Lenders See Opportunities for Branch Expansion - Mutuals Add Branches as Larger Competitors Scale Back
This article was originally featured in The Commercial Record. Photo: GSB North Haven Branch. (Photo courtesy of GSB)
From bank mergers and technology to the pandemic and changing consumer behaviors, multiple forces continue to alter the role of traditional brick-and-mortar branches in banking. Several banks have responded to these changes by reducing their branch footprints. Connecticut this year has seen dozens of branch closings, with more to come.
But other banks have taken a different approach. Multiple studies show that customers still want branches in their communities, and some community mutual banks have seen opportunities to expand with new branches, helping the bank increase growth while moving into communities that have experienced recent branch closings.
“There are opportunities that a community bank brings to areas that really will benefit them,” said David Finnerty, executive vice president and chief operating officer at Guilford Savings Bank. “Just look in the last six to nine months at all the different branch closures and mergers that are still going on – that’s leaving customers high and dry that are used to banking with that one branch.”
Part of the Community
The past year has seen both regional and national banks announce multiple branch closings in Connecticut, including Webster Bank, Berkshire Bank, Bank of America, Santander Bank, TD Bank and Wells Fargo. The state’s largest mutual bank, Liberty Bank, is closing six locations later this year, and People’s United Bank, which is in the process of being acquired by M&T Bank, plans to close its Stop & Shop branches in the coming years.
While community banks have closed a few branches, some banks have opened new ones, including Newtown Savings Bank, Ion Bank, Jewett City Savings Bank, Dime Bank and Windsor Federal Savings Bank.
The $914 million-asset Torrington Savings Bank will soon join these banks when it expands into Bristol this month.
Lesa Vanotti, Torrington Savings Bank’s president and CEO, said the bank had started talking about an expansion about five years ago. With six branches in Litchfield County, including three in Torrington, and one in Burlington, Torrington Savings Bank had looked at other communities before deciding on Bristol, which Vanotti said shares some similarities with Torrington, including as former mill towns.
The bank purchased a United Bank office that had closed after People’s United’s acquisition. Since then, both Webster and Liberty announced that they would close Bristol branches, and People’s United has two Stop & Shop branches there that will shutter.
“It’s a little bit fortuitous on our part that we chose to go to that market, and these things happened that really paved the way,” Vanotti said. “We already thought there was plenty of room there for another community bank, but we’re even more committed to that now seeing what’s happened in that market since we made the decision.”
While Bristol does have one community bank already, Thomaston Savings Bank, Vanotti still sees opportunities in the market, including for residential mortgages, commercial lending and cash management services for the business community.
Torrington Savings Bank has only been doing commercial lending since 2014, and Vanotti said the new branch in Bristol will help the bank continue to build that department. The bank has already started making connections with the business community there, as well as with city officials and nonprofit organizations.
While the Torrington Savings Bank name will be new to Bristol, Vanotti said the branch employees have lived or worked in the Bristol market. The bank also did research before the expansion to better understand moves into new markets.
“The research showed that it wasn’t so much the name of the bank that was important to people,” Vanotti said. “It was more feeling like the bank was part of the community.”
Torrington Savings Bank could be interested in other market expansions, Vanotti, said, but the bank plans to pause after the Bristol expansion before looking at other opportunities. She added that the bank has no plans to close any of its other locations, noting that they are geographically dispersed, even the three in the city of Torrington, and continue to show strong activity.
A Delicate Balance
The $983 million-asset Guilford Savings Bank also has no plans to close any branches and instead is working on two market expansions. The bank opened a branch in North Haven in the spring and will open another in Northford in September.
Finnerty said the branch expansion was part of the bank’s strategic plan to improve the lives of Connecticut residents while achieving scale and still operating efficiently. He said community bank branches often have a different purpose compared to large regional and national banks.
“They look at branching as a play for revenue and scale on their side, where we look at it as a way to engage the community and make the community stronger,” Finnerty said. “We come in and we’re here to stay. …We’re there in the good times and the bad times.”
Several banks that closed branches have cited changing consumer behaviors and the accelerated adoption of digital tools as reasons for consolidating offices. Even before the COVID-19 pandemic, technology had already started to change how banks service customers, Finnerty said. While digital banking options mean that banks might need less space and fewer offices or might have more distance between locations, he said, the branch augments digital options by acting as a community hub where customers can meet with bankers, lenders, the wealth management team and other specialists when needed.
“Depending on how [customers] want to interact with us, we see that digital technology component married perfectly,” Finnerty said. “It’s a very delicate balance with the branch space to bring that full venue of opportunities and options to the customer.”
Most of Guilford Savings Bank’s other six branches are on Connecticut’s shoreline, and the two new markets will provide access to a different demographic. North Haven in particular has a large number of small businesses, Finnerty said, adding that families and the community could all benefit from having another community bank in the market.
Like Torrington Savings Bank, Guilford Savings Bank plans to pause before pursuing other market expansions, though Finnerty said the bank would keep an eye out for any opportunities.
Without the type of marketing budget that a large regional or national bank could use to advertise new locations, Finnerty said, the bank has used digital channels to promote the new branches, while bank employees have been active with business, community and nonprofit organizations.
He added that the community banking industry as a whole could benefit from improving its messaging in communities.
“We need to do such a better job communicating to everyone in Connecticut … the benefits of banking with a community bank – what they bring in terms of all the different aspects of community life, the businesses, families,” Finnerty said.