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Smooth transition for Butler Bank sites

People’s United branches benefit from familiar faces
By Todd Wallack, Globe Staff  |  April 20, 2010

LOWELL — Jack Dacey, 65, was vacationing on Cape Cod over the weekend when he received some unnerving news: State and federal regulators had seized his community bank in Lowell, the first time in 16 years a Massachusetts bank had failed.

The Federal Deposit Insurance Corp. immediately said Friday evening that it had worked out a deal to sell troubled Butler Bank to a much larger New England institution, People’s United Bank of Bridgeport, Conn. And both the new owner and government officials tried to reassure customers that their money was safe and the bank would continue operating as usual.

But Dacey had to be sure. So he stopped by the bank’s main office in Lowell yesterday afternoon.

“I figured my accounts were insured, but I wanted to make sure that the people were still here and my checks were still good,’’ Dacey said. After being reassured that his checks were valid and that People’s was keeping most of the employees, Dacey said he planned to keep his money where it is. “A bank is a bank.’’

One major source of reassurance for Dacey and other longtime customers: familiar faces. The tellers and loan officers who worked for Butler last week were back at their same positions yesterday, as People’s United employees.

Though Butler’s financial woes had been building for months — the bank got into trouble by making too many residential construction loans just before the housing market stalled — the takeover still caught many customers by surprise. A trickle stopped by the new People’s United branches yesterday to see for themselves that the bank remained open and their savings were in good hands.

People’s United spokesman Brent DiGiorgio said the bank was pleased with how its first few days have gone. He said the bank hasn’t received a flood of calls from concerned customers. And it even signed up a couple of new customers yesterday.

David Brown, a bank consultant who had been helping Butler for a year to recover from its bad construction loans, said the company talked to a number of potential acquirers in Massachusetts. But he said it was “fairly obvious’’ last summer that Butler could not be sold without government assistance, despite fervent efforts by bank executives and consultants to pare down the losses.

“It was just too far gone,’’ said Brown, a partner with RMPI Consulting LLC in Boston. “There was not that much could be done to save it.’’

Brown said Butler executives had assembled two takeover proposals from local banks and investors that required government support. But he said the government officials instead decided to sell the bank to People’s United. The FDIC estimated Butler’s failure will cost it nearly $23 million.

Brown said it could have been much worse. Had the FDIC been forced to liquidate the bank a year ago, he estimated the losses could have approached $100 million. He said regulators gave Butler and its consultants time to resolve some of the troubled loans before stepping in to broker the sale to People’s United.

“I think they were smart to let the bank work out its issues as long as they did,’’ Brown said.

DiGiorgio, the People’s United spokesman, said the bank was contacted by the FDIC about Butler roughly six weeks ago, because People’s United had previously expressed interest in buying a failed bank. He said Butler was a good match because the company wanted to expand into the Boston area.

And DiGiorgio said People’s United wants to continue expanding in Massachusetts, either by opening new branches or buying an existing institution.

“Massachusetts is a very attractive market,’’ he said.

With nearly 300 branches, People’s United has quietly become one of the larger banking companies in New England, though its name may be less well-known because it continues to operate some of its banks under their original names, and its footprint is for the most part well outside of Boston. In Vermont, for example, it owns Chittenden Bank, with 46 branches, and has three other banks that have branches throughout Maine: Maine Bank & Trust, Merrill Bank, and Ocean Bank. Its closest affiliate to Boston is Flagship Bank, based in Worcester with branches in Shrewsbury and Westborough.

Yesterday was the first day its new branch in Lowell was open since the takeover, but its three other new branches — in Andover and Marlborough— were open as usual Saturday morning.

FDIC spokesman Eric Raines, who was at the Lowell headquarters of the former Butler Bank yesterday, noted there wasn’t a rush of customers anxious about their money.

Still, Art Veves, a retired psychologist from Carlisle, was concerned when he had trouble logging onto the bank’s website yesterday morning. Instead of calling into tech support — and giving his personal information to a stranger — he felt he needed to go directly to the bank headquarters in Lowell. He said the bank employees helped him get back online again, and he felt reassured his money was safe.

“They were good,’’ said Veves, 62. “It was worth the drive.’’

Veves said he plans to keep his accounts with People’s United for now. “I want to see how it all shapes up,’’ he said.

Meanwhile, Gilbert A. Price, a retired teacher from Lowell, has banked with Butler for more than a half a century. And Price said he didn’t have any plans to switch banks now, just because it has a new name.

“I don’t see any change,’’ said Price, 83, who has been a bank customer since 1959. “I like the people here.’’

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[ Original Source: Boston.com ]