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  • ICP Protested Key - First Niagara, Now FOIAs Withheld Answers

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    Matthew Russell Lee
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    On First Niagara, Key Says It'll Address Branches Later, Withholds, ICP FOIAs By Matthew R. Lee NEW YORK, February 23 -- The lack of seriousness in US bank regulation grows from the relatively smaller to the largest banks like Goldman Sachs - and those in the upper bulge like KeyCorp, seeking to buy First Niagara and close a lot of branches. In a submission to the Federal Reserve dated February 12 but only mailed to Inner City Press on February 20, Key answers questions about branch closings by saying "Additional information will be provided supplementally." Key withholds a Community Reinvestment Act and other answers. Inner City Press on February 23 submitted a FOIA request: This is a FOIA request for the entirety of the February 12, 2016 submission in connection with the Application by Application by KeyCorp to acquire First Niagara Financial Group of which a heavily redacted copy was received by Inner City Press on February 22-23, as a timely commenter, by Goldman Sachs. (The cover letter to ICP says February 12, but the USPS Express envelope says Feb 20, notice received Feb 22, picked up Feb 23.) Key's answer has many exhibits withheld -- all of which we are hereby requesting under FOIA. Simply as examples: Page 1 referes to Confidential Exhibit 1 and 2(a); Page 2 refers to Confidential Exhibits 2(b), 3, 4 and 5; in the Community Reinvestment Acti section, “Confidential” Exhibit 10 is withheld. We also note that the Fed still owes ICP a FOIA response on this application, and that Key's answer on branch closings is 'Additional information will be provided supplementally.' The comment period must be extended; we request this information in advance." Back on December 16, Inner City Press filed a Freedom of Information Act request with the Federal Reserve about the Key / First Niagara proposal. On January 20, the Fed extended its time to reply -- to February 2, AFTER the comment period would expire on January 31. So Inner City Press commented to the Fed: "This is a timely first comment opposing and requesting an extension of the FRB's public comment period on the Application by KeyCorp to Acquire First Niagara. First, the comment period must be extended. All the way back on December 16, 2015, Inner City Press submitted a FOIA request for documents related to this proposal. It was assigned number F-2016-00073 by the Federal Reserve. But on January 20 the Manager of the FRB's Freedom of Information Office wrote to Inner City Press that “pursuant to section (a)(6)(B)(i) of the FOIA, we are extending the period for our response until February 2, 2016, in order to consult with two or more components of the Board having a substantial interest in the determination of the request.” The comment period is set to expire on January 31 -- six weeks after ICP's FOIA request, but days BEFORE the Fed's response. This request to extend the comment period is being submitted on January 30 and must in context be granted. In the interim, in support of ICP's request for public hearings, consider that in 2014, the most recent year for which Home Mortgage Disclosure Act data is available, Key Bank National Association in the Buffalo Metropolitan Statistical Area made 258 home purchase loans to whites but only seven to African Americans, while denying the applications of African Americans 2.56 times more frequently than those of whites. For refinance loans, Key's denial rate disparity for African Americans was 2.28. In the New York City MSA, Key Bank National Association made 21 home purchase loans to whites and only ONE to an African American applicant. Key made 43 refinance loans to whites and NONE to African Americans. These disparities are not acceptable. Nor is the lack of transparency, as the comment period is set to close, on branch closures or 'consolidations.' The comment period must be extended and public hearings held." We'll have more on this.

