Bank of Cape Cod, a start-up institution, plans to open its doors at 232 Main St. in Hyannis shortly after Labor Day. The image above shows how the bank will look.
While much of the Bay State is seeing an exodus of residents or, at best, experiencing stagnant growth, there are a few pockets of opportunity where the population is expanding and new businesses potentially could thrive. One such area, Cape Cod, has caught the eye of opportunists in the banking community and two de novo banks are expected to open there soon.
Frank Perfetuo, who will serve as president and chief executive officer of New England Savings Bank, one of the start-up institutions currently in the planning stages, said the bank has an ambitious plan – to raise the required $10.5 million in capital over the next three months and open in Hyannis by the end of the year.
However, New England Savings is not the only new bank planning to establish itself in Hyannis by the end of the year. Bank of Cape Cod plans to open its doors at 232 Main St. – previously known as the Colonial Candle building – shortly after Labor Day.
Perfetuo and Tim Telman, the Bank of Cape Cod’s president and chief executive officer, say that a recent spate of mergers and acquisitions has changed the banking landscape of Cape Cod, giving them an opening to enter the market. Bank of Cape Cod will focus on commercial lending while New England Savings Bank will concentrate on retail banking and residential mortgage lending.
“The objective is to bring community banking back to the Cape,” said Perfetuo, whose bank recently received its Certificate of Public Convenience from the state Division of Banks, which determines whether there is need for the proposed institution in the community.
According to Daniel Forte, president of the Massachusetts Bankers Association, the recent de novo bank activity in the Bay State is a sign of a healthy banking industry. However, other parts of the country are seeing more start-up banks because capital requirements for opening a bank in Massachusetts can be much higher. He said while other states may have lower thresholds, raising a higher capital amount means the bank has a stronger chance of surviving and thriving in the long term.
“You really have to be ready [to start a new banking enterprise] here,” said Forte.
Forte said banks throughout the state are battling for deposits as the industry becomes more and more competitive. However, on the Cape there is a different set of demographics that makes the outlook for de novos a bit brighter, he said.
“That has been an area where we have had customer growth,” said Forte. “A de novo bank would look at that market and say maybe there are some opportunities to make some inroads here.”
Forte said the Cape is undergoing a “mini-boom” with more people buying second homes with an eye toward using them as a retirement spot, ultimately becoming a year-round resident. While the pool of potential bank customers is on the rise, the Cape has lost four native banks in the past four or five years to mergers and acquisitions, he said.
Today there are 12 banks operating on the Cape, only three of which are based locally. Still, those 12 banks combined have 125 branches in the region.
“This is a very competitive market. You have to have a niche and a strategy,” Forte said.
‘A Call to Action’
Leaders at both of the new banks say they have thoroughly considered the steps they will need to take to succeed.
New England Savings Bank plans to put a strong emphasis on customer service. Perfetuo said one of the main objectives is to truly act and feel like a community bank. He said a big part of that is making customers feel welcome.
“They can walk into my office, as the president of the bank, if they have a concern,” he said. “You do have to deliver what you promise. It’s a case of people looking for a higher quality of service. It comes back to service. Service is the driving force.”
Perfetuo started drafting a plan for the new bank with business partner Joe Medeiros two years ago. He said the team of organizers is made up entirely of people who live and work on the Cape. He has had a home on the Cape for several years, but until three years ago he had been the president and chief executive officer of Family Federal Savings Bank in Fitchburg. He said he is very happy to be living on the Cape full-time now.
Both de novo banks chose Hyannis for their headquarters and hope to operate under state charters. Perfetuo said Hyannis is the “hub of the Cape.” Both banks plan to open second branches on the Cape a year or so after their main offices are established.
Bank of Cape Cod also likes the idea of bringing the community feel into its operation.
“Our tagline is ‘rediscover local banking,'” said Telman. “It’s a call to action. We see ourselves as a competitive alternative.” Last week, Bank of Cape Cod had a field visit from the Federal Deposit Insurance Corp. Telman said he expects the bank to officially become a corporation this week. He said the opening date is yet to be determined, but the plan is to open shortly after Labor Day. “We are on schedule on all fronts,” he said.
One thing Telman said he believes will set his bank further apart from the competition is that it will be the only locally based commercial bank on the Cape.
The bank was able to raise $13.8 million in capital and has more than 300 shareholders, giving it a nice platform from which to start, he said.
“That should be a good indicator that there is a need for this,” he said.
Also, Telman said the new hires that will help open the Bank of Cape Cod are some of the best around, such as Mary Cotoia, who will be the senior lender. Cotoia comes from Citizens Bank, where she served as regional president of Cape Cod and the islands.
‘Challenging Time’
Telman and Perfetuo aren’t the only bankers who have sought to break into the Cape Cod marketplace in recent years. Several larger, established regional players have made their way into the area in recent years, including Boston-based Eastern Bank when it merged with Plymouth Savings Bank in 2005.
According to Joe Bartolotta, spokesman for Eastern, the bank has greater aspirations on the Cape than simply operating the existing Cape branches it acquired in the Plymouth Savings merger. However, Bartolotta would not disclose exactly what the institution is planning.
Bartolotta said he suspects the new banks may get off to a slow start.
“It is a challenging time for a start-up,” said Bartolotta. “Margins are tight; competition is fierce.”
Bartolotta did not dismiss the possibility that the two new banks may in fact find their niches and thrive. However, he said that the larger, established players in the market are unlikely to view the new banks as a major threat.
“The Cape right now is an area that has seen a lot of growth,” said Steve Coukos, a Boston bank attorney.
“The demographics of the Cape have really gone through fundamental changes and substantial growth. It’s an affluent population that is moving into parts of the Cape,” said Coukos, who is a shareholder and director at the law firm of Gallagher Callahan & Gartrell.
Coukos said the volume of mergers that have taken place has created a window of opportunity for new banks. He said he believes there are enough people who want to bank with a hometown institution, provided they can offer the same quality of service and convenience as larger banks, to support the attempts of de novo banks.
“I think if you look at other parts of the country, mergers and acquisitions have been driving de novo activity,” he said. “I expect they [start-up banks] will do well,” he said. “I think community relationships still mean a lot.”
As for more de novo banks debuting on the Cape, Coukos said, “We’ll see how the first two do. I think if we put two new banks right in Hyannis, that’s probably enough to chew on for a while.”
