KeyBank 2007 Annual Report Download - page 7

substantial fee income and a stable
source of deposits.
Do you intend to make additional invest-
ments in some businesses?
Yes. We’d like to build scale in some
of the geographic markets that com-
prise our 13-state Community Bank-
ing branch network. We believe that
returns to shareholders are strongest
when our share of the business in a
given market ranks us among the
largest three or four providers.
Which geographic markets are most
attractive to you?
Key’s successful, long-term core
strategy has been to operate in four
regions of the country, as it offers us
diversity in terms of deposit pricing,
loan demand and risk management.
Certainly, we like our presence in the
higher growth markets of the Northwest
and Rocky Mountains, and would
like to expand through acquisitions in
those regions.
However, because much bank con-
solidation has already occurred in those
western states, opportunities are fewer
than in the Midwest and Northeast,
where we see relatively greater room
for acquisitions. Merger activity is
most often a matter of being at the
right place at the right time and, of
course, having other banks come to
the realization that they can benefit
their shareholders and clients by being
part of a larger, more product- and
technology-rich company that shares
their values.
Our most recent bank acquisition in
the attractive Hudson Valley area of
New York State, near New York City,
is a good example of the type of fill-
in opportunities we seek for our
Community Banking business.
How so?
The addition of U.S.B. Holding
Company, Inc., the holding company
for Union State Bank, effectively
doubles – to 61 – the number of Key
branches serving the communities of
this attractive market. Our specialties
in small business, middle market and
private banking are excellent fits for
current and prospective clients. Another
benefit is that deposits gathered in our
branches represent a relatively stable
and cost-effective form of funding.
What are your priorities for Key in 2008?
We have five of them: Profitably grow
revenue; execute on our client-rela-
tionship banking models; maintain a
disciplined, proactive risk management
culture; focus on expense management
and enhance the core capabilities of our
workforce.
INVESTING IN THE CLIENT EXPERIENCE
Key has launched two major projects to
enhance clients’ experiences in its
branches. Can you describe them briefly?
We launched a program this year
that will modernize about two-thirds
of our branches (see related story on
page 8). The makeovers will give the
branches more of a community feel;
reinforce the Key brand; and improve
decorating, lighting and landscaping.
The work began in the second half of
2007, and will continue over the next
few years. Second, we will begin in-
stalling new technologies this year at
teller stations in our branches. These
improvements will build on our invest-
ments in check-imaging capabilities in
recent years and speed transaction
processing. In addition, they will offer
more useful information to our front-
line team and free up time for more
interaction, providing an enhanced
experience for our clients.
KeyDRIVE is another important initiative.
What is it and how does it work?
Clients today expect speed and
ease when they do business with us.
KeyDRIVE, which stands for Deliver
Revenue – Improve Value and Effi-
ciency, involves meeting that expecta-
tion by simplifying, standardizing or
expediting how we operate. The work
is accomplished by small teams of
employees, who devote 100 days to
tackling projects that make a differ-
ence. At any given time, we have about
12 teams at work on KeyDRIVE
projects.
What’s an example of a KeyDRIVE project?
Replacing lost or stolen debit cards
used to be a cumbersome process for
our clients. They’d look for help at
their local branch, get referred to call
centers, and then endure lengthy
KEY 2007  5
Key’s branch in
Niskayuna, New York