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    On First Niagara, Key Says It'll Address Branches Later, Withholds, ICP FOIAs By Matthew R. Lee NEW YORK, February 23 -- The lack of seriousness in US bank regulation grows from the relatively smaller to the largest banks like Goldman Sachs - and those in the upper bulge like KeyCorp, seeking to buy First Niagara and close a lot of branches. In a submission to the Federal Reserve dated February 12 but only mailed to Inner City Press on February 20, Key answers questions about branch closings by saying "Additional information will be provided supplementally." Key withholds a Community Reinvestment Act and other answers. Inner City Press on February 23 submitted a FOIA request: This is a FOIA request for the entirety of the February 12, 2016 submission in connection with the Application by Application by KeyCorp to acquire First Niagara Financial Group of which a heavily redacted copy was received by Inner City Press on February 22-23, as a timely commenter, by Goldman Sachs. (The cover letter to ICP says February 12, but the USPS Express envelope says Feb 20, notice received Feb 22, picked up Feb 23.) Key's answer has many exhibits withheld -- all of which we are hereby requesting under FOIA. Simply as examples: Page 1 referes to Confidential Exhibit 1 and 2(a); Page 2 refers to Confidential Exhibits 2(b), 3, 4 and 5; in the Community Reinvestment Acti section, “Confidential” Exhibit 10 is withheld. We also note that the Fed still owes ICP a FOIA response on this application, and that Key's answer on branch closings is 'Additional information will be provided supplementally.' The comment period must be extended; we request this information in advance." Back on December 16, Inner City Press filed a Freedom of Information Act request with the Federal Reserve about the Key / First Niagara proposal. On January 20, the Fed extended its time to reply -- to February 2, AFTER the comment period would expire on January 31. So Inner City Press commented to the Fed: "This is a timely first comment opposing and requesting an extension of the FRB's public comment period on the Application by KeyCorp to Acquire First Niagara. First, the comment period must be extended. All the way back on December 16, 2015, Inner City Press submitted a FOIA request for documents related to this proposal. It was assigned number F-2016-00073 by the Federal Reserve. But on January 20 the Manager of the FRB's Freedom of Information Office wrote to Inner City Press that “pursuant to section (a)(6)(B)(i) of the FOIA, we are extending the period for our response until February 2, 2016, in order to consult with two or more components of the Board having a substantial interest in the determination of the request.” The comment period is set to expire on January 31 -- six weeks after ICP's FOIA request, but days BEFORE the Fed's response. This request to extend the comment period is being submitted on January 30 and must in context be granted. In the interim, in support of ICP's request for public hearings, consider that in 2014, the most recent year for which Home Mortgage Disclosure Act data is available, Key Bank National Association in the Buffalo Metropolitan Statistical Area made 258 home purchase loans to whites but only seven to African Americans, while denying the applications of African Americans 2.56 times more frequently than those of whites. For refinance loans, Key's denial rate disparity for African Americans was 2.28. In the New York City MSA, Key Bank National Association made 21 home purchase loans to whites and only ONE to an African American applicant. Key made 43 refinance loans to whites and NONE to African Americans. These disparities are not acceptable. Nor is the lack of transparency, as the comment period is set to close, on branch closures or 'consolidations.' The comment period must be extended and public hearings held." We'll have more on this.

