January 14, 2019
Banking & Finance

A Mass. bank startup has eyes on CT

Photo | HBJ File
A former officer of a predecessor to United Bank is leading New Valley Bank.
J. Jeffrey Sullivan, President/CEO, New Valley Bank & Trust Co.
Gregory Seay

Mergers and organic growth in recent years have shrunk the ranks of New England's community banks, and Springfield banker J. Jeffrey Sullivan and fellow associates are taking the opportunity to try and fill that void.

Sullivan is among a group of northern Connecticut and western Massachusetts stakeholders seeking a Bay State de novo state bank charter to launch a new lender in Springfield, New Valley Bank & Trust Co.

Originally, the bank was to have opened doors before the end of 2018. However, Sullivan, who is the organizing bank's president and chief executive officer, says the new target opening date is the first quarter of 2019.

For now, he says, New Valley's organizers are focused on raising the last $6 million to capitalize their fledgling institution at $25 million.

The bank has received preliminary OKs from Massachusetts and federal regulators to open.

"There are lots of community banks that have gotten larger,'' said Sullivan, an ex-senior banker at former United Bank of West Springfield, which in 2014 merged with Vernon's former Rockville Bank to form United Bank, now based in Hartford. Sullivan departed within weeks of the merger, to pursue other professional interests.

Connecticut has no new bank charters pending, according to state bank regulators, yet it has been emblematic of the region's shrinking base of community lenders.

Former Farmington Bank, acquired last Oct. 1 by Bridgeport super-regional lender People's United Financial, was among Connecticut's most profitable community lenders. Steady deposit and loan growth pushed its assets above $3 billion, ultimately drawing the attention of a suitor. It, too, had a handful of Springfield area branches.

People's absorption of Farmington Bank and its coveted West Hartford market presence has spawned a void that other Connecticut community-bank rivals, namely Naugatuck's $1.3 billion-asset Ion Bank and $1 billion-asset Thomaston Savings, are scrambling to fill. Each has applied for permission to open new branches in Farmington, to plumb new depositor/borrower relationships in and around that wealthy Farmington Valley enclave.

More recently, $1.6 billion-asset Windham community lender Savings Institute Bank & Trust announced a planned $180 million merger with Boston regional lender Berkshire Hills Bank, which has $12 billion in assets and a Greater Hartford presence.

Under the radar

Filling a banking void is precisely what New Valley's organizers hope to achieve in positioning a newly chartered lender in the midst of the competitive turf of its larger community- and money-center bank rivals.

The opportunity, Sullivan said, "is for us to sneak under the radar to do deals that might be too small for bigger banks.''

Massachusetts had four banks open doors this century, none of which now exist due to acquisitions. Moreover, Boston regional lender Berkshire Hills Bancorp has mushroomed due to acquisitions there and in Connecticut in recent years that have swelled its assets today to more than $12 billion vs. $2.8 billion in late 2010, when it was a community lender headquartered in Pittsfield, Mass.

"It's easier to have a merger happen and go out of business,'' Sullivan said. "We're on the side of trying to put more capacity into the system.''

Hartford real estate development and financial-services adviser R. Michael Goman says state and federal bank regulators appear to finally be responding to borrower concerns that fewer small lenders are crimping their access to credit.

"The Feds and banks have heard a lot of complaints that credit tightened up too much in the aftermath of the '08 financial crisis … ,'' said Goman, principal in Goman + York Property Advisors and president of its Accubranch bank-branch siting-marketing advisory.

"So the regulators,'' he said, "seem to be moving in the direction of trying to ease up on their scrutiny and encourage banks to do more lending in return."

New Valley's organizers also are implementing a capital-raising strategy they hope will benefit the bank long term. Sullivan says organizers are pursuing some 300 "investors'' culled from among Springfield/Greater Hartford area businesses and entrepreneurs who simultaneously will be its depositors, borrowers and ambassadors, generating business contacts for New Valley.

"Selfishly, these are our first 300 customers, and hopefully our sales force as well,'' Sullivan said.

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