Still a mutual, Liberty Bank has moved aggressively into the New Haven market aided in part by its purchase of the Bank of Southern Connecticut in June 2013. Originally a Middlesex County bank, it now has 49 branches in Connecticut, reaching into Hartford County. Its local footprint ranges from Cheshire and Meriden to New Haven and along the Connecticut shoreline. The bank is well capitalized, as the largest mutual in the state with $3.5 billion in assets, and total risk-based capital of more than 19 percent, as much as double some of its larger competitors.

The mutual history and strong capital base has driven much of Liberty’s sales effort in the residential and commercial real estate markets. In a BNH interview last year, CEO Chandler Howard said real estate lending would remain one of Liberty’s cornerstone sources of income.

Recently Liberty’s marketing has spotlighted large real estate loans both in and outside of Connecticut, but the bank has begun to focus on broadening its portfolio with more small-business marketing as well.

 Still feeling the after-effects of the meltdown, area financial institutions seek to navigate a new economic landscape

 

The economy may seem as though it’s still stuck in neutral, but the leading economic indicators of employment, prices, etc. have been slowly improving. New Haven streets are abuzz. The improving Elm City economy leads Connecticut — but for many on the streets, that success hasn’t trickled down yet. As a business the success of any bank or other financial institution is linked first and foremost to the economy. That means that times remain tough for Connecticut’s banks, navigating the slow-growing state and region-wide economies.

But perhaps the most intriguing financial indicator is how, six years after the onset of the big bank-led economic collapse, New Haven’s banking market is more competitive than at any time in recent memory.

New to greater New Haven bank entrants with combined assets of nearly $10 billion includes Bankwell (which recently purchased Hamden-based Quinnipiac Bank), United Bank (newly merged with Rockville Bank), Farmington Savings Bank and Liberty Bank, which purchased the Bank of Southern Connecticut in June 2013.

We even find Capital One with one New Haven County branch showing up at trade shows (not just in our wallets).

Even one of Connecticut’s smallest banks (by assets), New Haven’s Start Bank, has shown it can grow and is working to carve out a niche as a small-business bank as well.

For many New England communities, those banks alone would make for a competitive landscape, but added to the New Haven County mix are powerful national banks like Bank of America, Chase, Wells Fargo and TD Bank. And then there are the regionals: Webster, People’s United, First Niagara, and a host of community banks like Guilford Savings Bank, Ion Bank, Milford Bank and Essex Savings Bank.

Bank of America remains Connecticut’s largest bank by deposits, accounting for approximately 25 percent of all deposits statewide. Connecticut’s two homegrown regional banks, Waterbury’s Webster Bank and Bridgeport-based People’s United, are no slouches however, with nearly 12 percent of all statewide deposits each. People’s United, which was an early innovator in placing branches in supermarkets, still has the most branches in the state, with some 165.

Let’s take a look at some of the more overt changes in the region’s banking industry in the last 18 months or so.

The nation’s third largest bank, Citibank proved it wasn’t too big to fail — in New Haven, at least — when it abandoned its branch at Church and Chapel streets, leaving only a bunch of ATMs in the state (and two years left on its lease).

On the other end of the scale, Start Bank proved it could start to punch above its weight, hiring former mayor John DeStefano as its executive vice president and community-banking veteran Maureen Frank its new CEO, replacing William Placke. Former Centerbank CEO Placke came out of retirement to guide the bank through what would be a drawn-out licensing process.

Start Bank was created as a result of funding set aside for a community bank in the wake of the conversion of the mutual New Haven Savings Bank to the publicly traded New Alliance in 2004.

Then-Mayor DeStefano was the leading proponent for the creation and funding of a new New Haven community bank, and few were surprised that the longtime chief executive landed there after his 20-year stint at City Hall ended a year ago.

Start has seen its assets grow more than 20 percent from $58 million to $73 million in the first nine months of 2014. Over the same period it also closed its original Fair Haven branch.

DeStefano says he advocated for the Grand Avenue branch from his position as a founding board member, but it proved to be an unprofitable drain for the bank.

Start has begun an aggressive effort to market itself as a small-business bank. An advertising campaign created by New Haven advertising agency Mascola Group based on the theme “Stop Dreaming, Start Doing” has generated significant buzz.

In line with that entrepreneurial spirit, Start Bank has elected one of New Haven County’s most successful young entrepreneurs to its board: Kam Lasater, co-founder and COO of New Haven-based social media community incident report site SeeClickFix.

