Elmira Savings Bank Q3 net income rises 6 percent

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ELMIRA — Elmira Savings Bank (ticker: ESBK) reported net income of $1.4 million, or 44 cents per share, in the third quarter, up from $1.3

Tessy preps for more expansion at Elbridge HQ

Construction, Design & Real Estate, Manufacturing & Engineering, Subscriber Only, Technology

ELBRIDGE — Tessy Plastics Corp. didn’t take very long to outgrow a new building at its headquarters complex. The plastic component and packaging manufacturer is almost ready to break ground on an expansion of its 90,000-square-foot “south” building at 488 Route 5 in Elbridge. That building, which is one of three on Tessy’s campus at

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ELBRIDGE — Tessy Plastics Corp. didn’t take very long to outgrow a new building at its headquarters complex.

The plastic component and packaging manufacturer is almost ready to break ground on an expansion of its 90,000-square-foot “south” building at 488 Route 5 in Elbridge. That building, which is one of three on Tessy’s campus at that address, was completed in 2010.

Crews are slated to break ground on the addition in November. The expansion will add nearly 100,000 square feet of warehouse space that is necessary after Tessy took on new work, according to its president and CEO, Roland Beck.

“In order to do those new projects, we’ve encroached on our existing warehouse space,” he says. “We need to make up for that.”

Beck does not want to name the specific customers Tessy is working with on the new projects. But he notes that half of the new work involves manufacturing medical products and the other half is making consumer products.

Tessy currently employs around 820 workers in Central New York, about 100 of which are temporary. But it expects to make 40 of those temporary employees full time in the next few weeks.

And it will continue to add employees as its sales grow, Beck says. The south building’s new warehouse will likely require 30 new employees once it is open, he says. Construction could be completed as early as June.

“I don’t have exact numbers,” Beck says. “We grow about 10 percent a year, so we add on fairly steadily.”

Beck projects 10 percent revenue growth again in 2012. Tessy’s Central New York operations generated about $180 million in revenue in 2011, while the company tallied about $220 million between its New York locations and sites in Lynchburg, Va. and Shanghai, China.

Tessy’s other Central New York facilities include a 206,000-square-foot “west” plant and an “east” plant of approximately the same size at 488 Route 5 in Elbridge. The company also operates a 270,000-square-foot warehouse and assembly facility in the town of Van Buren. That facility, the former Syroco, Inc. building on Route 48, had been strictly warehouse space until this year.

Building the new warehouse on the south building in Elbridge will cost between $5.4 million and $8 million, according to Carl Hulett, Tessy’s director of maintenance. The company will finance the expansion with funding from M&T Bank. Syracuse–based VIP Architectural Associates, PLLC and VIP Structures, Inc. are set to design and build the addition.

It will include some energy-efficient features, like low-energy lighting and motion sensors that switch lights on and off. That’s keeping with an emphasis on energy efficiency in the south building.

The facility has energy-efficient injection-molding machines, high-efficiency chillers for air conditioning and process chilling, and water-economizing heat exchangers that allow Tessy to shut down its chillers during colder months. It also has water-cooled air compressors that reject heat to the building’s heating system to offset heating requirements.

Constructing the building and its energy-efficient features cost about $15 million, Hulett says. Sources of funding included Tessy’s cash, M&T Bank financing, and a $978,000 incentive from the New York State Energy Research and Development Authority’s (NYSERDA) Industrial Process and Efficiency Program.

“We estimate they’re saving approximately 50 percent over and above what they would have if they built that conventionally,” says Samuel Cosamano, president of IPD: Engineering of Syracuse, which helped to design the facility.

NYSERDA estimates show the building saves about $800,000 in energy costs annually, according to Stacey Sabo, a senior project manager at the authority. It saves over 8 million kilowatt-hours a year, she adds.

“The incentive is performance based,” she says. “So it’s based on actual savings.”

Tessy hasn’t signaled whether it plans to work with NYSERDA on the south building’s warehouse expansion. But NYSERDA is hoping to drum up corporate interest in its programs at the NEXT technology and innovation conference on Nov. 8 at the Holiday Inn Syracuse-Liverpool.