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    115 views8 pages

    ICP Protested Key - First Niagara, Now FOIAs Withheld Answers

    Uploaded by

    Matthew Russell Lee
    On First Niagara, Key Says It'll Address Branches Later, Withholds, ICP FOIAs By Matthew R. Lee NEW YORK, February 23 -- The lack of seriousness in US bank regulation grows from the relatively smaller to the largest banks like Goldman Sachs - and those in the upper bulge like KeyCorp, seeking to buy First Niagara and close a lot of branches. In a submission to the Federal Reserve dated February 12 but only mailed to Inner City Press on February 20, Key answers questions about branch closings by saying "Additional information will be provided supplementally." Key withholds a Community Reinvestment Act and other answers. Inner City Press on February 23 submitted a FOIA request: This is a FOIA request for the entirety of the February 12, 2016 submission in connection with the Application by Application by KeyCorp to acquire First Niagara Financial Group of which a heavily redacted copy was received by Inner City Press on February 22-23, as a timely commenter, by Goldman Sachs. (The cover letter to ICP says February 12, but the USPS Express envelope says Feb 20, notice received Feb 22, picked up Feb 23.) Key's answer has many exhibits withheld -- all of which we are hereby requesting under FOIA. Simply as examples: Page 1 referes to Confidential Exhibit 1 and 2(a); Page 2 refers to Confidential Exhibits 2(b), 3, 4 and 5; in the Community Reinvestment Acti section, “Confidential” Exhibit 10 is withheld. We also note that the Fed still owes ICP a FOIA response on this application, and that Key's answer on branch closings is 'Additional information will be provided supplementally.' The comment period must be extended; we request this information in advance." Back on December 16, Inner City Press filed a Freedom of Information Act request with the Federal Reserve about the Key / First Niagara proposal. On January 20, the Fed extended its time to reply -- to February 2, AFTER the comment period would expire on January 31. So Inner City Press commented to the Fed: "This is a timely first comment opposing and requesting an extension of the FRB's public comment period on the Application by KeyCorp to Acquire First Niagara. First, the comment period must be extended. All the way back on December 16, 2015, Inner City Press submitted a FOIA request for documents related to this proposal. It was assigned number F-2016-00073 by the Federal Reserve. But on January 20 the Manager of the FRB's Freedom of Information Office wrote to Inner City Press that “pursuant to section (a)(6)(B)(i) of the FOIA, we are extending the period for our response until February 2, 2016, in order to consult with two or more components of the Board having a substantial interest in the determination of the request.” The comment period is set to expire on January 31 -- six weeks after ICP's FOIA request, but days BEFORE the Fed's response. This request to extend the comment period is being submitted on January 30 and must in context be granted. In the interim, in support of ICP's request for public hearings, consider that in 2014, the most recent year for which Home Mortgage Disclosure Act data is available, Key Bank National Association in the Buffalo Metropolitan Statistical Area made 258 home purchase loans to whites but only seven to African Americans, while denying the applications of African Americans 2.56 times more frequently than those of whites. For refinance loans, Key's denial rate disparity for African Americans was 2.28. In the New York City MSA, Key Bank National Association made 21 home purchase loans to whites and only ONE to an African American applicant. Key made 43 refinance loans to whites and NONE to African Americans. These disparities are not acceptable. Nor is the lack of transparency, as the comment period is set to close, on branch closures or 'consolidations.' The comment period must be extended and public hearings held." We'll have more on this.

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    SIMPSON THACHER

    &

    BARTLETT LLP

    425 LEXINGTON AVENUE


    NEW YORK, NY 10017-3954
    (212) 455-2000

    FACSIMILE (212) 455-2502


    E-MAIL ADDRESS
    spencer.sloan@stblaw.com

    DIRECT DIAL NUMBER


    (212) 455-7821

    VIA FEDERAL EXPRESS

    February 12, 2016

    Matthew R. Lee Esq.


    PO Box 20047
    New York, NY 10017
    Dear Mr. Lee:
    Enclosed please find a copy of (i) the public portion of the response to the letter from the
    Board ofGovernors ofthe Federal Reserve System (the "Board"), dated December 16,2015,
    requesting additional information on KeyCorp's application to acquire First Niagara Financial
    Group, Inc., Buffalo, New York, pursuant to Section 3 ofthe Bank Holding Company Act of
    1956, as amended (the "Application"), and (ii) the public portion ofthe response to the letter
    from the Board, dated January 29, 2016, requesting additional information on the Application.
    Sincerely,

    Spencer A. Sloan

    Please acknowledge receipt of the foregoing by signing a copy of this letter below
    and returning it to me by email (spencer.sloan@stblaw.com) or fax (212-455-2502).
    I acknowledge receipt of the above materials.

    signed
    dated

    BEIJING

    HONG KONG

    HOUSTON

    LONDON

    LOS ANGELES

    ..........__________

    PALO ALTO

    SAO PAULO

    SEOUL

    TOKYO

    WASHINGTON, D.C .

    ./

    Submission in Response to the Request for Information dated December 16, 2015
    ("Response Submission")
    PuBLIC RESPONSES