 With $100 billion in assets and branches in 16 states along the East Coast, the Royal Bank of Scotland’s Citizens Bank is today the eighth-largest bank in the U.S.

However, the 2008 financial collapse placed a significant strain on RBS, and many banking industry insiders believe this has left Citizens in limbo.

The Royal Bank of Scotland was bailed out by the UK government, which still owns 80 percent of RBS. Citizens, however, has begun to shed its chains and recently became an independent publicly traded bank on the NYSE (ticker symbol CFG), raising $3 billion in assets and an IPO at $21.50 per share in late September.

The $3 billon windfall, however, is not for use by the bank but to help pay back the UK government.

RBS still owns more than 70 percent of the stock of Citizens.

The Street.com called the IPO “tepid” and suggested that banks generally wouldn’t see much if they chose to sell stock as well. Wall Street views the new banking regulations, continued weak economy, competition and the Federal Reserve-induced low-rate environment as a drag on bank profits.

Citizens now has 16 branches in greater New Haven, several others along the shoreline north to Providence, R.I., where its U.S. headquarters are based. Whether this newfound semi-independence will bring Citizens back to its once very aggressive marketing and acquisition posture remains to be seen.

 The major money-center banks may be making national headlines, but here in Connecticut they appear to be going quietly about their business.

Bank of America and Wells Fargo, with assets of approximately $1.4 trillion each, tower over even a major player like TD Bank, which boasts more than 1,000 branches, including 76 in Connecticut, and $225 billion in assets.

Unlike it big-bank brethren, TD has proven to be the only one very active in the small-business SBA market.

In 2013 it placed $24 million with 138 loans. That was second only to the sleeper Eastern Bank, based in Norwich, which placed 439 SBA loans for $23 million.

Wells Fargo reportedly entered the Northeast reluctantly when it took over then-troubled Charlotte, N.C.-based Wachovia Bank in 2009. Wells Fargo did up the local game in Connecticut and New Haven and in 2014 was named Business New Haven’s Corporate Citizen of the Year, for a host of financial and personal staff commitments throughout the greater New Haven community. With 75 branches and only 7.5 percent of deposits the banking giant is still well behind local favorites People’s United and Webster as well as Bank of America.

 In late December 2013 the First Niagara board appointed Gary Cosby as the bank’s CEO. Cosby had initially replaced CEO John Koelmel in early 2013. Koelmel’s and the Buffalo, N.Y.-based bank’s strategy fell victim to the continuing effects of the financial meltdown, the Federal Reserve’s interest-rate policy and a weak economy.

And then there was Koelmel’s acquisition strategy.

After acquiring New Haven’s NewAlliance Bank in 2010, Koelmel met with BNH and outlined a strategy to acquire banks within the Buffalo-Philadelphia-Boston triangle. Koelmel wanted to trade slow-growing (though consistently profitable) markets in upstate New York, where the bank had established a dominant presence, for faster growing markets.

His currency was strong growth, good capital and what was viewed as a management that was growing even as other banks were really struggling.

Koelmel believed bank directors and potential acquisition targets “will prefer our stock to their own.” That was essentially true in the NewAlliance deal.

Even as the financial crisis was coming into full force, First Niagara was reaching a market value peak in 2008 and when it merged with NewAlliance in 2010 its stock was still very strong.

Regulators, however, had ceased being keen to acquisitions that weren’t “necessary,” and most banks and their boards of directors had become overwhelmed by the new regulatory burdens imposed in the wake of the meltdown.

First Niagara found there was no more low-lying fruit and concerns about portfolio quality undermined potential acquisitions moving forward.

Federal Reserve policy may have helped the huge money-center banks, but they weren’t a good friend to First Niagara or banks like it.

One 60-plus-year-old FNB director told us, the Fed was overseeing the “biggest transfer of wealth in his lifetime,” as the strongest borrowers were getting low rates, but depositors were getting nothing on their money.

With $39 billion in assets and more than 400 branches and strong franchises in several major markets, First Niagara is a pretty big dog.

It’s a loan portfolio that had many long-term investments paying above the market rates engineered by the Fed.

The board replaced Koelmel in early 2013 after First Niagara’s stock hit a ten-year low.

The stock market has reacted negatively to some balance-sheet reshuffling, but overall First Niagara appears to be moving slowly back into the driver’s seat with CEO Cosby seeing high single-digit increases in loan volumes and deposits and continued operating profit growth.

In Connecticut First Niagara has rolled out an aggressive marketing campaign geared to small business and deposit growth, reflecting a bank that seems confident again. One local First Niagara loan officer told us he was at 400 percent of goal. Not bad.