“NYSERDA was looking for a venue for us to present program information and to engage industrial manufacturing customers in Central New York,” Sabo says. “NYSERDA does have the capability of working with large industrial companies on very complex process projects.”

Contact Seltzer at rseltzer@cnybj.com

Credit unions move toward video teller machines

Banks & Credit Unions, Subscriber Only, Technology

Technology is pushing banks and credit unions into new territory, including the use of video teller machines. In a legal opinion, the National Credit Union Administration (NCUA) in August ruled that credit unions aren’t prohibited from using the machines, says Mark Harrington, an attorney with Syracuse–based law firm Mackenzie Hughes, LLP. Like any new technology

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Technology is pushing banks and credit unions into new territory, including the use of video teller machines.

In a legal opinion, the National Credit Union Administration (NCUA) in August ruled that credit unions aren’t prohibited from using the machines, says Mark Harrington, an attorney with Syracuse–based law firm Mackenzie Hughes, LLP. Like any new technology though, credit unions need to consider all the costs involved before jumping in, he says.

Video teller machines are somewhat similar to ATMs, Harrington explains. The machines themselves look like their older counterparts, but have video-conferencing capabilities so customers can talk with and see tellers as they conduct their business.

“You would be speaking with an actual teller of your institution and be able to transact business in the same way as if you did go into a branch and spoke with the same person,” Harrington explains.

And while ATMs are limited to transactions like deposits, withdrawals, and balance checks, video teller machines could handle business that’s a little more complex because of the presence of an actual human on the other end.

“Certainly there’s an element of convenience,” Harrington says of the potential appeal of the machines. “It’s a relatively new technology.”

The machines also offer a cost-effective way for credit unions to add another service facility where they might not be able to otherwise because of cost or space limitations, Harrington adds. It could be a way for institutions to explore new markets as well.

If a credit union placed a video teller machine in a new community and it proved to be popular, the institution might then follow up with a branch.

“That would be a part of the business plan in determining whether it’s a suitable area and if there’s enough traffic there,” Harrington says.

Finding a good location for one of the machines wouldn’t be any more difficult than setting up an ATM, a task most credit unions have completed numerous times, he adds. The machines do cost more and there are more back-office concerns.

A credit union would have to set up specific times that a teller would staff the machine, Harrington notes. An institution might choose to have a teller in an office dealing with in-person customers while staffing the machine at the same time, for example.

“Offering services that way may take some different coordination,” Harrington says.

He notes that most credit unions are highly sensitive about the level of service they provide to members. They would have to be sure they were not ignoring members who come to branches in person in favor of video customers, he says.

In its August decision, NCUA said it would allow video tellers to count as service facilities and satisfy the requirements of credit unions that would like to expand their membership territory or serve underserved areas, according to an article in the Sept. 26 issue of Credit Union Times magazine.

Contact Tampone at ktampone@cnybj.com

Bonadio Group enters the Mohawk Valley market

Insurance & Financial Services, Law, Accounting & Taxes, Regional News, Small Business, Subscriber Only

NEW HARTFORD — The Bonadio Group is adding to its Central New York presence once again, this time with the acquisition of an accounting firm in the Utica–Rome region. Bonadio, an accounting firm based in Rochester, acquired Richard Zweifel’s Utica–area accounting practice effective Nov. 1. The move increases Bonadio’s headcount in Central New York to

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NEW HARTFORD — The Bonadio Group is adding to its Central New York presence once again, this time with the acquisition of an accounting firm in the Utica–Rome region.

Bonadio, an accounting firm based in Rochester, acquired Richard Zweifel’s Utica–area accounting practice effective Nov. 1. The move increases Bonadio’s headcount in Central New York to more than 60 people, including offices in Syracuse, Geneva, and now the Mohawk Valley region. The firm has additional offices in Buffalo, Albany, and New York City.

