First Niagara Financial Group's decision to move its headquarters from Pendleton to Buffalo and create more than 300 new jobs, mostly downtown, while maintaining its Niagara County work force cements the fast-growing bank's future in the Buffalo-Niagara region, officials said Thursday.
Local development officials hailed the announcement as a "giant step forward" for the region, giving Buffalo a new corporate headquarters while expanding the local roots of a home-grown business that recently has branched out into new Pennsylvania markets in Pittsburgh and Philadelphia.
John R. Koelmel, First Niagara's president and chief executive officer, said staying in the Buffalo-Niagara region -- and expanding at the Larkin at Exchange Building downtown -- were always the first choice.
"We think this is the right time and the right place," Koelmel said. "Who cares where the CEO sits? This is all about new jobs."
When the expansion is completed in about a year, First Niagara expects to have about 500 people working in the Larkin Building, up from about 250 today, and will occupy more than 100,000 square feet of space there. Its work force at the current Pendleton headquarters, which now stands at 316, will stay about the same, or possibly increase slightly, as the company adds new work, primarily related to its expansion in Pennsylvania, Koelmel said.
And if First Niagara keeps growing as bank executives hope, there could be more opportunities for new jobs locally in the future. "In the long term, where do we go with the call center? Where do we go with the data center?" Koelmel asked in an interview. "These are some of our bigger challenges."
The additional jobs will bring the bank's employment in Erie and Niagara counties to 1,100.
The key to the deal, which includes a $1.3 million state grant that First Niagara will use for streetscape improvements around the Larkin District, was First Niagara's willingness to expand in Buffalo while also maintaining its work force in Pendleton.
"Clearly, their confidence level was to be here," said Dennis Mullen, chairman and chief executive officer-designate at Empire State Development, which is providing the grant. "But we weren't going to get involved if it was just about moving jobs from here to there."
Buffalo Mayor Byron W. Brown said Koelmel and Larkin Development Group Principal Howard Zemsky approached him a couple of months ago about the plan to shift the bank's headquarters to Buffalo. "They were clear that this was where they wanted to be," he said.
"It needed to be a win-win for both communities," he said. "Buffalo will gain a corporate headquarters, but Lockport will retain the corporate operations center."
Much of the growth in jobs here is coming from First Niagara's recent expansion into the Western Pennsylvania and suburban Philadelphia markets through a series of recent acquisitions.
First Niagara is adding about 150 local jobs, mostly in the Larkin Building and at its Pendleton office, because of its expansion into the Pittsburgh market. "We've got most of those people hired," Koelmel said.
The bank also plans to add another 100 local workers because of the planned acquisition, announced in July, of Harleysville National Corp., which will give First Niagara 83 branches in suburban Philadelphia. The remaining new jobs will be tied to growth within First Niagara's existing markets in upstate New York, Koelmel said.
First Niagara is in the midst of a major growth spurt. The banking company has raised nearly $500 million in a pair of stock sales over the last year, even after the stock market went bad and many financial services firms fell upon hard times.
That gave it the cash to buy 57 branches in Western Pennsylvania from PNC Bank this spring and the resources to agree to spend another $237 million to buy and shore up Harleysville, which has been battered by land and real estate loans that went bad.
When the Harleysville deal closes, First Niagara will be almost twice the size it was before the Pennsylvania acquisitions. It will have staked out a footprint in a rectangular market that runs from Buffalo to Albany, down to Philadelphia and across to Pittsburgh. The PNC and Harleysville deals also push First Niagara into wealthier markets that have the potential to grow faster than its Buffalo-Niagara home base.
Mullen noted that the First Niagara expansion is the third major project announced for the Buffalo-Niagara region in recent months: 125 new jobs will come with a Yahoo! data center in Niagara County, and insurance giant GEICO Corp. plans to add at least 300 jobs in Amherst over the next three years.
In the case of Yahoo!, the attraction was large amounts of cheap hydropower. For GEICO, the quality of the local work force was a key factor, company officials have said.
"These businesses are not picking us by accident or because they feel sorry for us," Mullen said. "They're not going to make a decision to come here without the scales being tipped in their favor."
With First Niagara already out of room at its Pendleton office and the recent acquisitions adding to its space needs, Koelmel said moving the headquarters to Buffalo was the primary option from the start.
Buffalo is a more recognizable location for people outside Western New York, he noted. Plus, First Niagara officials wanted the bank "to be more engaged, more involved in the Western New York community, and it's hard to do that if you're not in downtown Buffalo."