A Webster Bank branch in downtown Boston. Photo by James Sanna | Banker & Tradesman Staff

Webster Bank has ended Nitin Mhatre’s tenure as head of community banking in a move that analysts say could point to challenges facing community banking.

The Waterbury, Connecticut-based bank, which has about $32 billion in assets and branches throughout Greater Boston, announced in an SEC 8-K report yesterday that Mhatre’s role as executive vice president and head of community banking had ended that day. He had led the community bank since 2013.

Mhatre will remain at Webster Bank to assist with the transition, according to the 8-K report, acting as an adviser to president and CEO, John Ciulla, until Dec. 31, unless Mhatre and the bank agree to an earlier date for his departure.

“Over the last 12 years, Nitin Mhatre has had a distinguished career at Webster and has contributed to the growth and success of our consumer business,” Ciulla said in a statement emailed to Banker & Tradesman. “In addition, Nitin has elevated Webster’s brand on the regional and national level. We thank him for his important contributions to the company.”

Because the 8-K report did not mention Mhatre’s successor, research analysts at investment bank Keefe, Bruyette & Woods expect an “internal and smooth” leadership transition.

In an analyst’s note today, KBW’s Collyn Gilbert and Christopher O’Connell said Webster had recently been deemphasizing its community banking efforts.

“We have always held Nitin in the highest regard as he has overseen Webster through being a ‘first mover’ to addressing the rapid changes to the traditional community banking business as well as the branch delivery channels,” the analysts wrote. “However, in the wake of even more significant changes in consumer banking behaviors arising during this pandemic, we are not surprised by this move.”

KBW noted that Webster’s net income from community banking had fallen to 23 percent compared to 38 percent five years ago, with an expectation that the community bank’s contribution to net income would continue to decline in coming quarters and years.

Mhatre had joined Webster Bank in October 2008 as executive vice president of consumer lending and was named executive vice president of consumer finance a few months later, according to his biography on Webster Bank’s website. He became head of consumer banking in August 2013. He previously had several roles at Citigroup, including managing director for CitiMortgage’s home equity retail business in Stamford, Connecticut.

Mhatre at the end of September had completed a one-year term as chair of the Consumer Bankers Association board of directors.

KBW noted that Webster, led in part by Nitin’s leadership, had been a “first mover” since 2012 in identifying changes in consumer banking behavior and the use of traditional branches, including through closing multiple branches, accelerating image capture transactions and adopting the universal banker concept.

“Along those lines, we think Nitin’s departure further reflects the company’s responsiveness/redirection again and ultimate optimization in the wake of the consumer banking behavioral changes arising from the pandemic as well as the persistence of this challenging rate environment,” KBW said.

Mhatre’s departure is considered a termination without cause, and the SEC report said Mhatre would receive career transition services when he leaves Webster Bank, as well as payments and benefits outlined in his non-competition agreement.

According to an SEC filing earlier this year based on 2019 information, Mhatre upon his departure could receive payments totaling $1.5 million, including a salary and bonus, health and other benefits and accelerated equity granted under Webster’s stock option program. Mhatre’s 2019 compensation, including a salary of $420,000, an annual incentive and long-term incentives, was about $1.1 million, according to the SEC filing.

Editor’s note, Oct. 2, 2020, 4:45 p.m.: This story has been updated to include a comment from Webster Bank.