Is Big the New Local?

Customers of New Haven-headquartered NewAlliance Bank have received a welcome booklet from Buffalo, N.Y.-headquartered First Niagara, which on April 1 obtained approval from the Federal Reserve for a $1.5 billion takeover of the third largest bank in Connecticut.

The deal is contingent upon receiving the blessing of the Connecticut Banking Commission – a process that is expected to go smoothly despite numerous roadblocks along the way.

Among those opposed to losing a cash-rich community bank to an out-of-state corporation are Sen. Richard Blumenthal, Connecticut's former attorney general, and New Haven Mayor John DeStefano Jr.

A customer-supported Facebook page called ‘Say NO to First Niagara’ carries a dramatic image of a big and mean-looking shark about to eat up a small fish, which not too long ago munched up the smaller Savings Bank of Manchester (SBM), also depicted by a fish caricature.

“I think the SBM-New Alliance merger was much more earth-shattering. I liked SBM, and now you just have a bunch of pirates operating out of New Haven. The bank’s already lost touch with its customers,” said Peter Mahler, a customer at a Manchester branch.

The bank has several locations in Manchester and branches in East Windsor, Ellington, Enfield, Storrs, and Tolland.

But banking analysts  pooh-pooh the notion that First Niagara is the big bad wolf.

Hartford-based Damon DelMonte, who tracks the bank’s parent company First Niagara Financial Group at Keefe, Bruyette & Woods, said it takes two to tango.

“Look, First Niagara isn’t the bad guy here. NewAlliance agreed to the merger and then politicians got involved and it became messy,” he said.

DelMonte insisted that contrary to its image among those that oppose the takeover, First Niagara is not anti-community.

“In fact they’ve been expanding in the last three years and are very dedicated to local communities. Unlike a large banking corporation, First Niagara has a very de-centralized model where decision-making is local, not in New Haven or Buffalo,” he said. 

Kishwer Rahman, a customer at a Manchester branch, said she was open-minded about the change.

“What can I do about it?” she asked. “As long as it doesn’t affect me, it doesn’t bother me. The people are the same, so I’m okay,” she said.

Alan Skinner, a customer service representative at the North Main Branch in Manchester, said several customers have asked him if he would still be there.

Skinner assured them that he was not going anywhere, and that the bank will always focus on its community.

It is estimated that more than 200 positions will be eliminated due to redundancies. Employees at Main Street, Manchester, were provided with free access to the services of a resume-writing specialist, who also conducted a session on job interviewing techniques.

From the customers’ perspective, changes are already afoot.

According to the welcome booklet from First Niagara, the minimum balance requirements to maintain a free checking account will increase shortly depending on the account type. Free savings and premium savings will no longer be available for new accounts.

The booklet carries a message from John R. Koelmel, president and CEO of First Niagara:

“We’re dedicated to maintaining local leadership, hometown decision-making, and a strong commitment to supporting the local communities we serve,” he wrote.

Given the recent federal banking regulations that make it harder for smaller banks to stay competitive, it looks like from now on, big is the new local.