Banks are in the business of making loans and connecting with customers through their branches.
But community groups say for too long, banks have neglected parts of Buffalo, leaving those residents with too few branches and financial services accessible to them. As a result, many residents turn to high-cost alternatives like pawn shops, and face barriers to building wealth.
Northwest Bank and KeyBank, to pave the way for their deals to buy former First Niagara bank branches, have rolled out separate investment plans that, if successful, will help the city make some headway on those problems. More low-income and minority residents will become homeowners. More small businesses will obtain loans. And new branches will enable more residents to build relationships with a bank.
Both Northwest and Key have committed to millions of dollars worth of loans, investments and donations to the Buffalo area over a five-year period. Both programs, known as community benefits plans, were launched last year. The pledges come as both banks have morphed into bigger players in the Buffalo banking market.
Key bought First Niagara Bank in 2016. And Northwest bought 18 First Niagara branches, to address anti-competitive concerns, the same year. Key now ranks No. 2 in deposit market share in the region, while Northwest is No. 4.
Community groups had raised concerns about whether the banking upheaval would trigger a wave of branch cuts and job reductions that would harm the local economy. Those same groups helped shape the community benefits plans launched last year by Northwest and Key.
There is much for the advocates to measure and track.
Northwest is in the second year of a five-year, $102 million plan for the Buffalo Niagara region, created in conjunction with the Buffalo Niagara Community Reinvestment Coalition.
Key said it invested more than $140 million in Western New York in 2017 in the first year of its own five-year plan. It's a slice of a $16.5 billion plan touching markets in all 15 states where Key operates.
The bank worked with the National Community Reinvestment Coalition and local partners to develop the plan. About $5.8 billion of it, or 35 percent, will be directed to markets where Key and First Niagara combined their operations following the merger.
What do the advocates think of the results so far?
Stephen Halpern, staff attorney with the Western New York Law Center, said Northwest "has done quite a bit in a short time" under the agreement. "We hope that other banks, with deeper roots in our community, will also find creative ways to serve individuals and neighborhoods long neglected by financial institutions."
The coalition has "every expectation of working constructively with the bank" over the life of the agreement, Halpern said. "Northwest appears to serious about following through on the remaining commitments in its agreement and our coalition stands ready to work with the bank to achieve its goals."
Michael Riegel, a member of Key's advisory board, and president of Belmont Housing Resources for WNY, said Key's plan appears to be moving in the right direction. "Each time they're sharing information that's showing good progress," he said.
Northwest is based in Warren, Pa. Its benefits plan reflects the greater expectations the bank faces here, as it went from just eight local branches to adding 18 former First Niagara locations.
After that deal, Northwest chairman and CEO William Wagner walked through Buffalo's neighborhoods to get a better feel for the bank's biggest urban market.
He met people who had not been in a bank branch, or who didn't feel welcome going into one. He heard about poor residents being forced out of their homes because they couldn't afford rent hikes imposed by out-of-town landlords. He learned about the diversity of Buffalo's neighborhoods, transformed by an influx of refugees and immigrants.
Northwest wanted to better connect with those populations, and the community benefits agreement aims to achieve those goals. One highly visible piece: a new branch that Northwest plans to open on Jefferson Avenue later this year, a project valued at $1 million.
During the first year of the community benefits agreement, the bank set the plan's pieces in motion, and hired Trina Burruss as a community development officer.
"The biggest part of the plan was finding Trina, finding the right person not only with the financial services background, but also the community background and the belief in what it was that we're doing," said John Golding, Northwest's executive vice president of business development.
Burruss had managed a bank branch on the Buffalo Niagara Medical Campus for 14 years, as the location's identity switched from HSBC to First Niagara to Key.
Northwest hired Burruss a year ago as a community development officer, which she calls a "dream job." (The bank in its agreement has pledged to hire two such officers.) "Customers have been readying me for it over two decades," she said.
Burruss said her role allows her take her years of experience running a branch and relating to customers, and combine that with Northwest's community goals. She said an African proverb suits her job: "If you want to go fast, go alone, but if you want to go far, go together." Her role puts her in a position to gather feedback from community and share those insights with Northwest's leaders.
Burruss was influential in plans for the new East Side branch. "We're over the moon excited about that," Burruss said. "We can't say enough about that."
Northwest says the new location will fill a geographic hole in its branch network. It will also inject new life into a struggling business corridor, on the site of the former Miracle Christian Fellowship Center. A Tops supermarket is across the street and an M&T Bank branch is just to the north. But there are also vacant lots and boarded-up buildings nearby.
"We have many customers on that side of town," Burruss said. "There's certainly a strong business reason to want to be there. And just from our footprint point of view, we had a gap there."
And Northwest will support another project nearby: a financial literacy center, run in conjunction with Belmont Housing Resources for WNY. The center, set to open in 2019, won't pitch Northwest products and services, Golding said. It will be open to anyone and will focus on helping residents learn basics such as writing a check, the difference between ATM and debit cards, and avoiding fraud.
"When you think about what folks need to be financially stable, it really does start with education," Burruss said.
