KeyBank is set to acquire New York-based Laurel Road Bank’s digital lending business. The deal includes Laurel Road’s platforms for student loan refinancing, mortgage applications and payments and is expected to enhance KeyBank’s digital capabilities, and its ability to attract and serve professional millennial clients. “Key is focused on building targeted scale against discrete client segments through distinctive platforms," KeyBank Vice Chair and President of Banking Chris Gorman said. "Laurel Road's model of focusing on advanced degree professionals is not only consistent with Key's approach, but also complements our focus on specific sectors more broadly."
- Some 140 Laurel Road employees will join Key, though they will still be based in New York, Connecticut and California.
- Laurel Road's three bank branches located in southeast Connecticut are not part of this transaction.
The deal caused some consternation among Wall Street analysts who follow the bank.
CLEVELAND, Jan. 16, 2019 /PRNewswire/ — KeyBank National Association today announced that KeyBank and Laurel Road Bank have entered into a definitive agreement for the acquisition by Key of Laurel Road’s digital lending business; Laurel Road’s three bank branches located in southeast Connecticut are not part of this transaction. Through the acquisition, Key will enhance its digital capabilities with state-of-the-art, customer-centric technology and will leverage Laurel Road’s proven ability to attract and serve professional millennial clients.
Laurel Road, based in New York City, has built a best-in-class student loan refinancing platform, which launched in 2013 and has grown rapidly, totaling more than $4 billion in loan originations to date. The end-to-end consumer lending platform offers a streamlined, transparent experience with customized loan products. In 2018, the company introduced an innovative platform for mortgages using the same secure lending technology to offer home buyers and owners a streamlined experience, from application to payment. Laurel Road has leveraged its differentiated technology to earn a strong reputation for providing high-quality customer experiences and solutions to targeted customer segments – such as healthcare professionals, lawyers and graduate students.
In addition to its advanced technology and distinctive client experience, Laurel Road has created a broad network of affinity partners through which it is a preferred provider of its products. This expansive platform includes partners across trade associations, member groups, and employers and aligns closely with Key’s approach to strategic partnerships.
“We are thrilled to have the opportunity to partner with Laurel Road and to continue expanding their business,” said Vice Chair and President of Banking, Chris Gorman. “As we shared at our Investor Day in October, Key is focused on building targeted scale against discrete client segments through distinctive platforms. Laurel Road’s model of focusing on advanced degree professionals is not only consistent with Key’s approach but also complements our focus on specific sectors more broadly. We have invested significant resources in building our own strategic partnerships with fintech companies and we have yet to encounter a firm that so clearly matches our business and cultural approach to serving clients.”
“We are excited to combine our technological expertise with Key’s industry expertise,” said Gary Lieberman, Founder and Chairman of Laurel Road Bank. “We could not have found a better strategic partner to help take Laurel Road to the next level and continue our mission of serving millennial customers with technology that meets them where they are in their financial journey. Together, we will work to create an innovative digital financial experience for all of our customer segments.”
In addition to the technology and business platform, Key is eager to onboard the Laurel Road team. “The management team at Laurel Road is truly outstanding,” said Gorman. “While operating within a bank regulatory environment, Laurel Road has been an innovator in online lending and experienced significant growth, a remarkable accomplishment under Gary’s leadership.” With the integration, approximately 140 Laurel Road employees will join Key. The employee teams will continue to be based in New York, Connecticut, and California.
The acquisition is subject to customary closing conditions, including regulatory approvals. Financial terms of the transaction have not been disclosed. KeyCorp was advised by Debevoise & Plimpton LLP. Laurel Road Bank was advised by RBC Capital Markets and Fried Frank.
KeyCorp’s (NYSE: KEY) roots trace back 190 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 $138.8 billion at September 30, 2018. 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 over 1,100 branches and more than 1,500 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.
About Laurel Road
Laurel Road is a national online lending company and FDIC-insured bank, offering online student loan refinancing, personal lending and mortgage products as well as consumer and commercial banking services. Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with graduate and undergraduate degrees to refinance and consolidate more than $4 billion in federal and private school loans. With our low rates, borrowers have reduced their monthly payments and on average saved tens of thousands of dollars. For more information on potential savings, see laurelroad.com/student. Laurel Road Bank is a Connecticut chartered bank offering lending products in all 50 U.S. states, Washington, D.C. and Puerto Rico. The mortgage product is not offered in Puerto Rico. Laurel Road Bank is an Equal Housing Lender, Member FDIC. NMLS ID # 402942.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “outlook,” “goal,” “objective,” “plan,” “expect,” “anticipate,” “intend,” “project,” “believe,” “estimate” and other words of similar meaning. Forward-looking statements represent management’s current expectations and forecasts regarding future events. If underlying assumptions prove to be inaccurate or unknown risks or uncertainties arise, actual results could vary materially from these projections or expectations. Factors that could cause Key’s actual results to differ from those described in the forward-looking statements can be found in KeyCorp’s Form 10-K for the year ended December 31, 2017, as well as in KeyCorp’s subsequent SEC filings, all of which have been filed with the Securities and Exchange Commission and are available on Key’s website (www.key.com/ir) and on the Securities and Exchange Commission’s website (www.sec.gov). Forward looking statements speak only as of the date they are made and Key does not undertake any obligation to update the forward-looking statements to reflect new information or future events.