Bonadio approached Zweifel about an acquisition. The firm was not out looking for a deal, says Zweifel, who joins Bonadio as managing partner for the Utica–area office, located at 7936 Seneca Turnpike in the town of New Hartford.

Zweifel says he and Bonadio worked together on joint projects in the past.

“Our clients here certainly mesh well with Bonadio,” he says. “We knew they were a quality firm. When they approached us, we knew it was something we needed to consider.”

The Bonadio Group provides a broader range of services, Zweifel notes. Their offerings include new areas of expertise for Zweifel’s clients like payroll, risk management, and financial planning, he says.

For Bonadio, the acquisition brings strong practices in health care and nonprofits, two areas that make up a sizeable chunk of the firm’s work, Bonadio Group Managing Partner and CEO Tom Bonadio says.

“We see it as another step forward for us in Central New York,” he says. “In Central New York, you have to have people who live in the community and know the community.”

Zweifel’s firm provides accounting, auditing, tax, and advisory services. In addition to health-care organizations and nonprofit groups, clients include small and medium-sized businesses, estates and trusts, and local governments.

Before the acquisition, Zweifel says he withdrew from his old firm, Gruver, Zweifel & Scott, which included the New Hartford office involved in the Bonadio deal and another location in Oneonta. The Oneonta office is not included in the acquisition and will continue independently.

Zweifel joined the Bonadio Group as an independent partner and brought the Utica–area work force with him, Bonadio explains. The deal adds nine new employees and about $1 million in annual revenue to the Bonadio Group.

The New Hartford office could already be in need of expansion, Bonadio says. The Bonadio Group currently has employees living in the Utica–Rome region who commute to either Albany or Syracuse.

They may now work locally, Bonadio says. The firm will probably also begin more hiring in the market.

Consolidation among accounting firms locally and nationally is likely to continue, Bonadio adds. Many smaller firms have aging partners without good exit plans, he notes.

“And it’s hard to compete,” he says. “They can’t find good people. They can’t work on larger companies because they don’t have enough depth. They’re looking to merge up.”

The Bonadio Group has more than 350 employees statewide and annual revenue of more than $50 million. The firm first entered the Syracuse market in 2007 with the acquisition of Loguidice & Kamide, CPAs PLLC.

It acquired the Syracuse operations of Philadelphia–based ParenteBeard in 2011, which added 21 employees and four new partners.

Contact Tampone at

ktampone@cnybj.com

Ex-Im Bank official returns to Syracuse

Banks & Credit Unions, Small Business, Subscriber Only

SYRACUSE — Central New York could be importing a new source of financing for small and medium companies after a federal official’s recent visit. Wanda Felton, the vice chair and first vice president of the Export-Import Bank of the United States, spent the day in Syracuse Oct. 26 to meet with area businesses. Felton, who

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SYRACUSE — Central New York could be importing a new source of financing for small and medium companies after a federal official’s recent visit.

Wanda Felton, the vice chair and first vice president of the Export-Import Bank of the United States, spent the day in Syracuse Oct. 26 to meet with area businesses. Felton, who gave the keynote speech in April at CenterState CEO’s annual meeting, returned to the area to build relationships with companies that want to export or boost their exporting.

“We had the opportunity to go around and visit some people,” Felton says. “It’s to talk with companies about what they need and to give them more insight into how Ex-Im Bank can help them with their financing needs.”

The Export-Import Bank of the United States, also known as Ex-Im Bank, is the country’s official export credit agency. It’s tasked with helping to finance the exports of U.S. goods and services to international markets. The bank provides working-capital guarantees, export credit insurance, loan guarantees, and direct loans.

It backed more than $119.2 million in disbursements to seven businesses in New York’s 25th Congressional District, which includes Syracuse and Onondaga County, between 2007 and 2012. Those disbursements supported more than $138.7 million in export sales, according to the bank’s website.

“I think there’s a lot of opportunity here,” Felton says. “You’ve got a very engaged business community, and it’s seen in a CenterState CEO membership that looks to be working very hard to promote exports. That’s very important.”

