7 questions with KeyCorp CEO Beth Mooney

In the four years that Beth Mooney has led KeyCorp, the banking company's value and profits have increased, new branches have opened, and industry recognition has been steady.

A company Forbes magazine once described as "hemorrhaging money" during the recession has become confident and profitable during the recovery, while reporting 14 straight quarters of growth.

Many credit Mooney, chairman and chief executive officer, for the turnaround. In Central Indiana, Key has deposits of $1.8 billion — up about $3 million over the past five years — and about 5 percent market share, according to the latest summary of deposits report from the Federal Deposit Insurance Corp.

"Central Indiana has always been a great market for Key," said Mooney, who was in Indianapolis recently for meetings with employees and company leaders. "Over the last couple of years, we've invested in new branches and added bankers. ... It's all about continuing to grow here."

Even with the growth, Key is competing on a landscape dominated by market leaders, such as Chase, PNC and Fifth Third. Combined, the trio controls about 54 percent of the banking market.

Key's "sweet spot" as Mooney calls it and the source of company's 12 percent year-over-year growth has been in small- to medium-size business lending — in addition to focusing services on the individual consumer.

It is a strategy in which smaller banks are making inroads, said John Reed, an Indianapolis-based banking expert.

Key and others are promoting themselves as community-based financial alternatives to the larger corporate banks. Lending decisions generally are made locally and small businesses don't have to compete as much with larger clients for the banker's attention, he said.

"The biggest differential is the little banks market themselves and succeed at being community banks," said Reed, an investment banker and senior vice president at City Securities. "A lot of banking customers long for the day when their local banker was a decision maker. ... Community banks offer an alternative."

Mooney talked with The Star about Key's business strategies, future and the attention that comes with being the first woman to lead a Top 20 bank.

Question: What opportunities are there that might not be elsewhere?

Answer: We are a Midwestern bank headquartered in Cleveland and while our franchise does extend as the 14th-largest bank from Maine to Alaska, our largest presence is in the Midwest. We get this kind of economy. I've long thought well of Indianapolis and Central Indiana, because it has such a broad and diverse base of employment between public employers to the mix of manufacturing services. It's bringing in health care, it's doing high tech, so to me, this is one of those areas where, and obviously employers like Eli Lilly and several of those really large companies are residents here, too,is what the Midwest does. We're in the kind of economy where these businesses are growing, they're stable, they're profitable again. ... To our business model, where we focus, in addition to the consumer, on small- to medium-size businesses, we find it really fits our sweet spot as well as helps the economy grow when we can come in and work with this diverse set of companies. I think Indianapolis and Indiana is a very attractive place to do business.

Q: In a recent call with Wall Street, you said home mortgages might offer Key growth opportunities. Is that a strategy you see this market helping with?

A: Yes, and in addition to where our strongest growth has been the last couple of years, is our lending to businesses. We were in a town hall meeting ... with employees and the head of our mortgage business here was talking about that very point, that we're investing in how we can up our mortgage presence and strengthen our product offering, because now that we've gotten through the financial crisis and the rules on what are going to be permissible on mortgages and how you need to fund them, all that is clear. We think it's a good time for Key to invest in our mortgage capabilities. It is something we need in every single market, the ability to help support consumers as they make the decision to purchase or expand.

If you look over the last year and actually the past five years, our strongest lending has been to commercial businesses. ... We've had 14 straight quarters of double-digit growth in our lending to mid-size to small businesses, so that is something we continue to see and as we talk about 2015 as an area where we expect to continue to grow. We announced our quarterly results last week and said our lending to businesses was up 12 percent year over year. This is the time of year where people start thinking about homes, so we also expect some growth in our home equity product.

Q: Being the first female CEO of a Top 20 bank comes with some responsibility and pressure. How important is that to you and what you represent, not only in banking but across the business world?

