First Niagara Financial Group (NASDAQ: FNFG) is planning a new focus on small-business banking.
“It’s an untapped market for us,” First Niagara Retail Banking Director Scott Fisher says. “We were missing a slice of the market.”
The Buffalo–based banking company added a new team of 40 bankers throughout its footprint who will focus on small business. For First Niagara, that means companies with up to $2 million in annual sales.
The bank did serve those customers before, but it was largely through branch managers and was not a distinct business area, Fisher says. Compared to the industry as a whole and its competitors, First Niagara wasn’t tapping the small-business market as much as it could have been, he adds.
The banking company is planning to close an acquisition of 195 HSBC Bank branches in May. Adding the locations in upstate New York, Westchester County, and Connecticut will make First Niagara a major force in the Syracuse, Utica, and Binghamton markets.
When the HSBC acquisition is completed, First Niagara will have nearly 430 branches, $30 billion in deposits, $38 billion in assets, and more than 6,000 employees in New York, Pennsylvania, Connecticut, and Massachusetts.
The deal will virtually double First Niagara’s New York branch network to more than 200 locations and add more than 1,200 employees to its work force.
The deal will also bring First Niagara some business-banking accounts.
The new group of small-business bankers, which includes some former HSBC staff, began work in February. Over time, that group should account for about half of First Niagara’s small-business activity, Fisher says.
He declined to share specific targets on loan volume, but says the bank expects to double its lending from 2011. So far, customer response has been positive and First Niagara’s small-business loan pipeline is expanding, Fisher says.
Bankers have been reporting an increased demand for credit among small businesses, he adds, indicating an improving economy.
The bankers who started in February have plenty of small-business experience, Fisher says. They know the space and the companies in it.
First Niagara will also seek to separate itself from competitors through an updated set of small-business banking products and with quick decisions.
“They want it yesterday,” Fisher says of small-business people. “They’re busy. They wear multiple hats at their company.”
The new group will focus on acquiring new customers and expanding the bank’s relationship with existing clients.
Widening First Niagara’s presence in the small-business space will benefit its branch network, says David Kavney, Central New York market executive for First Niagara. Two of the new small-business bankers are in the Central New York market.
“These companies are tied in closely with their owners,” he says. “This small- business banker position is going to line up well with our branch system. We see this as a great opportunity.”
During the fourth quarter of 2011, First Niagara took $17 million in charges related to branch closures and severance costs. The staff reductions were aimed at enhancing the bank’s capabilities in both small-business banking and wealth management by adding new staff in those areas, CFO Gregory Norwood said during a conference call in January.