    Financial and Managerial


    I

    1. Provide more detail and a timeline for the integration plan beyond the summary and
    guiding principle materials submitted with the Application.
    The Merger Integration Plan will consist of three primary phases: (i) Assessment, (ii)
    Implementation and (iii) Wind-Down.
    The Assessment Phase commenced upon the announcement of the Merger on October 30,2015,
    and involves three activities: (i) a current state assessment, (ii) a targeted environment design and
    (iii) detailed integration planning. The objective of the Assessment Phase is to perform a
    detailed analysis ofthe similarities and differences between the operating models ofKeyCorp
    and First Niagara to make informed decisions regarding the pro forma operating model of the
    combined organization, supported by detailed transition plans. The Implementation Phase will
    begin upon the closing of the Merger and will involve the execution of the transition plans
    developed in the Assessment Phase. The Implementation Phase will include a "Customer Day
    1" event, which will be a significant milestone in the Merger Integration Plan as it is the date on
    which the primary customer- and client-facing changes developed during the Assessment Phase
    are implemented. The Implementation Phase will conclude, and the Wind-Down Phase will
    begin, upon the completion of each individual transition plan developed during the Assessment
    Phase. The Wind-Down Phase will involve the wind-down oflegacy First Niagara operations
    following completion of the Implementation Phase.
    For additional information regarding the Merger Integration Plan, please see Confidential Exhibit

    1 to this Response Submission.


    2. Provide the following actual and pro forma financial information, as of September 30,
    2015.
    a. For KeyCorp:
    i. Actual and pro forma balance sheet, on a parent-only and consolidated basis.
    ii. Actual and pro forma risk-based capital, common equity tier 1 capital ("CET1")
    and leverage ratios (with relevant calculations). All components of capital should
    be clearly identified. The numerator and denominator of each calculated ratio
    must be as of the same point in time, September 30, 2015.
    For the information requested by this Question 2(a), please see Confidential Exhibit 2(a) to this
    Response Submission.

    b. For KeyBank National Association ("KeyBank"), Cleveland, Ohio:


    i. Actual and pro forma balance sheet.

    002438-000I-13095-Active.l8333107.6

    ii. Actual and pro forma risk-based capital, CET1, and leverage ratios as requested

    above in 2.a.ii.
    For the information requested by this Question 2(b), please see Confidential Exhibit 2(b) to this
    Response Submission.

    3. With respect to the due diligence review of First Niagara conducted by KeyCorp in
    connection with the proposed acquisition:
    a. Discuss key findings, including areas of weaknesses, if any, that KeyCorp identified.
    For the information requested by this Question 3(a), please see Confidential Exhibit 3 to this
    Response Submission.

    b. Describe KeyCorp's plans to address any identified deficiencies following


    consummation of the proposed transaction.
    For the information requested by this Question 3(b), please see Confidential Exhibit 3 to this
    Response Submission.

    4. For KeyBank, provide the following actual and pro forma asset quality information (in
    dollar amount totals), as of September 30, 2015:
    a. Other assets especially mentioned.
    b. Classified assets, comprised ofthe separate categories of substandard, doubtful, and
    loss (with relevant components of OREO, separately identified in .each category).
    c. Nonperforming assets comprised ofthe separate categories of total nonaccrual
    loans; OREO and other repossessed assets; and the following troubled debt
    restructurings: (i) in compliance with their terms; (ii) 30-89 days past due; (iii) 90
    days and greater past due; (iv) on nonaccrual.
    d. Accruing loans 90 days past due.
    For the information requested by this Question 4, please see Confidential Exhibits 4 & 5 to this
    Response Submission.

    5. For First Niagara Bank, National Association ("First Niagara Bank"), Buffalo, New
    York, provide the same (actual as of September 30, 2015, only) asset quality
    information as requested for KeyBank above.
    For the information requested by this Question 5, please see Confidential Exhibits 4 & 5 to this
    Response Submission.

    6. The application states that "[t]hree of Key's most senior executives, including
    [KeyBank CEO] Mr. [Christopher] Gorman, will be dedicated full-time to the
    integration" of First Niagara into KeyCorp. Discuss KeyCorp's plans to ensure that the
    existing roles of these executives will be adequately covered during the integration
    period.

