investing plan the bank agreed to.
Back in March, the Cleveland-based bank and community advocacy groups signed a National Community Benefits Plan. The five-year program will touch all markets where Key will operate. The total includes $5.8 billion that will be directed toward markets where both Key and First Niagara currently operate. That means 35 percent of the $16.5 billion will go toward markets where the two banks overlap.
The investment plan all along has been scheduled to take effect Jan. 1. But it wasn’t until last week that the Federal Reserve approved Key’s plan to acquire First Niagara, giving the deal a stamp of certainty. Key hopes to complete its deal for First Niagara on Aug. 1.
“I think they’re committed to it,” said Thomas Keily, consumer data and research coordinator for the Western New York Law Center, referring to the community benefits plan. “Now it’s a reality,” The Law Center is part of the Buffalo Niagara Community Reinvestment Coalition, which helped Key develop its community benefits plan.
When the Key-First Niagara deal was announced last fall, groups like the Buffalo Niagara Community Reinvestment Coalition raised questions about how Key’s deal for First Niagara would impact branches and access to financial services, especially in low- to moderate-income neighborhoods. Groups including the coalition ended up working with Key to develop the plan.
Key last week gave notice of its plan to close a total of 136 First Niagara and Key branches. Key says in most cases, those branches will be consolidated with another location that is less than a mile away.
“It was a lot of what was discussed by the bank through the process,” Keily said. “We advocate for keeping as many branches open as possible. We understand there is overlap.”
And Keily said he is hopeful that Key’s announced plan to retain all branch employees, and to eventually add more jobs upstate, will translate into more services available in neighborhoods.
The Community Benefits Plan is sweeping in length and scope, with funds for mortgage lending, small-business lending, community development lending, investing and grants.
Closer to home, local community groups say they will work with Key to ensure the bank follows through on commitments like opening a branch on the East Side, implementing Key products in low- to moderate-income branches to help those residents build wealth, and adding two to three loan officers in the Buffalo area to focus on low- to moderate-income residents.
A Buffalo Niagara Advisory Council will be created to work with Key on following through on those plans.
“KeyBank has shown that they are willing to work with communities and committed to put resources behind this plan,” said John Washington, a community organizer with PUSH Buffalo, in a statement. “The challenge will be in maintaining the transparency and collaboration that has gotten us this far.”
Another partner in developing the national plan, the Greater Rochester Community Reinvestment Coalition, said it was pleased the Federal Reserve’s order approving the Key-First Niagara deal “references specific details negotiated as part of the Community Benefits Plan and establishes an ideal model for the Federal Reserve’s future merger approval documents.”
“We are pleased that the Federal Reserve’s approval of this merger is contingent upon the goals laid out in the community benefits reached between KeyBank, the (National Community Reinvestment Coalition) and community groups,” said John Taylor, president and CEO of the NCRC.