THOMAS J. HOLLISTER
‘An exciting moment’
When Citizens Bank officially acquires Cleveland-based Charter One Financial in the fourth quarter of this year, it not only will obtain branches in the Midwest, it will take on an area of Massachusetts that isn’t yet saturated with Citizens branches.
Western Massachusetts won’t be an entirely new area of focus for Citizens, but the number of branches it manages will increase as it acquires 12 branches from Charter One Financial, the parent of Charter One Bank. While Citizens already had a handful of branches within Stop & Shop supermarkets in western Massachusetts, both Charter One and Citizens Bank executives say the added branches will help Citizens strengthen its business in Massachusetts.
“We just sort of touch where Citizens leaves off,” said Charles John Koch, Charter One’s chairman and chief executive officer. “It’s a good market extension.”
There will be a total of 18 Citizens Bank branches west of Worcester once the deal is complete.
Charter One opened three branches last year and, while Koch described the western Massachusetts area as a smaller piece of the Charter One footprint, he said he expects Citizens to grow in that region.
Gerard Cassidy of Portland, Maine-based RBC Capital Markets doesn’t expect that Citizens will open many more branches unless it is acquired. He said Citizens Bank has had a strategy to grow through acquisitions, not opening branches.
Both Cassidy and Massachusetts Bankers Association President and Chief Executive Officer Daniel J. Forte said the only branch changes that might occur would be to close one location in order to open another for better distribution in the area.
Ludlow and Chicopee are just two of the communities where Charter One branches are located. Koch said the western Massachusetts sector brings in more than $400 million in deposits.
“It was a good market,” said Koch. “[Citizens Bank will] do very well in the Springfield area.”
Koch said the additional branches in western Massachusetts simply came with the Charter One deal.
“It certainly didn’t hurt the deal,” said Koch.
Cassidy said Citizens Bank would have built up in the western part of the state eventually.
“The company would have found their way out to western Massachusetts,” he said. “But I don’t think it was the top spot on their list to get to.”
‘Fierce’ Competition
Thomas J. Hollister, who was promoted from president and chief executive officer of Citizens Bank of Massachusetts to vice chairman of Citizens Financial Group and president and chief executive officer of the bank’s new Midwest region, said the new western Massachusetts branches give Citizens a more meaningful presence.
“It’s an exciting moment for us,” said Hollister. “Historically, we’ve been in eastern Massachusetts.”
Hollister said the acquired branches will allow Citizens Bank to better serve smaller businesses and continue to focus on community involvement. Citizens is the top U.S. Small Business Administration lender in each of the states in which it operates and the No. 2 SBA lender nationwide.
Forte called the competition in western Massachusetts “fierce.” He said the area west of Interstate 495 has a heavy presence of banks, especially tax-exempt credit unions that can serve as a retardant for banks like Citizens to leap west.
Cassidy agreed that the competition can be tough, but said the banking industry is like that everywhere in the country, partly due to non-bank competitors who also offer loans.
However, with the acquisition of Charter One’s branches, Forte said Citizens Bank is simply maintaining what was already in existence and believes people will welcome the name.
“They are not unknown in the western Massachusetts area,” said Forte.
Cassidy said he expects the acquisition to go “uneventfully.” He explained that the name “Citizens Bank” is one that can fit in any state, despite having its corporate headquarters in Rhode Island. He noted that North Carolina-based Bank of America doesn’t conjure up ill feelings because the name can be used nationwide and doesn’t come across as a bank in North Carolina.
Still, even with that name recognition, Forte said Citizens will still have to establish itself quickly. He expects the bank will play to its strengths, including the small-business market.
Koch said any “customer-facing” jobs, such as teller positions, will not be affected by the merger. Other employees at data centers or in customer service, however, will see some consolidation of jobs.
Koch said there have been 17 employee orientation meetings where new products have been introduced to Charter One employees.
“The initial integration is going very well,” said Koch.
The acquisition of Charter One will give Citizens Bank an additional $43 billion in assets, 616 retail branches including 160 in-store locations and more than 8,000 employees. Citizens will grow to $128.4 billion in assets, more than 24,000 employees and 1,400 branches across 13 states with the latest acquisition combined with the existing New England and mid-Atlantic franchises. The acquisition will make Citizens one of the 10 largest commercial bank holding companies in the United States.
The Charter One deal is Citizens Bank’s 26th acquisition since 1988.
Citizens isn’t the first bank regional to reach to the western part of the state. Forte said FleetBoston/Bank of America has branches in Springfield and Portland, Maine-based Banknorth Group has reached out past Worcester. Forte said it is also possible to see some other banks move across the Connecticut border into western Massachusetts.
As part of the deal, Charter One’s national bank charter will remain intact and Koch will serve as chairman of the Cleveland-based bank, vice chairman of the Citizens Financial Group board and on Citizens’ parent company Royal Bank of Scotland board. Additionally, Robert E. Smyth, who formerly served as executive vice president of commercial banking for Citizens in the Bay State, has been promoted to president and chief executive officer of Citizens Bank of Massachusetts as part of the acquisition.
Jennifer Jope may be reached at jjope@thewarrengroup.com.
