The KeyCorp acquisition of First Niagara Financial Group — set to close in the third quarter of 2016 — poses a growth opportunity in the indirect auto lending space, said Key’s Chief Financial Officer Don Kimble.
During a conference call, Kimble said First Niagara has been originating auto loans “in the right way,” with a focus on “super-prime” loans with credit scores in the high-700 range. “[We are] comfortable with what they are doing and how they are going about it,” he said. “We’ll see how we can continue to leverage that going forward.”
It is unclear how this transaction would directly affect the bank’s auto portfolio, since the acquisition process is still in its early stages, a Key spokesman told Auto Finance News. Key currently offers direct-to-consumers auto loans, as well as floorplanning services to dealers, according to its website. The company sold its indirect auto loan portfolio to Bank of America a decade ago, and Key currently does not issue indirect auto loans, a spokeswoman confirmed.
Key will acquire Buffalo, N.Y.-based First Niagara in a cash and stock transaction valued at $4.1 billion. The buyout would make Key the 13th-largest commercial bank headquartered in the U.S., the company said in October. First Niagara is listed 44th among the top 100 auto financiers in the U.S., according to the 2015 Big Wheels Report, with total auto outstandings exceeding $2 billion.
