QUINCY, Mass. -- Jon Chesto's biz column
The next company that will claim the title of the biggest independent retail bank to be based in New England won't have its headquarters in the financial districts of Boston or Providence.
No, you'll have to travel to downtown Bridgeport to find the next bank that will likely inherit the mantle once held by regional powerhouses such as FleetBoston Financial and Banknorth.
People's United Financial Inc.'s pending acquisition of Burlington, Vt.-based Chittenden Corp. would take it from Connecticut into four other New England states, including Massachusetts. When it completes the deal early next year, People's will leapfrog Webster Financial -- which is based in Waterbury, another blue-collar Connecticut city -- to become New England's largest local bank, with more than 300 branches.
Where have all the big banks gone? FleetBoston was swallowed by Bank of America in 2004. Banknorth is now part of Toronto's TD Bank Financial Group. Citizens is based in Providence, but it has long been an extension of the Royal Bank of Scotland. State Street ditched its branch banking business years ago. Sovereign's CEO works out of a Boston office, but the bank is still based in Pennsylvania.
During the industry's frenetic M&A activity in recent years, People's remained tightly focused on its core Connecticut market. But that tight focus changed in April when People's finished a ``second step conversion'' into a full-fledged public company. The deal raised more than $3.4 billion by selling off a majority stake that had been owned by a mutual holding company. Now, all of its shares are owned by public shareholders.
People's executives said they plan to spend the money on acquisitions or branch openings in nearby markets. The first move out of Connecticut took place last month when the bank opened a branch in New York's Westchester County. The bank also added ``United'' to its name to help it differentiate itself from other, similar sounding banks in other markets.
Then, on June 27, People's unveiled its Chittenden deal -- its first acquisition in nearly 10 years. Some industry insiders expected that People's would move in the other direction by making a play for a New York or New Jersey bank. But People's decided to put its emphasis on New England instead.
John Carusone, president of Bank Analysis Center Inc. in Hartford, said the decision to bet on New England is beneficial in the long run for the region, partly because local ownership means local decision-making. The Chittenden deal puts People's in Central and Western Massachusetts, but not the eastern part of the state. Carusone says he expects that People's will eventually consider expansions into the Boston and Providence areas.
People's will likely stay open to acquisitions in the other direction, too, especially as it builds a branch network in New York. But Jared Shaw, an analyst with Keefe, Bruyette & Woods in Hartford, says he thinks People's will focus on integrating the Chittenden operations through next year before going back on the prowl for another big acquisition.
Of course, if People's builds a strong enough franchise, there's always the possibility that it could become an acquisition target itself in several years. That said, for the near future at least, we'll be able to watch another New England institution grow within the region as an independent company.
Yes, the shots will be called in Bridgeport. But it sure beats having the decisions made in Charlotte or Toronto or some other faraway city.
The Patriot Ledger of Quincy, Mass.
Jon Chesto is the business editor of The Patriot Ledger. He may be reached at firstname.lastname@example.org.