The Erie County Industrial Development Agency is expected to select First Niagara Financial Group as its new depository bank at its meeting today, replacing rival M&T Bank Corp., which has held the role for eight years.
According to the meeting agenda and accompanying documents obtained by The Buffalo News, Buffalo-based First Niagara beat out M&T, Bank of America Corp., Citizens Financial Group and KeyCorp for the new contract.
The relationship would include both payroll and nonpayroll funds, with a maximum of $20 million to be held in the account at any one time, except in situations where a large deposit is temporarily received or funds are needed for a closing.
The staff recommendation is still subject to approval by the ECIDA board at today's meeting. According to the resolution to be considered, First Niagara would replace M&T as the bank for nonpayroll funds and HSBC Bank USA as the agency's payroll bank. Those relationships had been in place since December 2003.
"First Niagara's deeply committed to serving our communities with experienced local bankers meeting customers' complex needs in every market where we do business, and that's certainly true in our corporate home of Erie County," said the bank's Western New York market leader, R. Buford Sears, a veteran of government banking at both M&T and now First Niagara. "We would be gratified if the ECIDA board selects First Niagara."
ECIDA Chief Operating Officer Al Culliton declined to confirm the decision, citing the board's upcoming vote.
As a government agency, ECIDA must comply with strict rules for handling deposits. For example, Culliton said, when the bank's cash exceeds the limit for federal deposit insurance -- now $250,000 -- the bank must pledge municipal securities that it owns as collateral to protect those funds, in an amount equal to 102 percent of the deposits.
"We need the cash to be liquid. We don't go into long-term investments," Culliton said. "It takes a sophisticated bank to follow those rules."
Under the formal request-for-proposals process the agency conducted, officials sought bids from the 10 largest banks in Erie County.