Building - And Buying - A Name For Itself -- Key Bank Strives To Boost Visibility In Northwest
When Key Bank of Washington agreed to pay $15 million to sponsor the Seattle Center Coliseum's renovations, it bought more than the right to put a sign on top of the arena.
It bought presence.
"The idea intrigued us," said Victor Riley Jr., chairman and chief executive of Key Bank's parent company, KeyCorp, based in Cleveland. "It gave us an opportunity to enter into a public-private partnership to show the community that we are here and that we are here to stay."
Establishing presence may seem like the last thing that the second-largest commercial bank in the state - with 186 branches, 240 automated-teller machines and $8 billion in assets - needs to do.
But despite the inroads it has made into the Puget Sound market, Key Bank still isn't a household name like Seafirst or Washington Mutual, which have been here for more than a century, analysts and company officials said.
At least not yet.
Key Bank has been in Washington for less than a decade and still has a lot of growing to do, company officials said.
"We think the Pacific Northwest is going to see tremendous growth in the next 20 years," Riley said. "And we're not anywhere near reaching the threshold of where we think we ought to be in terms of realizing that growth."
Riley spent the afternoon yesterday touring the construction site at the newly named Key Arena at Seattle Center, which is scheduled to be completed by November, in time for the SuperSonics'
first game of the 1995-96 season.
Ever since KeyCorp came into Puget Sound eight years ago with the purchase of Seattle Trust and Savings Bank, it has grown rapidly. Two years ago, it purchased 48 branches of Security Pacific Bank and acquired Puget Sound Bancorp of Tacoma. It continues to have a strong presence in Oregon, Alaska and Idaho.
This time, though, Riley said he does not know if growth will come in the form of additional branches in the Northwest. Some analysts said KeyCorp, which has $66.8 billion in assets stretching from Alaska to Maine, does not need to expand geographically. Those details are being worked out as part of a long-term planning process called First Choice 2000.
What Riley does know is that the bank will do more of what it does best: providing loans and services to small and medium-sized businesses. Nationwide, KeyCorp finished fourth in small-business loans last year.
The focus dovetails nicely with the company's push into the West, which was based on trade opportunities in the Pacific Rim, company officials said.
"If you look at growth in Washington and the Northwest, there are so many opportunities to work with small and medium-sized businesses that are beginning to export overseas," said Deborah Bevier, Key Bank of Washington's chairwoman and chief executive.
This is particularly true, she said, now that the region's economy is gradually becoming less dependent on The Boeing Co. and other large companies and is shifting to medium-sized companies, many of which are found in the high-technology and service industries.
Bevier noted that Key Bank recently committed $50 million to help value-added wood-products companies to export their goods to Asia. It comes at an appropriate time, she said, as several companies are looking to export their goods to Kobe, Japan, which requires large-scale rebuilding after its devastating earthquake.
Key Bank isn't the only company going after the small-business market, analysts said. Seafirst and U.S. Bancorp, for instance, are working aggressively in this market segment.
"Most of the larger banks are already doing this aggressively," said Piper Jaffray analyst Steven Schroll. "You almost have to in this part of the country."
For KeyCorp to gain market share, Schroll said the bank is going to have to do it by offering a significantly greater variety of services.
KeyCorp became equipped to do just that last year, when it merged with Society Corp. of Cleveland, making it the 10th-largest bank in the nation, with 1,300 offices in 25 states, analysts said.
Through Society, KeyCorp gained expertise in several departments, including trusts and money management - services that are critical to offering one-stop full-service shopping, analysts said. Before the $7.8 billion merger, KeyCorp had already been strong in trade-related financing and merchant banking.
KeyCorp has been performing exceedingly well since its merger with Society, said James Weber, an analyst with A.G. Edwards.
Return on assets was 1.36 percent last year, well above the $1 per $100 in assets that has long been considered a benchmark in the banking industry. In Washington, KeyCorp's figure is lower, at 1.08 percent. Still, analysts said, the figure is respectable considering how new Key Bank is to the market.
KeyCorp has been building its presence in other parts of the country, too. Most recently, it sold its mortgage-servicing unit to NationsBank Corp. in Charlotte, N.C., for $500 million. Less than a week later, it acquired Omnibancorp of Denver, more than doubling KeyCorp's presence in Colorado. It also has bought the naming rights to the Rock and Roll Hall of Fame and Museum's outdoor plaza in Cleveland, which will be called Key Plaza.
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