Manchester Offers Tepid Response to NewAlliance Merger

Residents and community leaders had been clamoring for a public hearing with the state's Banking Commissioner since details about a proposed merger between First Niagara Financial Group and NewAlliance Bank began to emerge in December, such as the fact that the merger would eliminate  in Connecticut, including 93 in downtown Manchester.

Tuesday night, Manchester got its wish, as Banking Commissioner Howard F. Pitkin held the first of two public hearings on the proposed merger in the Community Commons Room of the Great Path Academy building at Manchester Community College. 

But anybody expecting harsh words, righteous indignation and a populist sentiment to rule the evening would have been sorely disappointed. In fact, the hearing lasted barely all of an hour and was attended by less than 90 people. Most of the speakers were elected officials or community leaders, who either endorsed the merger or expressed vague platitudes as to how they were "cautiously optimistic" about the deal and its impact on downtown Manchester and the state of Connecticut. 

Mayor Louis Spadaccini noted that NewAlliance had a 100-plus year history in downtown Manchester, dating back to its origins as the Savings Bank of Manchester, and that the bank was the downtown area’s largest property owner and employer. The Savings Bank of Manchester and Tolland Bank were absorbed into NewAlliance Bank in 2004 following a takeover orchestrated by New Haven Savings Bank. 

“In the context of downtown Manchester, this is a huge change. NewAlliance is our largest employer in the downtown area. It will affect other businesses in the downtown area as well,” said Spadaccini, who noted that he worked as a teller at SBM branch while in college. “My foremost concern above all is that downtown Manchester remains vibrant and a center of commerce with good jobs.”

Spadaccini encouraged First Niagara to take advantage of all state and local tax credits to grow its downtown workforce, such as a local property tax credit the town offers for call or processing centers in the downtown area.

Tana Parseliti, who oversees the Downtown Manchester Special Services District, which helps to support the downtown district, said that the special services district was at first concerned with the merger, because of the many staff eliminations it called for, but now supported the proposal.

“First Niagara was receptive to our suggestions,” Parseliti said, noting that the bank planned to contribute $100,000 to the district as “local impact mitigation assistance,” which included parking fees, office rents, phone services and other assistance. First Niagara has also agreed to fund a “feasibility study” to explore options to help the downtown district maintain its vibrancy.

“This is a one plus one equals three combination where the whole is greater than the sum of the parts,” said John Koelmel, president and CEO of First Niagara Bank, in his remarks Tuesday. “The two teams have worked hard to meld the strengths of our respective organizations and ensure that the one team that emerges will be a banking force to be reckoned with in New England for years to come.”

Koelmel said the merged institution, which would go by the name of First Niagara, would be among the top 25 banks in the country with $30 billion in assets, $18 billion in deposits and 340 branches throughout four Northeastern states. First Niagara’s plan call for it invest more than $1 billion in NewAlliance's market over a five-year period to spur increases in small business lending, community development lending and lending to low and moderate income levels for residential loan purposes.

When talked turned to the eliminated positions called for under the merger, Koelmel said the bank had “pulled no punches” and was trying to be transparent and honest about the reductions. He said that although the merger called for the eliminate of almost 220 “back-office positions,” which he attributed to “redundancies between the two organizations,” the plan was for First Niagara to begin to grow its front office staff almost immediately after the merger was complete.

Koelmel said that by the end of the year the bank planned to have filled about 170 of those eliminated positions, and hoped to return to its current workforce of 1,200 employees by the end of 2012.

“How does that happen?” he said. “Over the next 18 months, our plan is to offset the back-office job eliminations by repositioning the bank’s workforce in Connecticut and the region to be more focused on customer-facing retail and commercial banking services to drive our growth strategy. In fact, you will soon see us aggressively recruiting for over sixty newly-created positions.”

But not everyone who spoke Tuesday offered praise for the merger.  

General Manager Scott Shanley said that he was concerned about the number of staff reductions called for immediately under the merger.

“Take a look at the folks in this room and imagine yourself as a small business owner in downtown Manchester, and think about this as your business base, and think about them all leaving, and we don’t even have 93 people in this room,” Shanley said. “This is a lot of people for a small downtown to lose.”

While Robert Samuelson, who described himself as a longtime Manchester resident, said he was alarmed by a trend that seemed to be becoming more and more common: larger corporate-driven banks gobbling up smaller local banks.

“Who do the common folk go to for a loan and who does the small business person go to?” Samuelson said. “The bigger the bank, the more you’re just a number; and your loan is done by numbers. Where does the individual who starts a business in a community go to when this whole banking scheme is done?”

The second hearing is scheduled for Wednesday at 5 p.m. in the Conte-West Hills School auditorium, 511 Chapel Street, New Haven.

New Haven, where NewAlliance is headquartered, will bear the largest brunt of the proposed layoffs, at 126 positions.

Pitkin said he would review the statements made as part of the two public hearings, and any other documents the public might wish to provide him with about the proposed merger, and then make a decision. In addition to approval from the Connecticut Department of Banking, the Federal Reserve Board and the Office of the Comptroller of the Currency must also approve the merger.

When asked what would happen if any of those branches did not approve the merger, Koelmel said he did not foresee that happening.

“We have every confidence it will be approved,” he said, adding that the hearings offered the bank “an opportunity to hear what peoples thoughts and concerns are.”

Koelmel said that, although it might not seem like it to some now, the merger would be a boon to the local Manchester community.

“You’re going to see more dollars invested locally, more philanthropic giving and more community sponsorship,” he said.

No one who would be affected by the proposed layoffs spoke as part of the hearing.