    2
    002438-000I-13095-Active.l8333107.6

    During the integration period, Mr. Christopher Gorman, Mr. Craig Buffie, and Mr. Bob
    DeAngelis will be dedicated full-time to the integration of First Niagara into KeyCorp, while
    their pre-integration respective roles of President, Key Corporate Bank, Chief Human Resources
    Officer, and Director, Enterprise Program Management Office will be adequately covered during
    the integration period in accordance with existing succession plans, as further described below.
    Corporate Bank
    Ms. Angela Mago, KeyCorp's Head of Real Estate Capital prior to the integration period, and
    Mr. Randy Paine, KeyCorp's Head ofKeyBanc Capital Markets prior to the integration period,
    will serve as co-Heads of the Corporate Bank during the integration period. Ms. Mago will
    continue to manage all employees in the Real Estate Capital group, while Mr. Paine will manage
    all employees in the Corporate Bank other than those in Real Estate Capital. Together, Ms. Mago
    and Mr. Paine will represent and report on the Corporate Bank before KeyCorp's Board of
    Directors. Mr. Gorman will continue to represent the Corporate Bank in relations with
    KeyCorp's analyst and investor community and will continue to serve as the CEO ofKeyBank.
    Human Resources
    Ms. Kate Terrell, KeyCorp's Director of Compensation & Benefits prior to the integration, will
    serve as KeyCorp's Interim Chief Human Resources Officer during the integration period.
    KeyCorp's Human Resources Leadership Team will report to Ms. Terrell during the integration
    period regarding the human resources-related management ofKeyCorp.
    Marketing. Client Insights & Analytics
    Ms. Trina Evans, KeyCorp's Head of the Corporate Center prior to the integration, will serve as
    the Head of Marketing, Client Insights & Analytics during the integration period, in addition to
    maintaining her role as the Head of the Corporate Center. The Director of Marketing and each of
    the Directors oflnsights and Analytics will report to Ms. Evans during the integration period.
    Mr. Bob DeAngelis will continue to lead KeyCorp's Enterprise Project Management Office and
    the Transition Project Office.

    Consumer Compliance and Community Reinvestment Act ("CRA")


    7. To the extent not already provided, provide an update on KeyBank's CRA activities
    since its October 2011 CRA Performance Evaluation, and on First Niagara Bank's
    CRA activities since its March 2007 CRA Performance Evaluation, in every banking
    market in which the banks operate. Include in your response for each bank any
    significant CRA initiatives undertaken, particularly with respect to credit and deposit
    products and retail banking services targeted toward low- and moderate-income
    ("LMI") geographies and individuals. In addition, provide information for each bank,
    as applicable, on community development lending, investments, and services since its
    last evaluation period, including the total number, dollar amount, and service hours,
    and a brief description of each bank's most significant community development loans,
    investments, and services.
    3
    002438-000I-13095-Active.l8333107.6

    .............___________

    '\
    For information regarding KeyBank's and First Niagara Bank's respective CRA activities, please
    see Part IV.D. of the Application. Additional information may be provided supplementally.

    8. The Application notes that KeyBank received an overall performance rating of


    "Outstanding" on its most recent CRA examination by the OCC, dated October 1,
    2011. However, staff notes that KeyBank received several "Needs to Improve" ("NTI")
    ratings in several state assessment areas despite the overall Outstanding rating.
    Describe how KeyCorp is addressing, or has addressed, the following NTI ratings:
    a. Overall NTI rating for the state of Connecticut (including a NTI rating for the
    lending test);
    Since 2012, KeyBank no longer operates branches in Connecticut.

    b. Overall NTI rating for the state of Florida (including NTI ratings for both the
    lending and investment tests); and
    KeyBank currently operates three branches in Florida for private banking clients. As these
    private offices were de novo offices in October 2011, KeyBank had very limited opportunity for
    community development lending and investing in the Florida market at the time ofKeyBank's
    most recent CRA examination by the OCC. However, since the 2011 CRA examination,
    KeyBank has extended approximately $49 million in community development loans and has
    provided approximately $23 million in community development investments in Florida.

    c. NTI rating for the investment test for the state of Michigan.
    At the time of its most recent CRA examination by the OCC, KeyBank had a considerable
    community development investment portfolio throughout Michigan. However, in the Ann Arbor
    Metropolitan Statistical Area ("MSA"), which was selected for full-scope review in the 2011
    CRA examination, KeyBank's community development investment portfolio of approximately
    $204 million was of comparatively modest size due to KeyBank's focus at the time on devoting
    community development resources to the Detroit MSA. As a result of its 2011 NTI rating for the
    investment test for Michigan, KeyBank refined its community development investment strategy
    for Michigan and has since provided more than $16 million in Low-Income Housing Tax Credit
    ("LIHTC") investments in the Ann Arbor MSA and more than $33.5 million in LIHTC
    investments throughout the state.

