KeyCorp’s big bet on Indianapolis paying off

We Hoosiers tend to beat ourselves up, focusing on shortcomings of the central Indiana economy and business climate rather than strengths.

That’s why it’s valuable to hear an outsider’s perspective—someone like Beth Mooney, chairwoman and CEO of Cleveland-based KeyCorp, the sixth-largest central Indiana bank (as ranked by deposits).

Mooney recently spun through town to meet with bank staff and clients. And while here, she said all the diplomatic and upbeat things you’d expect, praising everything from Indianapolis’ civic leadership to its bustling downtown. That’s what out-of-town CEOs passing through almost always do.
 

Mooney

But the difference in Key’s case is that Mooney and her management have backed up the rhetoric with cold, hard cash. Over the last three years, Key has invested millions to add 13 central Indiana branches, bringing the total to 46. No other bank in central Indiana has added nearly as many in that span, Federal Deposit Insurance Corp. data show.

This wasn’t a case of Indianapolis’ merely getting its share of spoils amid a national expansion. Key—which has 1,100 branches in 14 states, from Maine to Alaska—zeroed in on Indianapolis, Seattle, Portland, suburban Cleveland and Buffalo, N.Y.

“I remember when we started this program, I said, ‘It is not like peanut butter.’ We are not going to spread one or two branches everywhere. You don’t make a market impact,” Mooney said. “So we picked a handful of markets and said, ‘Where, if we did a burst of investment, do we believe we could get returns across our broader business?’”

Mooney added: “It was a conscious choice to keep building through the downturn. You cannot shrink yourself to prosperity, and you have to invest where you see the potential for payoff and growth.”

All told, Key opened 130 branches, though some replaced older outposts or consolidated two offices into one. About 75 were truly new, including all those here. So Indianapolis ended up with about 17 percent of the total.

Why the big bet on Indy? Mooney, 57, said Key likes the city’s leadership and demographics, as well as its diversified economy, which she said has allowed the region to come back faster than other Midwestern markets. Key’s commercial loan customers are in such fields as manufacturing, distribution and health care.

“This is a community that very much has a focus and has its act together in terms of how to stay vibrant—and vibrant is relative—even in times when the economy is clearly not growing rapidly,” she said.

It also doesn’t hurt to have an intense, veteran banker at the helm. Gary Hentschel, 54, an alum of Indiana National Bank, had been running a personnel-management firm before coming aboard as president of Key’s central Indiana region in November 2007—“just in time for all the fun,” he said.

When Mooney came through town in 2010, Hentschel predicted his region would win Key’s district-of-the-year award—recognition it snagged in 2011, beating out the 21 other districts.

Mooney said Hentschel’s 350-employee district was No. 1 in the nation in 2011 in a variety of measures, including revenue growth and how it performed vs. its business plan. She also said Key’s new branches in Indianapolis are the top-performing new branches companywide.

“Across all the things we are asking people to do, central Indiana stepped up and knocked it out of the park last year,” Mooney said.

Hentschel said the momentum continues. He noted that in the first eight months of the fiscal year that began last October, Key was the top U.S. Small Business Administration lender in the state, as measured by the value of loans issued.

Key hasn’t given district of the year to the same region two years in a row, but Hentschel isn’t shrinking from the challenge. “We’re going to do it again—that’s the goal,” he said.

Emmis chugging higher

Emmis Communications Corp. shares spiked to $2.37 on July 31—a level not seen in nearly four years—as investor appetite grew for the radio station operator.

Recent moves that slashed debt have improved the outlook for Emmis, whose shares are up 300 percent since September.

Adding to the optimism is insider buying, including by a partnership of CEO Jeff Smulyan and real estate mogul Herb Simon. Their firm, HSJS LLC, has bought 1.2 million shares over three months.•