KEYBANK PARTNERS WITH COMMUNITY LENDING INSTITUTIONS TO PROVIDE $50 MILLION IN ACCESS TO CAPITAL

Rhea-AI Summary

KeyBank (KEY) announced the placement of $50 million in deposits with six Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs), including Black-owned banks and banks serving Alaskan Native and Native American communities. This initiative is part of KeyBank's commitment to social justice and racial equity, supporting historically under-resourced communities. KeyBank's ongoing support for CDFIs and MDIs is a testament to its dedication to economic inclusion and community development.

Insights

Financial Analyst

KeyBank's decision to place $50 million in deposits with six CDFIs and MDIs is a strategic move that reflects the bank's commitment to social responsibility and economic inclusion. This initiative not only enhances KeyBank's corporate image but potentially opens up new market segments by fostering relationships with historically underserved communities. From a financial perspective, this move could improve the bank's risk diversification by engaging with institutions that have localized expertise in managing community-focused lending, which may have different risk profiles compared to traditional banking investments.

Moreover, this action aligns with broader industry trends where financial institutions are increasingly scrutinized for their social impact. It could potentially attract socially conscious investors and customers, thus having a positive effect on the bank's stock valuation. However, the direct financial impact of the deposits on KeyBank's balance sheet is likely to be marginal in the short term, given the relative size of the investment compared to the bank's total assets. Long-term benefits, however, may include enhanced customer loyalty and brand strength.

Economist

Investing in CDFIs and MDIs can have a multiplier effect on local economies, especially in underserved areas. By increasing the lending capacity of these institutions, KeyBank is indirectly supporting economic development and job creation in communities that may lack access to traditional financial services. This can lead to a more balanced economic growth and potentially reduce income disparities. The initiative may also stimulate additional private investment in these areas, as it signals confidence in the viability of these markets.

Furthermore, KeyBank's initiative can be seen as part of a broader trend of impact investing, which seeks to generate social and environmental impact alongside a financial return. The success of these investments could encourage other financial institutions to follow suit, leading to increased capital flows into community development and potentially influencing monetary policy considerations related to community reinvestment and financial inclusion.

Market Research Analyst

The commitment to CDFIs and MDIs should be viewed within the context of changing consumer preferences and the increasing importance of corporate social responsibility (CSR) in brand perception. Consumers and businesses alike are more inclined to engage with institutions that demonstrate a strong CSR profile. KeyBank's initiative may enhance its competitive positioning by appealing to these values-driven segments.

It's essential to monitor the performance of these deposits over time, as they may serve as an indicator for the viability of similar CSR initiatives within the financial sector. If successful, KeyBank's approach could set a precedent for how banks can integrate social goals with financial services, potentially reshaping market expectations and standards for community engagement by financial institutions.

CLEVELAND, Jan. 23, 2024 /PRNewswire/ -- KeyBank (NYSE: KEY) announced placement of $50 million in deposits with six Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs), including four Black-owned banks or managed banks and two banks serving Alaskan Native and Native American communities. As a founding member of the Economic Opportunity Coalition, KeyBank is pioneering the support of placing deposits with urban and rural community lending institutions to further enhance their ability to serve historically under-resourced communities. This effort is one of many that symbolizes KeyBank's larger purpose: to help clients and communities thrive.   

Today's announcement includes our support in the following institutions:

• Adelphi Bank – Columbus, OH
• Carver Federal Savings – Harlem, NY
• First Independence Bank – Detroit, MI
• Legacy Bank – Murrieta, CA
• OneUnited Bank – Boston, MA
• Native American Bank – Denver, CO

"Our country's CDFIs and MDIs are vital to providing economic opportunity in underserved and low-income communities," said Chris Gorman, Chairman and CEO of KeyBank. "Our support of the CDFIs and MDIs is part of our ongoing commitment to address social justice and racial equity in the communities we so proudly serve."

"KeyBank's acknowledgment of Legacy Bank's social mission within Native American communities is sincerely appreciated. Inclusion as a Native American bank among other CDFI and MDI institutions in their $50 million deposit commitment exemplifies KeyBank's commitment to fostering a more inclusive financial landscape," said James D. Hicken, President & CEO of Legacy Bank. "Together, we can amplify our impact, broaden financial access, and enhance the quality of life in urban and rural areas alike. We value KeyBank's shared vision and collaborative spirit in making a lasting difference for low-income and underserved communities."

"KeyBank is demonstrating what a more inclusive financial services industry looks like by fulfilling their overall $50 million commitment towards various Minority Depository Institutions in America," said Kenneth Kelly, Chairman & CEO of First Independence Bank. "This support allows various MDIs to continue their concerted effort to expand their reach and expand relationships into partnerships within our industry. I am elated that KeyBank shares the same vision that all leaders can better impact communities we serve when we collaborate to broaden the financial quality of life for all." 

This support for Community Development Financial Institutions and Minority Depository Institutions are just the latest testament to KeyBank's enduring commitment to economic inclusion. In 2022, KeyBank extended financing to 10 additional CDFIs, including loan funds, affordable housing lenders, and small business loan providers that included $67 million of debt financing and approximately $6.5 million of equity financing. Prior to 2022, KeyBank deployed $93 million to CDFIs, including Cleveland Development Partnership, Impact Capital, and Rocky Mountain Reinvestment Corporation.

About KeyCorp
KeyCorp's roots trace back nearly 200 years to Albany, New York. Headquartered in Cleveland, Ohio, Key is one of the nation's largest bank-based financial services companies, with assets of approximately $188 billion at December 31, 2023. 

Key provides deposit, lending, cash management, and investment services to individuals and businesses in 15 states under the name KeyBank National Association through a network of approximately 1,000 branches and approximately 1,200 ATMs. Key also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets trade name. For more information, visit https://www.key.com/. KeyBank is Member FDIC. 

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SOURCE KeyBank

FAQ

What is the purpose of KeyBank's $50 million deposit placement?

The purpose is to support six Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs), including Black-owned banks and banks serving Alaskan Native and Native American communities.

What is the Economic Opportunity Coalition?

The Economic Opportunity Coalition is a group that supports placing deposits with urban and rural community lending institutions to enhance their ability to serve historically under-resourced communities.

Who is the Chairman and CEO of KeyBank?

The Chairman and CEO of KeyBank is Chris Gorman.

What is KeyBank's commitment to economic inclusion?

KeyBank has extended financing to 10 additional CDFIs, including loan funds, affordable housing lenders, and small business loan providers, as well as deploying $93 million to CDFIs prior to 2022.

How much financing did KeyBank extend to CDFIs in 2022?

KeyBank extended $67 million of debt financing and approximately $6.5 million of equity financing to CDFIs in 2022.