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You Can Bank on It
The southern Connecticut banking landscape is in flux.
Who will be the winners and losers?
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Business New Haven
10/30/2000
By: Fiona Phelan
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Big bank, little bank? Bank with bricks? Bank with clicks? Bank with bricks and clicks? Bank at the grocery store? Bank at the corner?
So many options.
So many banks to choose from.
Whatever service you need - savings, checking, mortgage, on-line bill pay, telephone bill pay, ATMs, drive-up windows, investment-management and insurance advice - it's all available at a bank near you (or your keyboard).
You can bank over the phone, over the Internet, in person, or at the ATM. If you are savvy enough, you can set up your banking requirements so that you never set foot inside a building. The trend, bank officials say, is to offer a myriad of financial services in one location.
Despite the electronic trend, the majority of the nation still banks at a traditional branch, according to the American Bankers Association. For instance, in 1999, 40 percent of retail banking transactions took place in a traditional branch. That's down from 54 percent in 1994. The largest area of growth was telephone banking: 22 percent of transactions took place over the telephone in 1999, compared with just 12 percent in 1994. (The ABA does not specify a percentage for online transactions.)
Although the number and use of ATMs has grown exponentially since the first machine was introduced in 1971, the number of transactions taking place at the ATM has declined. In 1991, there were 83,000 ATMs across the country. In 1999, there were 227,000. In 1991, there were 6,403 transactions per ATM each month in the U.S. Last year, that number dropped to 3,985 transactions per ATM per month. (By the way, the average ATM withdrawal is $60.)
Perhaps one of the reasons for the decline is the imposition of user fees by many banks, which can range from 75 cents to $1.25 per transaction for non-bank customers.
According to the state's Department of Banking, there are currently 70 financial institutions in the state with combined assets of more than $40 billion, and deposits of more than $34 billion. Altogether there are almost 100 banks in Connecticut: 60 state-chartered; 19 with national/federal charters; 18 out-of-state banks operating branches in Connecticut; and two foreign banks with branches here.
Topping the list of state-chartered banks in terms of assets is Waterbury-based Webster Bank, with total assets of more than $11 billion and deposits of $7 billion. Bridgeport-based People's Bank is a close second with assets of $10.7 billion and deposits of $7.5 billion.
Also in the top ten for assets are: Citizens Bank; New Haven Savings Bank; American Savings Bank; Liberty Bank; the Savings Bank of Manchester; Summit Bank; and First Federal Savings & Loan Association. (The state banking department does not list assets and deposits for banks doing business in Connecticut but licensed out of state, such as FleetBoston and Sovereign Bank).
Despite the size and market dominance of the big banks, new banks are still being created. This year, three new banks have been granted temporary certificates of authority by the Department of Banking: the Apple Valley Bank & Trust Co., based in Cheshire; the Bridgeport-based Community's Bank; and the Southern Connecticut Bank, based in New Haven.
“We're not going to be 57 varieties,” says Southern Connecticut Bank founder Joseph Ciaburri. “We're going back to basic banking.
“We're not going to offer so many services that people are confused,” he adds.
The bank, which is operating on a temporary charter granted in September, is currently trying to raise more than $10 million through an IPO. According to veteran New Haven banker Ciaburri and his son, Michael (a banking consultant), the offering is going “extremely well” and will make Southern Connecticut Bank the “first bank to raise more than $10 million in an IPO.”
Bank organizers have already signed an agreement to lease space at 215 Church Street and are hoping to open its doors by April 1. According to the Ciaburris, a second branch could open shortly thereafter. The bank expects to employ about a dozen people, they say.
“New Haven needs a bank to service the commercial customer,” says Joseph Ciaburri. “Our customers are going to be the small-business owner, the professionals, such as doctors. We're looking to service the business that does up to $25 million in gross sales a year.”
Southern Connecticut Bank is a dwarf compared with financial giant FleetBoston (NYSE: FBF). FleetBoston is the eighth-largest bank in the country. In Connecticut, the company boasts 166 branches (not including the 24 the bank acquired in the recent merger with Summit Bancorp), 400 ATMs, 6,000 employees, $14.3 billion in Nutmeg State deposits, and one million customers using the bank's Homelink online banking service.
Despite the size of FleetBoston, the bank still caters to the small-business owner, asserts company spokesman Dennis Schain. The bank was recently recognized as the No. 1 U.S. Small Business Administration (SBA) lender in New England, New Jersey and New York for the past year.