    9. Indicate whether the consumer compliance, fair lending compliance, and CRA
    programs of the merged bank will be KeyCorp's current programs, First Niagara's
    current programs, some combination of the current programs of KeyCorp and First
    Niagara, or programs developed from other sources. Discuss how these measures
    would be implemented at the merged institution.
    On consummation of the proposed transaction, KeyBank's CRA compliance program, policies
    and initiatives will be implemented for the merged bank. KeyBank's current CRA compliance

    4
    002438-000I-13095-Active.l8333107.6

    program is designed to be scalable and will effectively adapt to include First Niagara Bank's
    assessment areas.
    KeyBank's dedicated CRA team has begun conducting analyses of First Niagara's community
    lending performance using publicly available Home Mortgage Disclosure Act ("HMDA") and
    Small Business Act data from 2012, 2013, and 2014. KeyBank has also engaged Crowe Horwath
    LLP, a third-pru;ty consultant, to provide an additional perspective on the CRA and Fair Lending
    performances ofKeyBank and First Niagara Bank both individually and prospectively as a
    combined organization. Following the closing of the Merger, KeyBank will perform a full data
    integrity review of First Niagara Bank's internal HMDA and CRA data. Based on the results of
    that data integrity review, KeyBank will update relevant procedures and closely monitor the
    combined organization's overall data integrity.
    Additionally, immediately following the closing of the Merger, KeyBank will merge all other
    aspects of First Niagara Bank's CRA program into KeyBank's CRA program. The primary
    responsibilities ofKeyBank's CRA program include:

    CRA data integrity;


    CRA analysis (including based on the Lending, Investment, Services tests ofthe OCC's
    CRA examination);
    Line-of-business CRA performance oversight and monitoring;
    Ascertainment of community needs assessments;
    Development and implementation of community engagement strategies;
    Technical compliance with the CRA requirements;
    Risk Assessment and Governance, Risk, and Compliance reporting;
    Responses to regulatory, community and CRA-related comments and complaints; and
    Implementation of forward-thinking corporate strategy to address the needs of
    communities.

    10. To the extent not already provided, describe KeyCorp's due diligence review
    specifically relating to First Niagara's consumer compliance program, fair lending, and
    the CRA. Indicate the dates of the review, the individuals and organizations involved,
    and major areas reviewed. Discuss the overall findings, any significant deficiencies or
    issues noted, and any actions planned to address the deficiencies.
    For the information requested by this Question 10, please see Confidential Exhibit 10 to this
    Response Submission.

    11. Confirm, if such is the case, that following consummation of the proposed transaction,
    the First Niagara Foundation will be continued in the combined organization. Describe
    any proposed changes to the primary mission of the foundation.
    Following consummation of the proposed transaction, the First Niagara Foundation (the
    "Foundation") will be continued in the combined organization. KeyCorp currently does not
    propose any changes to the primary mission of the Foundation. As KeyCorp continues to refine
    the strategic priorities ofthe combined organization, it will consider adjustments to the

    5
    002438.()()01-13095-Active.l8333107.6

    Foundation's mission that support making sound investments in the relevant communities.

    12. The Application states that the proposal will enable KeyCorp to achieve higher
    earnings through cost savings and that KeyCorp expects cost savings to result from,
    among other things, "optimizing overlapping branches." Discuss how KeyCorp plans
    to optimize overlapping branches, including whether KeyCorp anticipates closing
    branches. For any anticipated branch closures, discuss whether such closures will be
    completesf in accordance with KeyBank's branch closing policies and procedures, the
    Interagency Policy Statement on Branch Closures, and 12 U.S.C. 1831r-1.
    KeyCorp plans to optimize the branch network through branch consolidations due to the
    meaningful branch overlap between the existing branch networks of the two franchises.
    Specifically, as ofDecember 22,2015,29% of First Niagara Bank's branches are located within
    1.5 miles of an existing KeyBank branch.
    KeyBank has established a "Branch Action Policy and Procedures," setting forth KeyBank's
    obligations to comply with applicable federal statutes, regulations and policy statements related
    to branch openings, closures, relocations and consolidations, including under the Joint Policy
    Statement Concerning Branch Closing Notices and Policies. KeyBank will follow the Branch
    Action Policy and Procedures in connection with future branch closures or consolidations,
    including by obtaining all required approvals (such as approvals by KeyBank's board of
    directors, executive management and community development banking team) for such branch
    closures or consolidations. KeyBank will submit a notice of branch closing to the OCC no later
    than 90 days in advance of any branch closure, as required by Section 42 of the Federal Deposit
    Insurance Act (12 U.S.C. 1831r-1). KeyBank will also provide required notifications to
    customers of any branch subject to a proposed closure by both mailing a notice of the closure to
    affected consumers and posting the notice in the branch.

