KeyCorp looking to accelerate pace of branch closings
KeyCorp in Cleveland is taking a look at closing more branches.
Chris Gorman, the $171 billion-asset company's chairman and CEO, said during a presentation at the Barclays Global Financial Services Conference that the coronavirus pandemic has accelerated Key’s digital transformation by as many as five years. The company has been adding more digitally sourced deposits and is gaining more business outside of its offices.
Those trends “have implications for what goes on in the branches,” Gorman said.
Key, which shuttered 61 branches last year, has only closed 21 in 2020. But the rapid, ongoing shift to digital channels provides an “opportunity to continue to ramp up,” Gorman said. Without detailing how many branches chould be closed, he said the objective is a smaller, “more impactful” footprint.
Key, which has 1,077 branches, said in its quarterly filing with the Securities and Exchange Commission that it spent $147 million on occupancy in the first half of 2020, a 1.4% increase from a year earlier. Any savings in that area can be reinvested in technology to create an even better customer experience, Gorman said.
Key has been on the sidelines for bank acquisitions since June 2016, when it paid $4.1 billion for First Niagara Financial. Gorman said he expects Key to remain idle for the forseeable future.
“I think the jury is really out on M&A in general and mergers of equals in particular,” Gorman said.
"I will tell you this, from spearheading our integration of First Niagara, I know that there's a real opportunity cost ... to buying whole banks," he added. “The best opportunity for us is to continue to implement our organic growth strategy."
Gorman said there may be opportunities to buy a “niche entrepreneurial company” similar to Key’s April 2019 purchase of digital lender Laurel Road. Since the deal closed, Laurel Road, which focuses on lending to health care professionals, has originated $3 billion in loans, Gorman said.