M&T takeover of People’s United causes ripples in WMass banking industry

Fibo Quantum

The merger of People’s United Bank into Buffalo-based M&T announced two weeks ago is good news for PeoplesBank president and CEO Thomas Senecal for at least one important reason.

People will stop conflating People’s United — for now still headquartered in New Haven, Connecticut — with his Holyoke-based PeoplesBank. It’s been a point of confusion since People’s United bought Chittenden Bank and its subsidiary the Bank of Western Massachusetts in 2008 entering the Western Massachusetts market.

PeoplesBank unsuccessfully tried in 2008 to get a federal court to intervene and help it protect its trade name.

Now the banking industry’s penchant for mergers and acquisitions, the very thing that brought the People’s United name, and the confusion, into the market, is taking the People’s United name.

“We knew someday it would probably happen,” Senecal said.

Thomas Senecal, president and CEO of PeoplesBank., says his bank will stay independent. He’s seen here at a recent Girls Inc. event.(Douglas Hook / MassLive)

It’ll take some time for other changes to weave through the region’s banking market where any disruption can send dissatisfied customers looking for bankers — and bankers looking for dissatisfied customers willing to switch whether they are consumers with household accounts or businesses with commercial loans.

Florence Bank CEO Kevin Day said the M&T merger is an example of how local banks can buy or get bought until they are part of a very large organization.

“I think that consolidation in the market, what customers experience is that movement away from local control,” Day said. “That local presence gets distanced. The people making the decisions are farther away. We are local people serving the local market.”

Michael Ostrowski, CEO and president at Arrha Credit Union in Springfield, said a major opportunity presents itself to competitors when merging banks bring their computer systems together. Invariably there will is trouble in the translation that customers have to iron out, or features of accounts like minimum balances and other rules crop up.

“(Customers) are going to be upset,” he says.

Day says the situation generally prompts customers to migrate.

“We see that shift,” he said. “That’s provided a lot of our growth over the years.”

He said the consistent bank mergers was one of the reasons Florence, based in Northampton, added offices in Chicopee, Springfield and West Springfield in recent years.

Florence Bank Kevin Day

Florence Bank’s president and CEO Kevin Day says his bank has grown because customers come to it, dissatisfied after a merger.(Republican File)

Arrha has already started advertising to People’s United customers in The Republican and elsewhere, hoping to grow its own business. Especially since Arrha has an office about a block away from a People’s United location in West Springfield.

M&T Bank Corp. announced last month that it will buy People’s United Financial in an all-stock transaction valued at $7.6 billion.

The deal is expected to close in the fourth quarter of 2021 and the combined bank will take the M&T name.

The new M&T company will have an estimated $200 billion in assets, more than 1,100 branches and 2,000-plus ATMs in 12 states from Maine to Virginia. The People’s United headquarters in Bridgeport, Connecticut will become the New England regional headquarters for M&T.

In Western Massachusetts, People’s United as it exists now has elements of United Cooperative Bank and of the Bank of Western Massachusetts, following a series of mergers and branch closings.

People’s United bought United Financial Bancorp, the holding company for United Bank, for $759 million in 2019.

That deal followed the 2014 merger of United Bank — once known as United Co-Operative Bank and once headquartered in West Springfield — with the former Rockville Bank in Connecticut.

The new M&T company will have an estimated $200 billion in assets, more than 1,100 branches and 2,000-plus ATMs in 12 states from Maine to Virginia. The People’s United headquarters in Bridgeport, Connecticut, will become the New England regional headquarters for M&T.

In Western Massachusetts, People’s United as it exists now has elements of United Cooperative Bank and the Bank of Western Massachusetts, following a series of mergers and branch closings. People’s United bought United Financial Bancorp, the holding company for United Bank, for $759 million in 2019.

That deal followed the 2014 merger of United Bank – once known as United Cooperative Bank and once headquartered in West Springfield – with the former Rockville Bank in Connecticut.

The much larger M&T doesn’t have any offices locally now, but PeoplesUnited is a major player. With 19 offices here, it’s got $1.9 billion in deposits in Greater Springfield, according to statistics kept by the FDIC. That makes it the third-largest market share in the region at 10%, behind Bank of America at 11.79%, TD Bank at 11.28%. PeoplesBank is fourth at 9.75%.

“M&T wants to grow into this part of New England,” says Westfield Bank executive vice president Kevin O’Connor.

Growth – by buying blocks of customers and assets instead of growing one at a time – is the goal. Bigger banks are better able to absorb the fixed costs of compliance with regulations, of keeping up with the latest technology. All of this is done in a low-interest rate environment where profit margins are squeezed.

And, in publicly-held banks – those owned by stockholders – are under obligations to return money to those investors, notes Senecal. Mutuals, like PeoplesBank and Florence, are under much less pressure although they do merge and buy other banks.

“We are a mutual, (and) we are not going anywhere,” Senecal says.

Florence Bank’s Day echoes the sentiments, adding his bank doesn’t have acquisitions as a priority .

Not that mutuals don’t merge or, in PeoplesBank’s case, acquire another bank. It bought the former First National Bank of Suffield in 2018, giving it a toehold in the Connecticut market. At the time, Suffield was stockholder-owned. “It’s worked out well,” Senecal says of the Suffield acquisition.

PeoplesBank isn’t currently looking to make any acquisitions, according to Senecal, but if a bank approached it with a deal, it would investigate.

Westfield Bank is a stockholder-owned bank. It bought Chicopee Savings in 2016 for $110 million.

“We’ve had continued growth since then, from that merger,” O’Connor says. “Our desire has been to remain independent. We continue to grow to make that happen.”

That means adding branches in Bloomfield and West Hartford in Connecticut and taking over a former United Bank office in the Hampshire County hilltown of Huntington, just up Route 20 from its downtown Westfield headquarters.

United was going to close the Huntington branch before the mergers. Westfield Bank responded to those in the community worried that the closure would leave the region’s hilltowns without a bank.

“But also given what Westfield Bank is and stands for in the community,” O’Connor says. “It’s the right thing to do.”

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