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BUSINESSPERSON OF THE YEAR
How Businessperson of the Year David Carson took once-struggling People's Bank to the top
of the heap
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Business New Haven
1/26/1998
By: Michael C. Bingham
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The results are in: People's Bank recorded record profits of $92.4 million ($1.51 per share) for calendar 1997, which happens to be the bank's fiscal year. That new record exceeds the then-record year of 1996, which exceeded the records set in 1995, 1994 and 1993 as well.
“This is our fifth consecutive year of record profits,” says People's Chairman and CEO David E.A. Carson, “capping a year of many accomplishments for People's Bank.”
Let him count the ways. “During 1997, managed assets grew more than $1 billion, driving us to above the $10 billion mark. Stockholders were also rewarded with two dividend increases, a three-for-two stock split and a total return exceeding 100 percent, bringing our market capitalization to more than $2 billion.
Reciting that litany of success (and there's much more) makes David Carson happy. It also helped to make him Business New Haven's 1998 Businessperson of the Year. And when he says good-bye to his spacious People's office high atop Bridgeport Center on December 31, 1999 (when he will retire as chairman; his last day as CEO will be December 31 of this year), he will depart secure in the satisfaction that he will have accomplished precisely what he set out to do in his 16-year run at what is now Connecticut's largest remaining independent bank.
He will likewise depart with an enviable measure of personal security. A May 1997 Forbes magazine survey named Carson No. 493 of its 800 “most powerful people” in corporate America, with a ranking of 91 among 153 executives in financial services.
For 1996, Carson earned a salary of $527,000, plus a $250,000 bonus and stock considerations that boosted his total compensation for the year to a cool $1.409 million. He also holds more than $2.5 million in stock in the bank - stock which of late has performing quite nicely, thank you.
Nevertheless, David Carson hardly sounds like a man who, at age 63, has done all he has to do. When his People's contract expires with the millennium, he hints at a possible future in the public sector. Or even back into the corporate. But he hardly sounds ready to ride off into the sunset. “Know anybody with a job?” he asks puckishly.
There were times when he wasn't so sure it would turn out this way. Take 1991, for example. Then People's was in real trouble - although hardly alone among state banks at the time - dragged down by risky loans made in the heady days of the '80s now gone bust as the Connecticut economy plunged into the depths of recession.
Carson remembers those days all too well. With a track record of success as a lieutenant and a general with companies large and small, Carson knew that failure was not a welcome addition to his lexicon, and set out, typically, to find his own route out of harm's way.
After all, that's what his English parents had done in 1940 when they gathered up five-year-old David Carson and fled the German blitz for the safety and opportunity of the New World. The settled in New York, where young David acclimated himself to American schools and proved sufficiently facile at mathematics to gain admission to the University of Michigan, whence he was graduated in 1955 with a bachelor's degree in business administration.
He returned to New York to go to work as an actuary for a rating bureau for a couple of years before a two-year stint in the Army. After that, he joined the then-Hartford Insurance Group in 1959. He rose through the ranks, achieving a senior vice presidency by 1964. By 1969 he was head of the company's worldwide property and casualty business.
In 1974 he moved to Middlesex Mutual Assurance, a Middletown-based property and casualty insurance company, which gave him his first shot at a top job (CEO). He ran Middlesex for nine years, before the search committee for the then-People's Savings Bank called. He was hired in 1983, and named president two years later.
“It was a challenging decision,” he characterizes it now. “Once I got here, I realized it was a very traditional organizational structure. One of the first things that needed to be done was to open that structure up, and to add a technology dimension to that structure.”
Indeed, one of the hallmarks of Carson's tenure at People's has been the creation of a real team approach to management, in contrast to competitors where shots are called by one or two honchos. A recent example was the luring of longtime civic leader Jean M. LaVecchia from a 24-year career at SNET to be People's new executive vice president of corporate services. “Her skills and perspective will broaden our strengths as we continue to diversify our organization's personnel and products,” Carson said of the hiring.
