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KeyCorp on track to close First Niagara deal Aug. 1

KeyCorp remains on track to close its deal for First Niagara Financial Group on Aug. 1, Key officials said Tuesday.

The Cleveland-based bank will set its plans for First Niagara and the Buffalo market in motion once the deal is finalized, said Beth Mooney, Key’s chairman and CEO, in an interview.

“What really happens then is, now that you have one company, you can act as one company and come together and start executing the plans for your employees, for your customers,” she said.

Other steps are yet to come. Branch conversions are set to take place in the fourth quarter, and Northwest Bancshares is preparing to acquire 18 First Niagara branches.

Key also plans to close and consolidate 106 First Niagara and Key branches in different markets. The first of those closings will take place Oct. 7.

Key has said it will protect jobs at its branches, will cut no more than 250 jobs statewide as a result of the deal, and add about 500 jobs in future years.

During a conference call on Tuesday, an analyst asked how Key would be able to stick to its cost-savings target in light of its pledge to eventually add more jobs. Mooney said Key intends to leverage a “well-skilled, low-cost work force in Western New York,” with an eye toward shifting some work here from elsewhere.

Mooney said she is eager for Aug. 1 to arrive, after Key and First Niagara employees have worked hard in the past few months to make the combination a reality.

“Everybody is excited, and then, as much as they think they’re tired from all the planning they do, I think there’s also a pretty quick recognition that now in some ways the real work begins,” she said.

Key has estimated cost savings of about $400 million stemming from the First Niagara acquisition. Key’s chief financial officer, Donald Kimble, said the bank expects about 40 percent of that target, or $160 million, will come from third-party vendor contracts that First Niagara has used for technology services.

Key officials also said they have internal cost savings targets that are higher than the $400 million target, and they remain confident they can achieve them.

Key on Tuesday reported net income attributable to common shareholders of Key of $193 million, down from $230 million a year ago. The bank recorded $45 million in merger-related expenses, which was up from $24 million in the first quarter. Key has said it expects to record a total of $550 million in merger-related costs by next year.


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