Fleet's small-business services group approved 2,909 loans within its seven-state franchise. While the average loan was $60,845, more than 66 percent of SBA loans granted by Fleet were for loans less than $50,000. Additionally, almost 40 percent of its SBA loans were granted to women, minorities and veterans.
FleetBoston serves more than 400,000 small-business customers throughout its service area. The bank, according to a recent bank announcement, is the largest small-business lender in the Northeast, with $9 billion in total small-business deposits, and approximately $6 billion in total small-business commitments.
Like Fleet, Waterbury-based Webster Bank (NASDAQ: WBST) boasts of being “the largest lender to small business in Connecticut,” says Mike Bazinet, senior vice president public affairs. “Our strengths are local decision-making for the small-business owner and understanding community issues. We can help business customers meet all their banking needs.
“It has been part of Webster Bank's strategy to grow our commercial portfolio,” adds Bazinet, “and we're aiming to make it even stronger.”
With $11 billion in total assets, Webster currently has 42,000 business accounts with a deposit value of $1.3 billion, as well as 357,000 consumer accounts with a deposit value of $5.6 billion. The bank has 114 branches, including four acquired from Fleet earlier this year, as well as 220 ATMs.
According to Bazinet, more than 25,000 customers use Webster's Web site for online banking and bill-pay services. Webster charges a $1 fee at the ATM for people who aren't Webster account holders.
Sovereign Bank New England (SVRN) became a player in Connecticut earlier this year when it acquired 35 branches (including two in New Haven and one in Branford) and 76 ATMs in the FleetBoston merger/divestiture. When the conversion was made, the bank expected between three and five percent of former Fleet or BankBoston customers to move their accounts, says spokesperson Ann Murphy. However, she notes, Sovereign retained 97 percent of the customers at the branches it acquired. The Pennsylvania-based Sovereign has 135,000 retail and small-business accounts with about $762 million in core deposits in Connecticut.
Meanwhile in southern Connecticut, the Bridgeport-based People's Bank has been adding branches and financial centers throughout the state. According to media relations officer Paul Nonnenmacher, the bank recently opened its 144th branch – 51 of which are in Stop & Shop supermarkets - a key People's positioning strategy.
Branches are also slated to open in New Britain and Seymour by the end of the year, along with a People's Financial Center in Avon. These branches are part of a 30-branch expansion plan, according to Nonnenmacher.
“We pride ourselves on building relationships with our customers,” he says. “We offer a full basket of products and services: insurance, leasing, Internet cash management, discount brokerage.”
People's Bank is the largest independent bank remaining in Connecticut, with managed assets of more than $13 billion, 140 branches and more than 220 ATMs. The bank ranks 17th nationally as an issuer of MasterCard and Visa cards.
If you're looking for one-stop shopping for your banking needs, look no further than the Charlotte, N.C.-based First Union. At the company's newly-crated business financial centers, business owners can take care of their banking and investment needs, and learn about First Union's 401(k) plans and medical and dental programs.
According to spokesperson Karen Kitzmiller, First Union has more than 850,000 small-business customers who are “an extremely important part of our business.”
“First Union is in a position to serve the business owner through out their life-cycle,” Kitzmiller explains. “We're a big player in the SBA program, and we can be very flexible for start-ups.
“One of the great advantages that First Union offers is that you can do your banking in a broad way,” she adds. “Our customers have the ability to bank anytime, anywhere and any way they want.” The bank has 81 branches in Connecticut, including supermarket locations, and 121 ATMs.
Another First Union advantage, says Kitzmiller, is the way the bank “bundles” services together for its customers. For instance, the company offers six different retail checking accounts - some with monthly fees, some without. Some of those accounts also include other benefits such as free online bill-pay, a second checking account with no monthly fee, an additional personal savings or money market account with no fee, a free check card, a no-annual-fee credit card, interest on the checking account, and more. There are also checking accounts geared toward specific age groups (50-plus and 60-plus).
“When we bundle services together and take into account the balances of all accounts, including loans, we're very often able to waive the monthly fee for many of these services,” Kitzmiller explains.
“Big banks really struggle with the 'impersonal' problem,” she notes. “We're trying to offer products and services that our customers need.
“Customer-retention is a big part of our goal,” she adds. “Part of that is knowing our customers and making sure our employees know our products, so they can offer our customers valuable suggestions to better meet their banking needs.”
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