Centered on the front page of First Niagara Bank's Web site is a simple message: "Welcome NewAlliance Bank customers."
Making them feel welcome is only part of First Niagara's goal, however. In absorbing NewAlliance and establishing a significant presence throughout Connecticut and Greater Springfield, it believes it can grow beyond NewAlliance's market share and become a key player in the region's financial-services landscape.
That's a daunting task for an institution headquartered in Buffalo, N.Y. making its first--albeit ambitious--move into the Southern New England market, particularly considering the community-bank culture of Western Mass.
"We've met with many of the community leaders, and they've given us feedback over the last several months," said David Ring, First Niagara's New England regional president. "I've met with many business leaders, and they're helping shape our strategy in the market and helping shape ow target market."
In doing so, Ring understands that this region is home to many smaller, yet thriving Massachusetts-based banks that tout their hometown culture in everything from personal service to small-business lending to local philanthropy. And he says First Niagara, despite its size and headquarters a few hundred miles away, is a good fit in that environment.
"We view ourselves as a community bank," he told BusinessWest. "We have made it very clear that local decision making is definitely a priority--not only in lending, but in our community commitments to nonprofits looking for some sort of sponsorship. And virtually 90% of our credit decisions will be made locally without going to any sort of committee."
That's significant, considering that among First Niagara's 340 branches, only 13 are located in Massachusetts, while Connecticut boasts another 75.
"NewAlliance had a great core franchise in the Springfield market and down throughout Connecticut," Ring said. "The merger with First Niagara will help build the franchise and its capabilities, and introduce clients to other services, but will have the same great people serving the market as before.
"I just think we have the opportunity to grow the platform with things like private banking and enhanced cash-management services, while we can serve larger companies than before and enhance small-business lending as well," he added.
Strength in Numbers
The region's new player certainly has size on its size, with the merger creating a top-25 U.S. bank by assets. The reconstituted First Niagara--which has completed at least 10 major whole-bank and branch-network acquisitions over the last 10 years--now boasts more than $29 billion in assets, including more than $14 billion in loans, as well as $18 billion in deposits.
First Niagara President and CEO John Koelmel said NewAlliance--which brought to the table $8.5 billion in assets, including $4.9 billion in loans, and $5.1 billion in deposits, and boasted 88 branches in eight counties--built a strong foundation on which First Niagara will base its New England growth.
"First Niagara's strategy for creating shareholder value is to deliver profitable growth by 'playing offense' and entering new markets that complement our geographic footprint with companies that enhance our strong business model," Koelmel explained in a statement. "We and NewAlliance share many strategic and cultural strengths, and by joining forces with them and their talented leadership team, we add another attractive and well-positioned franchise with tremendous upside potential in a region with very strong demographics."
The news of the merger didn't surprise Brian Corridan, president of Chicopee-based brokerage firm Corridan & Co., and a long-time analyst of the region's financial-services sector.
"This is a spinoff of the merger between Westbank and NewAlliance, when NewAlliance came into town and tried to sell itself" to former Westbank customers, Corridan said. "NewAlliance was really sewn together as a bank. They were a series of takeovers. So you had to know that, at some point relatively soon, they would be looking to be acquired."
The holders of more than 90% of First Niagara's shares and more than 94% of NewAlliance's shares voted in favor of the merger, but making the case to non-shareholding customers, who often value convenience over all else, is a different story. "The customers of this bank have to be scratching their heads, saying, 'wow, we've ridden in this rodeo before," Corridan said.
Therefore, he continued, "the biggest thing First Niagara has to do is sell itself to those people who have had their banking entity changed multiple times--to sell their clients and customers on the idea that there will be some permanency here."
Corridan said First Niagara's size can be a selling point to keep customers on board if it can manage to tout its broad reach and financial clout as a benefit while convincing former NewAlliance customers that it intends to grow in New England.
"Job one is to let their customers know who they are and give them some assurances that they are here to stay for the long term," he said. "Otherwise, they're going to lose their commercial-lending customers to some of the smaller, more local banks. And you can bet that a lot of the local, smaller banks are looking
at this as an opportunity to add to their commercial-lending and retal customers."
Ring said First Niagara is well-capitalized for lending to businesses of all sizes, in addition to a range of business-banking services.
"We're making sure people know we have even more money to lend, a lot more capital so we're willing to do bigger transactions, but at the same time, we're not going to lose sight of small businesses, because we've made as big commitment to small-business lending," he said.
In addition, "I think over the next several months, you'll see a lot of enhancements on the commercial side--better cash-management services than we had before but also foreign exchange for those customers doing business overseas, international services, equipment finance and asset-based lending," he explained. The bank is also equipped to focus on specific niches. "In your market, health care is big, and we have specialists just for companies in health care."
Accelerated Potential
Peyton Patterson, chairman, president, and CEO of NewAlliance--which had been the third-largest bank headquartered in Connecticut and the fourth-largest based in New England--made the same appeal to greater financial clout mixed with local attention.
"Both NewAlliance and First Niagara have been recognized as national standouts when so many other banks are struggling," she noted in a statement. "In combination, we will be creating a super-regional powerhouse and accelerating our potential in ways that we couldn't individually.
"By joining with First Niagara, NewAlliance customers will continue to enjoy the benefits of being served by a community-focused institution that makes lending and other decisions at the local level, in addition to having the resources of a fast-growing, top-25 bank," Patterson added. "We will be in a position to raise the bar on the level of support we provide to the communities we serve and extend to our employees broader career opportunities and better tools and training."
First Niagara plucked Ring from Wells Fargo-Wachovia, where he had served for 15 years in several capacities, most recently as senior vice president responsible for commercial banking across Connecticut and Upstate New York. A native of the New Haven area, Ring started his banking career there with People's United Bank.
In addition to his New England leadership role, Ring, working out of New Haven, will serve as First Niagara's enterprise banking leader and co-chair its senior loan committee.
The bank has promised to maintain the bulk of its employees in Massachusetts--a plus, Corridan noted, as "customers want to see the same faces they've grown accustomed to."
Indeed, beyond the name change, Ring said, "people will see the same people with even more support behind them."
In fact, he said, First Niagara is ready to take on much more loan demand than borrowers are currently showing.
"I think the banks have prepared their balance sheets and are ready to lend, but based on our customer calls and customer meetings, they're still being very conservative and waiting for signs of life in the economy before making key investments," he explained. "What we're seeing is lower usage of lines of credit and more deposits. It seems customers are waiting for signs of improvement, and as they see them, they'll buy equipment and invest and expand.
"That's not just in Western Mass., but pretty much throughout our franchise," he added. "Our folks are busy, and they're doing business, but it's mostly by acquiring new customers. Our existing customers are showing less loan demand, but we are very ready to lend, and we will turn things around quickly for them so they can put our money to work."
First Niagara has certainly been willing to "invest and expand," as Ring put it. Time will tell whether this top-25 bank from Western New York will become the community presence in Greater Springfield that it promises to be.