    13. lfKeyCorp anticipates any branch closures:


    a. Provide a list of branches operated by KeyBank and First Niagara Bank that may
    be closed, consolidated, or relocated in the combined organization's markets
    following consummation of the proposal, to the extent the information is available.
    Additional information will be provided supplementally.

    b. Describe the process KeyCorp is using to determine the number and location of
    branch closures, and indicate whether any branches are in LMI tracts or in
    underserved or distressed areas.
    Additional information will be provided supplementally.

    c. Describe any activities that KeyCorp plans to undertake to mitigate the potential
    impact of the branch closures in those communities. If such information is not yet
    available, provide an estimated timeframe for its availability and provide it
    immediately upon its becoming available.

    6
    002438-000I-13095-Active.l8333!07.6

    I'

    !
    i

    Additional information will be provided supplementally.

    14. A commenter objected to the proposal on the basis of "the potential impact and job
    losses ofthe contemplated closing of banking facilities in [New York] associated with
    the proposed acquisition ... " Please respond to this comment.
    KeyBank has a long-standing record as an employer within the State ofNew York. More than
    2,600 KeyBank professionals, representing more than 20% ofKeyBank's entire workforce, live
    and work in 40 counties throughout New York State. KeyBank's New York State workforce
    represents a $200 million payroll, and more than 20% ofKeyBank's business is conducted
    within the State ofNew York.
    The proposed Merger is an opportunity for KeyBank to select employees from both KeyBank
    and First Niagara Bank whose talent, teamwork and leadership can help the combined
    organization reach its full potential.
    Below are two examples ofKeyBank's commitment to minimize job loss resulting from the
    proposed Merger:

    KeyBank has plans to develop its own in-house residential mortgage loan origination
    capabilities, and intends to incorporate First Niagara's existing loan servicing unit to
    serve as KeyBank's underwriting, fulfillment and portfolio management platforms in
    support ofKeyBank's in-house mortgage loan origination processes. As a direct result of
    such onboarding, KeyBank anticipates retaining approximately 300 First Niagara
    employees in roles connected with residential mortgage underwriting, fulfillment and
    portfolio management. In particular, by maintaining First Niagara's mortgage fulfillment
    group, KeyBank will retain a significant number of jobs in New Haven, Connecticut.

    KeyBank has instituted an enterprise-wide hiring freeze in order to maximize retention of


    First Niagara employees (with case-by-case exceptions for critical and time-sensitive
    positions or positions for which First Niagara does not currently have employee
    resources).

    15. KeyCorp has represented that KeyBank has "began efforts to better understand the
    needs ofthe communities served by First Niagara Bank." Indicate KeyCorp's findings
    from these efforts. In addition, provide a timetable for completion of this research and
    what steps KeyBank plans to take to address these findings.
    KeyCorp has developed and launched a community engagement plan related to KeyCorp's
    acquisition of First Niagara. The plan was initiated on October 30, 2015, the day of the Merger's
    public announcement, and will continue through the closing of the Merger. The community
    engagement plan contemplates meetings with local and national organizations that may be
    impacted by the proposed transaction, as well as in-depth analysis and research of both
    KeyCorp's and First Niagara's investments in the affected communities. In-person community
    meetings are also being conducted to inform the development ofKeyCorp's community benefits
    plan to be submitted to the Federal Reserve in connection with the Application.

    7
    002438-000I-13095-Active.l83331 07.6

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