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First Niagara, Key shareholders overwhelmingly approve deal

First Niagara Financial Group and KeyCorp shareholders voted overwhelmingly in favor of Key’s purchase of First Niagara, completing a vital step toward completing the deal.

But some individual First Niagara shareholders who showed up at the bank’s special meeting on Wednesday in Larkinville said they were sorry to see a homegrown bank reach the point of a sale.

Jack Bridwell, a Lockport resident, was in the minority who opposed the deal. He didn’t like that First Niagara was being sold to a bank based out of town, and said M&T Bank Corp. and Key will control too much local market share to his liking.

“I think we need more competition,” Bridwell said. “I hate to lose a local corporation. I’ve been with this company since they were Lockport Savings (Bank).”

Leon Zwolinski of Orchard Park voted against the deal, but he called the outcome of the vote “preordained. The small shareholder had really no influence on this.” Institutional shareholders own about 80 percent of the bank’s shares.

Zwolinski said he was also disappointed with what First Niagara shareholders will receive. “I think the share price that is being paid out just didn’t reflect the true value of First Niagara. I think they sold out at too low a price.”

First Niagara shareholders will receive 0.68 shares of Key and $2.30 in cash for each First Niagara common share.

And Zwolinski criticized the millions of dollars in payouts that some top First Niagara executives are set to receive, calling those packages “just horrendously obscene.”

First Niagara reported that 75 percent of all outstanding shares voted in favor of the deal, now valued at $3.5 billion. But any shares that did not participate in voting were counted as “no” votes. Among the shares that actually cast ballots, 96 percent voted in favor of the deal, the bank said.

The results were similar at Key’s meeting in Cleveland. Seventy-two percent of all Key shares were recorded as in favor of the deal; of those shares which actually cast ballots, more than 90 percent backed the deal.

Regulators still need to sign off on the deal in order for it to go through, but shareholder approval was essential. Key and First Niagara hope to complete the deal in the third quarter.

Key has not specified how many jobs it plans to keep or cut in the Buffalo area, but reductions are expected as Key cuts costs and absorbs First Niagara’s headquarters. “I wish them well on jobs, but you absolutely know that there’s going to be consolidation, and I feel for the people that will be displaced,” Zwolinski said.

About 40 people, a combination of shareholders and bank employees, attended First Niagara’s special meeting at its Larkinville headquarters. No ballots were cast at the meeting, since shareholders had voted in advance.

Unlike at a regular First Niagara annual shareholders meeting, there were no company banners, no video presentation highlighting the bank’s community involvement, and no speeches by company leaders about the bank’s outlook. No time was set aside for shareholders to address the meeting. The agenda was brief, overseen by chairman Nathaniel Woodson.

Kristy Berner, First Niagara’s general counsel and corporate secretary, read out the vote results that moved the Key deal a step closer to reality. Four minutes after it began, the meeting was over.

James Czuprynski of West Seneca called the offer presented to First Niagara shareholders “probably the best they could do.” He said he felt First Niagara had taken on more than it could handle through acquisitions, particularly how much it paid for HSBC Bank USA’s upstate branch network.

“I think Key is fine,” he said. “I just hate to see less competition in the marketplace.”

At Key’s special meeting in Cleveland, which was broadcast on the Web, the bank took questions. One person stepped forward, a man who spoke on behalf of a Denver-based shareholder. He pressed Mooney on the drop in the share price for both Key and First Niagara have declined since the deal was announced.

Mooney said Key and First Niagara have performed “relatively in line” with the S&P stock index, “so some piece of the decline in the price, if not the leading indicator of that, is the pressure that financial stocks and financial institutions have experienced in this volatile stock market.”

In a statement, Mooney said the two banks’ “integration efforts are on track, we remain both confident in and committed to achieving the financial and growth targets of the First Niagara acquisition.”

First Niagara CEO Gary Crosby called the First Niagara shareholders’ vote “an important step in bringing our two companies together for the benefit of our customers, employees, shareholders and the communities we serve.”

The deal, now valued at $3.5 billion, would unite the No. 2 and No. 3 banks in Western New York, forming a strong competitor to market leader M&T. It also would create the 13th largest U.S.-based bank, with $135 billion in assets and 1,366 branches in 15 states, from Maine to Alaska.

mail: mglynn@buffnews.com