Rochester Business Journal

Converting 11 former Monroe County branches of HSBC Bank USA N.A. to KeyBank N.A. next month will more than double KeyBank's branch and employee count in the Rochester market.
 
KeyBank has 113 employees in the market, most of whom are at its nine branches in Monroe County. It also has two branches each in Livingston and Wayne counties, and one each in Ontario and Genesee counties.
 
KeyBank expects to add 119 former HSBC employees from Monroe County when the conversion begins July 13. The HSBC branches are to open as KeyBank July 16.
 
KeyBank also plans to convert an HSBC branch on Main Street in Medina, its first Orleans County location.
 
"When we looked at our existing branch network, we tried to pick things that complemented where we were and help fill out mainly the Monroe County piece," said Beth Mooney, chairman and CEO of Cleveland-based KeyCorp, during a trip to Rochester last week.
 
"These 11 branches for us, we felt, were prime locations and very additive to the franchise we had here."
 
KeyBank announced in January that it would buy the branches, along with 25 former HSBC branches in the Buffalo market.
 
It is one of several ripples resulting from First Niagara Bank N.A.'s acquisition of 195 HSBC Bank branches in Upstate New York and Connecticut.
 
Five Star Bank converted three First Niagara branches in the Rochester market and a fourth in Seneca County last weekend. Community Bank N.A. plans to convert 16 former HSBC branches-including Wayne County branches in Palmyra and Newark, and a Livingston County branch in Geneseo-at the close of business July 20.
 
KeyBank has nine branches in Monroe County, with a branch in part of a former Rite Aid Corp. pharmacy at Brighton's Twelve Corners scheduled to open early next year.
 
"Rochester has been a highly desirable market for us for many years," Mooney said, going back to the 1994 merger of Albany-based KeyCorp with Society Corp. of Cleveland, parent of Society Bank.
 
"There's an I-90 corridor from Cleveland going through Upstate New York that takes you through Buffalo, Rochester, Syracuse and up into Albany. It is an incredibly strong and good market for us. It performed well in the economic downturn. We like the demographics."
 
KeyBank ranked eighth in the Rochester market with local deposits of $602.9 million and a market share of 3.8 percent as of June 30, 2011, data from the Federal Deposit Insurance Corp. shows.
 
KeyBank is the dominant bank in the Albany market, with $7 billion in deposits and a market share of 33 percent. It ranks second in the Syracuse market behind M&T Bank Corp. at $1.7 billion and 16 percent. It is a distant third in Buffalo at $2.5 billion and 9.5 percent, behind M&T and First Niagara Bank.
 
"In this area of the world, there are good, solid businesses, good employers and a lot of historical wealth," Mooney said. "If you look at the string of those cities, Rochester was where we had the smallest market share.
 
"We've always said that this would be a market we would love to find a way to invest in and grow."
 
Mooney and James Carriero, the bank's district president in Rochester, declined to speculate on long-term plans for the market.
 
"I think Jim and his team would say let us adjust to what we're getting," Mooney said of the 11 branches.
 
Mooney, based in Cleveland, was in Buffalo last week Thursday and Rochester last Friday to meet with KeyBank employees, present and future.
 
"I wanted to be in the market," she said, "in front of our employees, to bring everybody together and thank people in advance, to welcome our new team members. And I also took time in both markets to talk about who Key is and what our purpose is."
 
Mooney also tried to prepare HSBC employees for their transition.
 
"They've got a lot to learn, and we've got a lot to learn from them," she said. "One of the things I said is, this is more significant than its size because this is what banks like KeyBank need to be doing as other banks, for whatever reason, are seeking a partner.
 
"We've all talked about how our industry is going to consolidate. We want to show that we can convert, embrace and train new employees, retain clients and give them competitive offerings, better service and a better experience."
 
The Rochester meeting was a great one, Mooney said.
 
"Spontaneously, at the end here in Rochester, the crowd just shot to their feet and were applauding me, because it's exciting and they're excited to be part of it," she said.
 
KeyBank has opened six new branches in the Buffalo market since 2009. The Brighton branch is its second in the Rochester market in the last two years.
 
"We were actually going to go through this sooner in Brighton, but once the merger was announced we felt we needed to absorb that first," Carriero said.
 
A portion of the former drugstore will be occupied by a second tenant, he said.
 
KeyBank also has refurbished several of its Rochester-area branches.
 
"We have been, all through the downturn, continuing to invest in our franchise," Mooney said. "Key never stopped looking at our markets and how we can enhance them. We've done a lot of investments online.
 
"We always look at where we can get a return, where additional capacity would give us an opportunity for further growth. I think this is more than a good start, for Rochester and Western New York."
 
KeyBank employees are ready to incorporate the HSBC branches and workers, Carriero said.
 
"The backroom people are getting ready for the conversion," he said. "Those of us on the front line are doing a lot of work training employees."
 
The work includes daily conference calls about potential conversion issues and aligning former HSBC employees with positions and titles comparable to the KeyBank workforce, Carriero said.
 
"There are a lot of other pieces to planning that are not just the backroom accounting," he said. "The backroom accounting is very important in doing a good conversion, but training the employees from HSBC before we get there is also very important.
 
"We're getting to the point now where those of us in the local market are going to take over. We're going to be handed the ball. The back room will be ready. Now it's up to us. How are we going to deal with the day-to-day operations of the branch?"
 
KeyBank executives companywide will come to branches in Rochester and Buffalo to help with the conversion, Carriero said. After that, as many as four KeyBank employees will go to each of the acquired HSBC branches to train new colleagues.
 
"It's a new system," Carriero said. "Even though they're trained, they're going to be new at these systems, so we're going to be alongside those people in HSBC to show them how to work the system and get the solutions to the problem."
 
The acquisitions likely will push KeyBank up three spots on the 2012 FDIC list of market-share leaders in Rochester, with $1.36 billion in local deposits, calculations show. The new list is released in the fall.
 
KeyBank is expected to rank behind Canandaigua National Bank & Trust Co.'s $1.5 billion and ahead of Bank of America N.A.'s $722.5 million.
 
KeyBank will be fifth, compared to eighth with local deposits of $602.9 million as of June 30,, 2011, before HSBC left the local retail market.
 
"It also puts us in places in the Rochester market where we didn't have coverage," Carriero said. "It fills in our franchise. It fills in where we have existing banks so we can have more capacity."

6/29/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.