Felton’s Syracuse stop comes as Ex-Im Bank pushes to increase its visibility among small and mid-sized businesses. The institution has drawn the nickname “Boeing’s bank” because of high-profile financing it has provided for large corporations like the aerospace company, but the bank is working hard to reach smaller firms, Felton says.

Ex-Im Bank tallied $6 billion in small-business volume in the 2011 fiscal year. It is attempting to double its annual small-business volume to $9 billion between the 2010 and 2014 fiscal years. It’s also trying to add 5,000 small businesses to its portfolio in that time frame — the bank had added 1,839 toward that goal as of the beginning of August.

Felton met personally with representatives from three companies during her stop in Syracuse. She also sat down to lunch with the heads of about eight firms. And Ex-Im Bank’s Northeast and Mid-Atlantic regions director, Thomas Cummings, met with two companies on Oct. 25, the day before her arrival.

The bank doesn’t generally close financing deals after a first meeting, according to Cummings.

“It’s really great if you can close something on your first visit, but in most cases it may take a repeat,” he says. “It can be a very long process. Sometimes, it can run from as little as 30 days up to a couple years before the close.”

Ex-Im officials discussed mostly credit insurance in their Friday visits, Cummings continues. He met with companies that were more interested in working capital the day before, he adds.

Central New York seems to be rich in the conditions needed for boosting exports, Cummings continues.

“What I found is that in the Syracuse as well as the Rochester area, so many companies and so many people are already familiar with exporting, far greater than you’ll find in most cases in the United States,” he says. “I think it came from a few large, major corporations that really brought exporting into view. I think there’s a much higher knowledge of trade in the Syracuse, Rochester area than there is on average across the country.”

The Ex-Im officials urged any business owner interested in working with the bank to contact Cummings or John Tracy of the U.S. Commercial Service’s Syracuse associate office by telephone. Cummings can be reached at (212) 809-2652. Tracy is available at (315) 453-4070.

The officials’ visit dovetails with Central New York’s participation in an effort to boost exporting, the Brookings Metropolitan Export Initiative, according to Kevin Schwab, CenterState CEO vice president for marketing and communications. And a question-and-answer session business leaders held with Felton when she visited Syracuse in the spring probably helped draw her back to the area, he adds.

“That’s really, I think, a testament to what our companies said,” Schwab says. “You don’t usually get that.”

Contact Seltzer at rseltzer@cnybj.com

NY small-business owners feel rising stress, survey finds

Small Business, Subscriber Only

Nearly two-thirds of New York’s small-business owners felt increasing levels of stress fueled by running their companies, according to a recently released survey. The survey, from TD Bank, found that 62 percent of small-business owners in New York said their recent stress levels associated with running their businesses were steadily increasing or somewhat increasing. Another

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Nearly two-thirds of New York’s small-business owners felt increasing levels of stress fueled by running their companies, according to a recently released survey.

The survey, from TD Bank, found that 62 percent of small-business owners in New York said their recent stress levels associated with running their businesses were steadily increasing or somewhat increasing. Another 25 percent indicated their stress levels weren’t changing, while just 13 percent reported decreasing levels of stress.

Rising stress was slightly more common in New York than in three other regions in the TD Bank survey — South Florida, Philadelphia, and Boston. A nearly equal portion of South Florida small-business owners said their stress levels were going up, 61 percent. Philadelphia wasn’t far behind, with 59 percent of small-business leaders there describing increasing stress. Slightly more than half of owners in Boston, 52 percent, felt more stressed recently.

A range of factors are driving up stress levels, TD Bank Market President for Upstate New York and Vermont Phil Daniels said in an email.

“Small-business owners have many responsibilities, which can lead to stress,” he said. “While managing their money was the top stressor according to our survey, small-business owners also cited managing employees, customer/client relations, and working hours.”

In New York, 30.9 percent of business owners cited managing finances as their top stressor. Sales and marketing tied with customer/client relations as the next-most-frequent responses, each notching 20.6 percent.