Carson also foresaw that technology would play an increasingly key role in the banking industry. He got rid of the bank's last typewriters, and in 1984 announced that every bank employee would become computer-literate. It was a bold statement, Carson recalls: The entire company had four PCs at the time.
That technology bias has informed the way People's does business ever since. Today the bank is a leader in PC and online banking. Prospective borrowers can stroll into a Stop & Shop store and teleconference with a lending officer.
Carson also led the drive to take People's public, which was effected in 1988 under an unusual structure that has the stock-issuing bank (NASDAQ: PBCT) held by a mutual holding company, known as People's Mutual Holdings, which maintains majority ownership of the bank itself. Under that arrangement, Carson could feel not only pretty smart, but practically speaking, takeover-proof.
Then came the Bad Time, when nobody in Connecticut banking felt particularly smart - and an unprecedented number of bank executives found themselves looking for new jobs.
Not David Carson. He tackled People's predicament with characteristic wisdom - which is to say, equal doses of the conventional and unconventional.
“We recognized that the problems of the bank were caused by a very small percentage of our customers,” Carson explains. “The rest of our customers were profitable - they paid their bills on time, deposited money in the bank. The decision we made was to separate the problem [loans] from the good business, and attack the problems.”
In doing so, Carson and People's management called on their people to redouble their efforts to turn things around. “We didn't want to diminish the services we gave good customers in our branches. We told [employees] they were going to have to work a lot harder, because we were going to be very tight on staffing.”
Those responses were conventional. “But we also did some things different from our major competitors,” says Carson. “One is, we never got rid of our training department. I went to our training department and said, 'These people are going to have to work a lot harder, because we're not going to be hiring a lot of new people. That means they're going to need more training.'”
Moreover, “Another thing that happened in New England was that a lot of banks sold their credit-card business as a way to generate money right away,” Carson explains. “We sold a third of our credit-card business, which at that time was our most profitable business. We had about $600 million in credit-card receivable; we sold about $200 million. Within 13 months, we had rebuilt the portfolio to where it was before we sold it.
That meant we added a very strong earning asset during 1992 and '93 that enabled us to overcome the losses. Because of that, we broke even in 1992, and made money in '93.” And the rest, as they say, is history.
Fouunded in 1842 as a mutual savings bank, People's today is a diversified financial-services company that is notable for having seized opportunities others may have seen.
One reason People's was able to foray boldly into Super Stop & Shop stores was, simply, that other banks did not. By the end of December People's had opened 39 of the 45 supermarket branches planned. And as the sole bank doing business in the state's largest supermarket chain, that niche appears secure for the foreseeable future.
People's President James P. Biggs, Carson's anointed successor as CEO and chairman, explains the supermarket program's most recent growth track.
“The Stop & Shop initiative exceeded our targets in 1997 as we ended the year with over $500 million in deposits, contributing to the bank's double-digit growth in consumer and commercial deposits.”
“We also expanded our market presence and basket of products and services. In addition to the pending acquisition of Norwich Financial, we acquired a money management firm [Olsen Mobeck & Associates of Rocky Hill and Litchfield] and an equipment leasing company [Independent Resources Inc. of Litchfield] during the fourth quarter. We also launched People's Online, linking our popular PC Banking product with the ability to manage investment activities through People's Securities.”
And, of course, People's has continued to craft itself as a player in the credit-card industry, the 23rd largest domestic issuer of MasterCard and VISA products. Is 23rd big enough to remain viable. Answers Carson: “We think so. We run the lowest operating costs of any major [issuers], so we feel big enough to enjoy efficiencies of scale.
“We're in a niche market. We market to people who use credit; we don't market to people who pay off every month. We're good at what we do.”
Come to think of it, that's seems like a pretty good summing up of David Carson's tenure at People's Bank. Now, the next challenge looms. BNH
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