If you work at First Niagara Bank, nothing else mattered Friday.
Yes, there was talk about the World Series, Donald Trump and the Bills’ bye week. But none of it rivaled the uncertainty created by KeyCorp’s $4.1 billion offer to buy the Buffalo-based institution.
“I actually woke up to text messages from my co-workers,” one First Niagara employee said.
The deal, if it goes through, would be big enough to make Key the 13th largest bank in the country and the No. 2 bank in Western New York.
It could also put hundreds, maybe thousands, of people out of work.
Nervous. Tense. Anxious. Those are just some of the words employees used to characterize the workplace at First Niagara’s offices and branches across the region Friday.
As news of the acquisition spread, it became clear that last week’s rumor is today’s reality.
“We’ve actually been hearing about this for weeks now,” said the First Niagara employee who spoke on the condition he not be identified. “You could see how tough it was for people to focus on their work.”
The bank, in a letter to employees, acknowledged the announcement may have surprised some and worried even more.
Gary M. Crosby, the bank’s president and chief executive officer, said employees need to keep in mind that the deal makes sense for both banks. And first and foremost, he added, it provides First Niagara with the resources it needs to get better after years of getting bigger.
“I’m sure this news is a shock to many of you, leaving you with many emotions and even more questions," Crosby told them. “I understand and I promise we will be there to help you through this.”
No one knows for certain how many layoffs may take place, but it’s no secret branch closings are on the agenda.
Three out of every 10 First Niagara branches are within two miles of a KeyBank branch. Branch consolidation also occurred when First Niagara bought HSBC Bank’s upstate network of branches.
The current round of closings, which Key wants to finish by the end of 2016, is an essential element in its plan for cutting $400 million a year in expenses as part of the acquisition.
“The easiest thing is to eliminate people," according to Orrin D. Tobbe, a veteran Buffalo banker who now owns a local consulting firm, Bank Advisory Services.
Tobbe, a former senior officer at Goldome, knows a thing or two about bank consolidations. He says the acquisition of First Niagara makes a lot of sense for Key but is sure to generate questions about its impact on local employees.
Unlike the breakup of Goldome, which led to hundreds of workers moving to M&T Bank and Key at the time, Tobbe think it’s less clear what will happen to First Niagara’s employees.
“This is different because they both have a significant number of branches and a significant number of people here," he said.
Like Crosby, Tobbe pointed to the interest rate environment as a compounding problem for Key as it reorganizes its local operations and looks for growth opportunities and savings.
In the end, he thinks certain First Niagara employees will land safely.
“My history tells me that the good people, the good operational people, will find jobs,” he said.
In his letter to employees, Crosby was quick to praise employees for building the bank’s business through increased loans and deposits and, in the end, making it an attractive acquisition target.
“I want to be very clear here," he said in the letter. “We succeeded at everything that was within our control. Everything. You did all that I asked of you and more.”
The one thing First Niagara couldn’t control was the interest rate environment, and Crosby made it clear that, without significantly higher rates, the short-term prospects for profitability were subpar.
He also thinks Key is the right partner for First Niagara.
“Through thick and thin, you have been the most committed, passionate, creative and tenacious team I have ever had the pleasure of working with," Crosby said in his letter. “And I’ve worked with plenty.”
For employees like the man who woke up to text messages Friday, the exodus from First Niagara began weeks ago when the rumors of a sale first surfaced.
“People are getting out like crazy,” he said. “Frankly, I may do the same.”