Another 19.6 percent of small-business owners named managing employees as their top source of stress. And 8.2 percent of respondents chalked stress levels up to working long hours.

Small-business owners didn’t run away from managing their finances, however. Just 8.2 percent of owners in New York claimed they spent too little time managing finances. That left 44.9 percent who said they spent the right amount of time on finances and 46.9 percent who believed they spent too much time doing so.

“Money management is one of the most important aspects of running a business, so it would be hard to find a business owner that isn’t spending the time needed to manage their finances,” Daniels said.

The TD Bank survey also covered sources of stress that are caused by owners’ business banks. Customer-service issues were the top stressors cited.

Lack of available customer support was named as the primary problem by 28.8 percent of New York owners, while limited banking locations was the main issue for 23.1 percent. An additional 17.3 percent pointed to credit delays for deposited checks, while 13.5 percent said their bank wasn’t open at convenient times. Finally, 11.5 percent lamented limited access to deposits, and 5.8 percent balked at limited checking-account options.

On the other hand, small-business owners credited customer service as a reason they appreciated their business banks. More than half of New York respondents, 54.2 percent, said they appreciated exceptional customer service. Other causes of warm feelings included banks being open during convenient hours, named by 24 percent of respondents, banks with large branch networks, cited by 11.5 percent, and banks offering a variety of services, named by 10.4 percent.

In addition to sources of concern covered in the survey, Daniels said uncertainty in Europe and the federal government’s potential “fiscal cliff” at the beginning of 2013 are causing stress among small-business owners. But he noted a positive trend in the New York market.

“With economic conditions slowly improving, we’re starting to see increased demand for small-business loans,” he said. “Whether it’s for business expansion or purchasing assets such as equipment, small-business owners are beginning to think more about growth headed into 2013.”

Princeton, N.J.–based ORC International conducted the survey for TD Bank in August. It measured responses from more than 400 respondents in New York, Philadelphia, Boston, and South Florida. TD Bank, which is headquartered in Cherry Hill, N.J. and Portland, Maine, released the survey results Oct. 11.

TD Bank is a subsidiary of The Toronto-Dominion Bank (NYSE: TD). It has nearly 8 million customers and 1,300 locations in the Northeast, Mid-Atlantic, Carolinas, and Florida. It had over $159 billion in deposits, including more than $22 billion in New York State, as of June 30, according to the Federal Deposit Insurance Corp. Its New York presence is primarily in the New York City and Albany areas.

Contact Seltzer at rseltzer@cnybj.com

Community Bank profit falls on acquisition costs

Banks & Credit Unions, Subscriber Only

DeWITT — Third-quarter profit slipped 8 percent at DeWitt–based Community Bank System, Inc. (NYSE: CBU) to $18.4 million, or 46 cents a share. Acquisition costs totaling $4.8 million for the period, compared with $400,000 a year earlier, helped push earnings lower. Community Bank System has $7.6 billion in assets and more than 180 branches. The

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DeWITT — Third-quarter profit slipped 8 percent at DeWitt–based Community Bank System, Inc. (NYSE: CBU) to $18.4 million, or 46 cents a share.

Acquisition costs totaling $4.8 million for the period, compared with $400,000 a year earlier, helped push earnings lower.

Community Bank System has $7.6 billion in assets and more than 180 branches. The banking company also operates subsidiaries in employee benefits, insurance, investment management and advising, and wealth management.

The bank acquired 19 new branches during the third quarter.

It added three First Niagara Bank branches in Canandaigua and Geneva and 16 HSBC locations in Adams, Alexandria Bay, Avon, Fulton, Geneseo, Gowanda, Lowville, Newark, Oswego, Palmyra, Plattsburgh, Springville, Watertown, Watkins Glen, and Westfield.

Community Bank later consolidated five of the acquired branches into existing branches of its own, President and CEO Mark Tryniski said during a conference call Oct. 24, discussing the bank’s latest earnings report.

The HSBC locations were part of First Niagara’s acquisition of 195 HSBC locations in upstate New York, Westchester County, and Connecticut.

