JIM JONES
Not a wise move

Bank of New England is coming back to Massachusetts.

But it’s not the same Boston-based powerhouse Bank of New England Corp., once the third-largest bank in New England until the federal government shut it down for financial insolvency in 1991 and Fleet Bank acquired most of its assets. Rather, one of the region’s youngest banks wants to adopt the name for its own.

Salem, N.H.-based Southern New Hampshire Bank and Trust Co.’s chief executives say they think the moniker fits their growing institution better than the original – and they’re willing to take on the risk of any bad associations that might come with it.

“We feel this is a long-term move,” said Paul E. Finn, chief executive officer of the 12-year-old SNHB. “We are willing to accept the challenge of overcoming any hangover effects from 15 years ago.”

SNHB – which already has advertised the pending name change, as well as a similar lightship logo to that of the old Bank of New England, in north-of-Boston newspapers serving Andover, where its single Massachusetts branch is located – has business customers throughout New England, according to Finn. The $500 million commercial bank, which does 95 percent of its lending in commercial real estate, also is planning to add branches in Methuen and Haverhill by the end of the year. Its headquarters, and five additional branches, are in New Hampshire.

Finn and SNHB President Bill Stone said the bank formed, de novo, in 1995 under the auspices of a dormant Fidelity Investments bank charter, with $3.5 million in capital and two branches. Finn noted that it has grown exponentially since then and said a recent study by industry analyst SNL Securities found that SNHB was growing more than twice as fast as its peers.

“Our advantage is that we are locally and privately held, and [customers] have access to senior management,” said Finn, who added that he and Stone call on customers personally from time to time.

“We tend not to have the same bureaucracy that a lot of our larger competitors have and the numbers bear out the fact that it works well,” added Stone.

Massachusetts Bankers Association staffers said the Merrimack Valley area is growing, something that would benefit any new business venture.

“This state is experiencing negative population growth, but one of the areas that’s been benefiting from that is southern New Hampshire,” noted MBA Director of Communications Bruce Spitzer.

“Any bank can make its decisions on where it thinks [there] is a good opportunity to expand,” added the trade association’s Senior Vice President for Government Affairs David Floreen.

Haverhill and Methuen are both growing communities with growing retail centers, Floreen said. Other banks are seeing opportunities there too, with two potential competitors for the new Bank of New England – Enterprise Bank and Butler Bank – opening new offices in Andover this year.

Floreen predicted that the old Bank of New England name won’t have bad connotations for everyone.

“For people that weren’t around 15 years ago, it won’t mean anything,” he said.

‘Terrific Success’
But Jim Jones, founder and president of First Wellesley Consulting, which consults with local and national banks on strategy, said taking on a name with such baggage isn’t wise.

“I would not [do so]. The feds shut down Bank of New England, and there is still a lot of institutional memory in Massachusetts,” he said. “They now are going to have to fight the legacy of the closing of [the former] Bank of New England, in the market where Bank of New England was closed. That is not a fight they can win.”

The chief financial officer of a new Connecticut bank that took on the name of a former bank – ironically, one the former Bank of New England acquired shortly before going under – said he certainly remembers when the old bank went under.

“It was a public company, and their shareholders lost millions,” said Connecticut Bank and Trust Chief Financial Officer Anson C. Hall.

He said that since the new CBT opened in 2004, it’s only encountered a bit of confusion.

“There was a good deal of fond memories of the old bank, which people mistakenly thought was opening again,” he recalled. “That wasn’t particularly troublesome. We actually used the name because we thought it had a good reputation in Connecticut.”

The bank’s founders got the name from the public domain, he said, as the Federal Deposit Insurance Corp. had not retained the rights. (The soon-to-be Bank of New England purchased its name from the bankruptcy trustee for the former BNE.)

Un-discharged mortgages instituted at former banks, or merged banks, sometimes result in phone calls to the new entities to clear matters up, according to Pepperell real estate lawyer Kurt Stuckel, who helps resolve such matters.

Indeed, officials at the new CBT were surprised when entities that once did business with the old CBT started contacting them again, and old magazine subscriptions were reinstituted. Even the Internal Revenue Service has approached CBT on occasion, looking for delinquent taxpayers who may have had an account there, Hall said.

But the process as a whole hasn’t been all that costly, he added, and costs have dwindled over time.

Branching out to Massachusetts makes complete sense for a growing bank in Southern New Hampshire, whose market should, of course, be defined by lending areas rather than natural state borders, according to Jones.

“It will, of course, increase their cost of doing business,” in that the bank will now have to comply with both New Hampshire and Massachusetts regulations, he said.

But profits to be had might outweigh that cost if the bank can hire good loan officers. That’s because the slow Massachusetts market is just one of many factors conspiring these days against community banks.

“Right now, for example, I am in Miami, which is virtually exploding with new opportunities for new business,” Jones said. “In Haverhill you literally have to steal customers [from your competitors].”

Finn and Stone said they’re confident they’ll get the right people on board.

“We’ve had terrific success in recruiting and retaining very successful commercial lenders,” Finn said. “That has really been the backbone of our growth.”