The financial literacy center will address fundamental issues about familiarity and comfort level with banks. "There's a lot of folks out there who don't see the bank as part of their financial picture," Burruss said.
Community groups that belong to the reinvestment coalition are keeping tabs on Northwest's progress on the agreement. Members of the coalition that led the negotiations of the plan were the Western New York Law Center, People United for Sustainable Housing and VOICE Buffalo.
Golding, who was recently promoted by Northwest from New York region president, said the bank and the coalition were striving to find common ground. "I would say that the coalition is always interested in how do they help their constituents, and that's their job," he said. "I would say we are still in the process of continuing to form a partnership."
Golding said "it's not like our agenda vs. their agenda," but a matter of taking two partners – a for-profit company and nonprofit community groups – and finding a way for them to work together on meeting the goals.
Northwest has pledged to distribute $200,000 in grants over five years in the region. In 2017, Northwest made $30,000 in grants, and so far this year has committed another $23,500 in grants, for a total of $53,500.
In community development lending, the bank has made 11 loans for $4.4 million, equal to 25 percent of its five-year target of $18.3 million. Burruss said the projects supported ranged from charter schools to senior facilities to non-profits.
Northwest officials declined to share specific amounts of dollars spent or lent in some other areas listed in the agreement. But Burruss said the bank exceeded its first-year goals in each category, "sometimes exceedingly so."
For instance, the bank said its lending to small businesses with less than $1 million in gross annual revenue was 1.8 times its undisclosed first-year goal, she said. For the full five years of the agreement, the bank's target is $75.5 million. Northwest has also agreed to make $36.8 million in loans to businesses in low- to moderate-income neighborhoods.
Some elements of the plan are not measured by dollars. Northwest has pledged to strengthen its connections with refugees, including by helping them train for financial services jobs and providing language services where needed in neighborhoods.
The bank will work with the Buffalo Cooperative Federal Credit Union to help low-income residents make their residences energy efficient and weatherized.
With the agreement now in its second year, Halpern, of the Western New York Law Center, said the coalition hopes to collaborate with the bank to increase the number of mortgages to first-time homebuyers, review the underwriting criteria to achieve that goal, and devise a credit restoration program for people unable to qualify for a mortgage under existing standards.
"Understandably, there will be areas in which our coalition and the bank may not always see eye-to-eye," Halpern said. "But the great and reassuring thing about our coalition's relationship with Northwest is our mutual commitment to talk and work things through."
Like Northwest, Cleveland-based Key has adopted a higher profile in the Buffalo market, moving up to No. 2 from No. 3 in deposit market share.
Key's community benefits plan has become a gauge of the bank's impact. In 2016, Bruce Murphy, then Key's head of corporate responsibility, came to Buffalo and vowed the bank would live up to its pledges. "We’ve made some significant commitments which, by the way, we’re not afraid of," he said.
Murphy recently retired, but his successor, Don Graves, said Key's commitment was unchanged. Graves said the advisory councils give Key "strategic advice and counsel with what is happening in markets to be successful.
"This is a two-way street," he said. "We're not there just to give them a reporting of what we are doing or what we aren't doing."
When the agreement was announced in 2016, John Taylor, president and CEO of the National Community Reinvestment Coalition, said Key's plan was in contrast to some other banks' commitments that "did not engage community leaders or have a system for evaluating the success of that commitment.
"This success would have been impossible without the leadership of the highest ranks of the bank making a genuine commitment to increase banking access to traditionally underserved people," Taylor said.
Key officials meet with a national advisory council and regional advisory councils to review the plan's progress. Buford Sears, Key's Buffalo market region president, said when Key recently met with the Buffalo regional council for the third time, he was struck by the difference in tone.
"The vibe and the feel in the room has moved from sort of neutral and sort of wait and see, to very positive," Sears said.
Riegel, the advisory board member, said if Key's plan works, it could have a lasting impact in an area such as increasing home ownership. "Housing costs are escalating, and it's getting harder and harder for first-time homebuyers," he said.
Key reported closing 649 mortgage loans in low- to moderate-income communities or for low- to moderate-income borrowers last year in Buffalo. The loans totaled $63.4 million.
If Key hits its five-year target, Riegel said, more people will be able to afford to buy homes than otherwise would have.
Other highlights Key cited from the first year of its plan:
- The bank has invested more than $54 million in Buffalo-area community development projects, including the Northland Workforce Training Center on the East Side, and said it has several community development opportunities in the pipeline totaling more than $49 million.
- Key originated 238 small business loans in low- to moderate-income neighborhoods, totaling $17.7 million.
- The KeyBank Foundation made about $5 million in grants last year in Western New York. The bank also made a $24 million commitment to JumpStart, to promote economic growth in upstate New York and Ohio. Plus, the First Niagara Foundation, in partnership with the KeyBank Foundation, paid out $3.1 million in grants to Buffalo-area groups.
- Key plans to open an additional East Side branch, but the bank has not yet announced a location.
Graves said the five-year plan's goal is to "build thriving, successful, vital economies," as well as stable neighborhoods where people have good-paying jobs and access to financial services."
"If the communities are successful, if communities are thriving," he said, "KeyBank will be successful and thriving."