Buffalo–based First Niagara made deals with Community Bank, KeyBank, and Five Star Bank to sell off some of the HSBC branches involved as well as some of its own offices. The bank made the divestitures to comply with federal anti-trust rules.

First Niagara leaders also said some of the branches were in markets, including the North Country, where they were not interested in competing.

Tryniski said Community Bank will continue to look for solid acquisition opportunities within and near its existing footprint. That could include new markets like New Jersey or Ohio, he said.

He also said the company could continue to add to its employee benefits business, which now brings in $35 million a year in revenue. Community Bank has made several acquisitions in that space in recent years.

The HSBC-First Niagara deal could continue to benefit Community Bank as customers moved around in the shakeup examine their long-term banking relationships, Community Bank CFO Scott Kingsley said during the conference call.

“Any kind of displacement creates opportunities for other institutions,” he said.

He also noted that the commercial-banking landscape remains competitive.

Net interest income at Community Bank rose 7.7 percent to $58.8 million in the latest quarter, compared to the third quarter of 2011. The increase resulted from a rise in average interest-earning assets thanks to loan growth and additional investment securities, according to the bank.

Noninterest income totaled more than $25.8 million, up from $23.2 million. Higher benefits administration and consulting fees, service fees, and wealth-management revenues helped drive the increase, according to Community Bank.

Total loans rose to $3.8 billion as of Sept. 30, up from more than $3.5 billion at the end of the second quarter and more than $3.4 billion at the end of the third quarter in 2011. Deposits increased to $5.7 billion in this year’s third quarter, up from $4.9 billion at the end of the second quarter and $4.8 billion in the year-earlier period.

Net charge-offs for the latest quarter totaled $1.7 million, down from $2.1 million in the second quarter and up from $1.1 million in the third quarter last year. The provision for loan losses was $2.6 million, up $500,000 from the second quarter and up from

$1.6 million in the third quarter of 2011.

The increase resulted from organic loan growth as well as $500,000 from certain loans acquired in the branch deal, according to the bank. Nonperforming loans totaled $30.7 million at the end of the period, down from $32 million at the end of the second quarter and up from $18.8 million a year earlier.

Contact Tampone at

ktampone@cnybj.com

First Niagara job cuts mostly spare Central New York

Banks & Credit Unions, Subscriber Only

Job cuts announced in October at First Niagara Financial Group, Inc. (NASDAQ: FNFG) eliminated just a few positions in Central New York. The Buffalo–based banking company cut 180 positions across its four-state footprint, but just five of the jobs were located in Central New York, according to an email from David Lanzillo, a First Niagara

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Job cuts announced in October at First Niagara Financial Group, Inc. (NASDAQ: FNFG) eliminated just a few positions in Central New York.

The Buffalo–based banking company cut 180 positions across its four-state footprint, but just five of the jobs were located in Central New York, according to an email from David Lanzillo, a First Niagara spokesman. First Niagara Bank has 430 branches, $36 billion in assets, and 6,000 employees in upstate New York, Pennsylvania, Connecticut, and Massachusetts.

The positions eliminated didn’t directly support running the business First Niagara has today or its plans in the next few years, Lanzillo said in the email. About 30 of the jobs were in facilities and building maintenance, which First Niagara outsourced to another company.

First Niagara is currently recruiting to fill more than 250 open positions across the company. The net loss of jobs from the recent cuts is expected to be about 100 positions after planned new hiring takes place, Lanzillo said.

“The work-force realignments we made earlier this month were designed to ensure that we have the right people in the right positions to best support our growth strategy,” he said.

First Niagara Bank is number four in the Syracuse metro area deposit market with 21 branches, more than $808 million in deposits, and a deposit market share of more than 7.5 percent, according to the latest statistics from the Federal Deposit Insurance Corp. First Niagara is also number four in the Utica–Rome market with nine branches, $405.9 million in deposits, and a market share of about 11 percent.

The bank is number two in the Binghamton market with 10 branches, $342.5 million in deposits, and a market share of 12.8 percent.

