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Lake Shore sees benefit from Key-First Niagara upheaval

DUNKIRK – Lake Shore Bank is still capitalizing on the market disruption caused by KeyBank's deal for First Niagara Bank, said Daniel P. Reininga, Lake Shore's president and CEO.

"It's meant deposit growth and it's meant loan growth," Reininga said after the bank's annual shareholders meeting on Wednesday.

Depositors, he said, see Lake Shore as the type of community bank that First Niagara was before it grew rapidly and was acquired by Key.

"That's been a great opportunity for us and a lot of the customers have echoed that, that's it's great to come home to a local bank, a bank that serves exclusively the communities of Western New York," he said.

Lake Shore has a total of 11 branches in Chautauqua and Erie counties and ranked ninth in Buffalo Niagara deposit market share last year. Reininga said the bank started to see the impact of the Key-First Niagara deal last September or October, after Key had completed the acquisition and was preparing to convert branches.

Reininga said there was a "lull" in the market disruption effect over the holidays, but that it has picked up again since.

The ripple effect of the $4 billion Key-First Niagara deal has dominated local banks over the past year. Even Key is sending a message about the region's significance, scheduling its annual meeting on Thursday in Buffalo instead of its usual location, in Cleveland.

Lake Shore recorded net income of $3.5 million in 2016 and $716,000 in the first quarter of this year. The bank continues to emphasize growing its commercial loans, which accounted for 46 percent of its total loan portfolio, said Rachel Foley, the bank's chief financial officer.

Lake Shore will originate commercial loans as high as $10 million, but will partner with other banks on loans that are higher than that amount, Reininga said.

While Erie County is competitive territory for commercial lending, Reininga said a bank of Lake Shore's size still can find opportunities.

"The bigger fish look for the bigger loans. In one bite, they want to do a $20 million loan or a $15 million loan," he said.

A smaller organization can focus on the "sweet spot" of loans under $10 million, Reininga said. "There's good volume out there for that."

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