A: I was taken aback with how much notoriety came with being first. ... Right or wrong or fair or unfair, people often judge — whether it is conscious or not — the prospects of how somebody who is from a diverse background will do in a role and then they tend to extrapolate it to others. So, as I took this role on, not only did I care that I did well for our clients and our communities, our employees, our shareholders, I thought 'I've got this unique moment in time where I am first at something that is very visible.' I mean, I got a call out in Business Week as a trendsetter for 2011 and you're like 'How can this be?' You realize people are watching. When that's the case, it does up the bar on how you get up and want to do this every day, because I want it to be something where when I'm done, it will be like 'That wasn't so bad, a woman running a bank. I think it was OK.' and it will make it easier for others to follow.

And one of my thoughts is as much as it was a headline, what success would look like is when I'm done, that it's a footnote, it's no longer a headline.

Q: People write about the diversity that Key has brought to banking. How that has made a difference in how you see the world, how you do banking?

A: Diversity does matter to how you see the world and how you do your business. And we are a company that has gotten a series of recognitions from Diversity Inc. to corporate boards for the diversity of our board. So it is something that has been conscious on our part to build a very diverse and inclusive culture. I think that makes good business sense, and it was something our company did for years before I became CEO. You make better business decisions when you have a diversity in thought and opinions and different perspectives and insights. ... We have really worked hard at saying that is a core value of our company.

Q: We've had our challenges in recent weeks with our legislature and the debate over RFRA, the Religious Freedom Restoration Act. As a business leader, did you have advice, suggestions or conversations with your team around that issue?

A: I won't specifically comment, because I'm not here and haven't been part of the direct dialogue. ... I know that the business community here and people from many different areas of interest stood up and said this isn't who we are, this isn't how we want to do business and this doesn't reflect our values and that's how change happens. So I would say from afar, one of my reactions is knowing that this is a cornerstone of how we view both our values as well as our business proposition. I was proud to see a business community stand up and say inclusion is core to how we want to run our company and the communities we want to live in. That's how you sustain things like that. ... I was proud to see the leadership in this community and in this state talk about it openly and a change was made.

Q: What's your big challenge, what's the big rock that you need to move?

A: One is one you can't control and all of us face. ... We're still in a slow low-growth economy ... Growth isn't as dynamic as I think most business leaders and governmental leaders would have hoped at this point, six years out from the lowest point of the recession. Interest rates are persistently low, which for people who have a balance sheet composed of loans and deposits, that's a suppressor on earnings. ... I will tell you we are well-positioned to grow, but it is still a little bit of a game of inches.

Q: Where do you see Key in five years?

A: If you don't have an aspiration or goal, what is it all about? (Our goal is) to be the best regional bank in the United States. Take it to the bank. In fairness, it's like I told everybody this morning, 'Don't you get up thinking about being the best?' You don't get up saying 'I think I'm going to go out and have an average day.' We want to be the best.

Call Star reporter Leisa Richardson at (317) 444-6378. Follow her on Twitter: @leisarichardson.

About Beth Mooney

Title: Chairman and chief executive officer since May 1, 2011.

Age: 60.

Residence: Cleveland.

Education: Graduated from the University of Texas in 1977 and earned a master of business administration degree from Southern Methodist University in 1983.

Among recognitions: Ranked 96th on Forbes' power women list, twice named most powerful woman in banking by American Banker, on Fortune's "50 Most Powerful Women in Business"

About KeyCorp

Base: Cleveland.

Reach: 14th largest bank in United States with branches in 13 states, including 41 branches in Central Indiana and 25 in Northern Indiana.

Assets: Total: $90 billion; Indiana: $2.9 billion; Central Indiana: $1.8 billion.

Number of employees: Total: 14,000; Indiana: 591; Central Indiana: 271.

10 largest Central Indiana banks by deposit

1. JP Morgan Chase: $9.6 billion

2. PNC: $7.4 billion

3. Fifth Third: $3.6 billion

4. Huntington: $2.8 billion

5. BMO Harris: $2.1 billion

6. KeyBank: 1.8 billion

7. National Bank of Indianapolis: $1.4 billion

8. Regions: $1.3 billion

9. Merchants: $991,643 million

10. First Merchants: $958,102

Source: FDIC