First Niagara President and CEO John Koelmel said the company must be more efficient in all it does going forward.

“It’s not about slashing expenses or taking costs out,” he said during a conference call Oct. 19, discussing the bank’s latest financial results. “It’s about doing things more efficiently across the organization.”

As for the third quarter, First Niagara earned $50.8 million in the third quarter, down from $57 million a year earlier.

Earnings per share in the period totaled 14 cents, down from 19 cents a share in the third quarter of 2011. The third quarter’s results were improved from a loss of $18.5 million, or 5 cents a share, in the second quarter.

The net income total also includes a preferred stock dividend of $7.5 million. Excluding that item, the Buffalo–based banking company earned $58.4 million.

Operating income for the third quarter, which excludes items such as gains on securities and merger costs, was $74 million, up from $73.6 million a year earlier and $66.6 million in the second quarter this year.

Total loans and leases increased to $19.1 billion as of Sept. 30, up from $16.4 billion a year earlier. Deposits at the end of the third quarter totaled $27.7 billion, up from $19.6 billion at the end of the third quarter in 2011.

Net interest income for the period was $269.6 million, up from $235.4 million a year earlier. Noninterest income totaled $102.2 million, up from $68.7 million.

Noninterest expenses totaled $266.5 million, up from $203.9 million a year earlier. The most recent quarter’s expenses included more than $29 million in acquisition and restructuring costs associated with First Niagara’s deal for 195 HSBC branches in upstate New York and Connecticut.

The provision for loan losses during the third quarter was $21.8 million, up from $13.8 million last year as First Niagara’s balance sheet has grown. Net charge-offs for the period totaled $10.1 million, up from $8.1 million

Nonperforming loans totaled $142.4 million at the end of the third quarter, up from $81.9 million a year earlier.

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KeyCorp continues cost-cutting efforts

Banks & Credit Unions, Subscriber Only

KeyCorp (NYSE: KEY) remains on track to cut $150 million to $200 million in annual expenses by December 2013. The Cleveland–based banking company’s plans include closing up to 5 percent of its nationwide branch-office network, reducing staffing levels, and examining its contracts with third-party vendors, Key leaders said during a conference call Oct. 18, discussing

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KeyCorp (NYSE: KEY) remains on track to cut $150 million to $200 million in annual expenses by December 2013.

The Cleveland–based banking company’s plans include closing up to 5 percent of its nationwide branch-office network, reducing staffing levels, and examining its contracts with third-party vendors, Key leaders said during a conference call Oct. 18, discussing the company’s latest quarterly results. The branch closures are expected to have an incremental impact in Key’s Central New York region, according to the bank.

KeyBank recently opened a new branch in Manlius after closing a location in Dannemora (Clinton County) earlier this year and one in Syracuse in September. Key has also relocated branches in Cazenovia and Fayetteville to new sites in recent years.

Key has more than 1,000 branches in 14 states and assets of $87 billion. The bank closed 16 branch offices in the third quarter and has plans to shutter another three in the fourth quarter, Senior Executive Vice President and CFO Jeffrey Weeden said during the conference call.

Savings are on pace to reach $30 million to $50 million by the end of 2012 with cost-cutting efforts continuing next year, Weeden said. He also said the bank will continue to invest in other areas to ensure future growth.

“Our efforts are not all about cost cutting,” he said. “They are about improving profitability.”

Key is the number two bank in the Syracuse metro area deposit market with 27 branches, more than $1.8 billion in deposits, and a market share of 16.8 percent, according to the latest statistics from the Federal Deposit Insurance Corp. The bank has two offices, more than $58 million in deposits, and a market share of 1.58 percent in the Utica–Rome area.

Third-quarter net income from continuing operations attributable to common shareholders at Key totaled $214 million, down from $229 million a year earlier. Earnings per share totaled 23 cents, down from 24 cents a year earlier.

The bank closed an acquisition of 37 former HSBC branches in the Buffalo and Rochester markets during the period. The locations were involved in First Niagara Bank’s deal for 195 HSBC locations in upstate New York and Connecticut.

