First Niagara Bank CEO John R. Koelmel defended his company’s proposed $1.5 billion acquisition of New Alliance Bancshares at a public hearing Tuesday night, saying the merger of the two banks will create a banking “powerhouse” that will be able to provide more products and services and increased lending to the state.
Koelmel spoke for about 10 minutes during the hour long hearing, which was ordered by Connecticut banking regulators after various political and social leaders raised concerns about the deal. Critics, led by New Haven Mayor John DeStefano, have said First Niagara has a poor track record when it comes to lending to low- to moderate-income consumers, as well as to small businesses.
In his prepared remarks, Koelmel took both of those issues head-on saying the bank has plans to make $750 million in small business loans and $250 million in new mortgage originations, including a $30 million pool with special rates and reduced fees.
The bank also plans to make $100 million in community development loans over the next five years, Koelmel said.
“All banks have a responsibility to provide this real form of economic stimulus,” Koelmel said. “And we at First Niagara are building on record years of lending to all businesses, both small and large.”
First Niagara, based in Buffalo, N.Y., is currently waiting for regulatory approval for its $1.5 billion merger with NewAlliance, based in New Haven. The merger will create one of the 25 largest banks in the country, with $30 billion in assets and 320 branches serving four states in the Northeast.
Another key concern with the deal is its impact on employment in the state. Koelmel reiterated the bank’s plans to lay off 219 Connecticut workers, including 126 in New Haven and 93 in Manchester. But he said the bank will also eventually add 180 new jobs, for a net reduction of 50 positions in the state by the end of this year.
The bank plans to return to the current employee workforce levels of 1,200 by the end of 2012.
“We aren’t coming here to create a ‘more efficient’ or ‘lean and mean’ operation,” Koelmel said. “We’re here to grow the business and create a premier banking franchise.”
In an interview with the Hartford Business Journal before the hearing Koelmel said the bank continues to proceed “on pace and on schedule,” with the merger which is expected to close in the spring.
In terms of some of the negative attention the deal has garnered, Koelmel said he isn’t surprised and he expected that public hearings would be required when the deal was first announced.
“I understand that polticial interests will pursue their agendas,” Koelmel said.
During his testimony Koelmel also revealed that the bank is in the final stages of recruiting a new regional president who will be based in New Haven. He also said 95 percent of local loan and credit approval decisions will be made by Connecticut bankers.