First Niagara completed that deal in May and divested some of the locations to Key and others to comply with anti-trust rules.

Also during the third quarter, Key re-entered the credit-card business by acquiring a $725 million Key-branded credit-card portfolio made up of its own customers. The bank also started to self-issue cards.

Net interest income in the third quarter totaled $578 million, up from $555 million a year earlier. Noninterest income totaled $544 million in the latest quarter, up from $483 million.

Noninterest expense totaled $734 million in the third quarter, up from $692 million in the same period last year.

Key had more than $51.4 billion in loans as of Sept. 30, up from $48.2 billion a year earlier. Deposits at the end of the quarter totaled $64.2 billion, up from $61 billion a year earlier.

The bank’s provision for loan losses was $109 million for the third quarter, compared with $10 million a year earlier. Net charge-offs for the period totaled $109 million, even with the third quarter of 2011.

Nonperforming loans at the end of the quarter totaled $653 million, down from $788 million at the end of the same period last year.

Contact Tampone at

ktampone@cnybj.com

HSBC names new new head of corporate banking for Upstate

Banks & Credit Unions, Subscriber Only

HSBC’s remaining businesses in upstate New York lost a major signpost when the bank sold its retail branch network in the region earlier this year. “The branch network gave us great visibility,” says Kevin Quinn, HSBC senior vice president and the new head of corporate banking for upstate New York. “I think what we learned

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HSBC’s remaining businesses in upstate New York lost a major signpost when the bank sold its retail branch network in the region earlier this year.

“The branch network gave us great visibility,” says Kevin Quinn, HSBC senior vice president and the new head of corporate banking for upstate New York. “I think what we learned through the sale is we have an extremely loyal customer base. Our challenge going forward is making sure the market knows we’re still present.”

Buffalo–based First Niagara Bank acquired 195 HSBC branches in upstate New York and Connecticut in May. HSBC kept businesses like corporate middle-market banking, investment banking, and private banking and the bank still employs 3,000 people across the region.

HSBC has a commercial-banking office at 250 S. Clinton St. in Syracuse with a staff of 12. Worldwide, the bank has 6,900 offices in 84 countries and assets of more than $2.6 trillion.

Given HSBC’s international ties, Quinn says the bank can set itself apart in its upstate markets by focusing on companies with global ambitions.

“That’s where we think we can be a thought leader and where we think we can be a resource for the region,” Quinn says. “There’s been a great emphasis across the U.S. as well as in New York state on supporting further export development and growth.

“We’re ideally positioned because we have that international footprint. For any company with international aspirations, we think we stand at the forefront.”

Quinn, a native of Buffalo, will be based there in his new position. He succeeds Paul Cronin, who accepted a New York City–based senior leadership role with HSBC.

Quinn previously worked as senior vice president and regional commercial executive manager for upstate New York. He has 18 years of commercial-banking experience, serving large corporate and middle- market companies in a 14-state region in the Midwest, as well as the Canadian provinces of Ontario and Quebec.

Prior to banking, he practiced law in Cleveland, Ohio, with an emphasis on mergers and acquisitions, according to HSBC. He’s been with HSBC for seven years and back living in upstate New York for 18 years.

Quinn will be responsible for the Rochester, Syracuse, and Albany markets, in addition to Buffalo.

Demand for loans varies across industries in the region, but in general, the market remains soft, Quinn says. Uncertainty will likely continue until the U.S. presidential election passes.

Companies with business overseas are also concerned about the situation in Europe and Asia, Quinn notes.

Most firms continue to focus on lean and efficient operations, he adds. In some cases, they’re building substantial amounts of cash.

“Eventually, that cash needs to be deployed,” Quinn says.

Lately, he says he’s seen an uptick in mergers and acquisitions. All banks, including HSBC, are looking to grow loans, which makes for a competitive environment, he adds.

“We think we’re ideally positioned in the upstate region,” he says. “There are few organizations that have the international connectivity that HSBC has.”

Contact Tampone at ktampone@cnybj.com

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