David B. Sidon, a former executive at two Gloucester banks, will serve as president and chief executive officer of Navisbank, a Gloucester-based start-up bank.
Although worries about increasing consolidation in the banking industry has led to concerns that choice will be limited, the commonwealth still has hundreds of banks to choose from, making it important for a de novo to differentiate itself.
Gloucester-based start-up Navisbank, which on Nov. 13 was granted approval to organize, plans to transact business over coffee tables with employees dressed in khakis and Izods instead of suits and ties. And customers won’t have to compete with telephones to get the receptionist’s attention because, instead of an employee sitting at a bank of phone lines behind a high wall, there’ll be a greeter at the front door and a coffee shop in the lobby.
These are just a few of the characteristics that David B. Sidon, principal founder, plans to bring to the world of banking on Cape Ann.
The community is really ripe for this and enthusiastic, said Sidon. Over the last several years, many of the former community-based banks have either been purchased or merged, leaving little in the way of a bank focused on commercial business. Additionally, of the $150 million worth of new mortgages on the Cape last year, only about a third of business was done by the 10 local banks. Another third was done by non-local banks. That says to me they’re [commercial customers] looking for something they’re not getting, and I hope we can provide that, said Sidon.
His vision for a comfortable financial center environment where bank personnel and customers can interact over a cup of coffee comes from the hard lessons learned by Abbey National bank in London, which Sidon studied after an invitation to visit the English bank.
There he saw the transformation that the old, established Abbey made to 10 of its city branches. Greeters handled customers as they came in and business was transacted in talk rooms, which were rather like living rooms.
The concept was really nice and comfortable. We’d been thinking about it, but to see it in the flesh was affirming. That’s what we’re looking for. So many banks are into this efficiency of ‘let’s get the customer in and let’s get them out and not waste our time with them,’ said Sidon. We really want the opposite. We want them to come to us, to spend some time, to bring a friend for coffee because if you get people in the facility, we think they’ll become customers.
Navis, which means ship in Latin, will also offer space for community use.
However, what Sidon only half-joshingly refers to as catering to thousandaires will cost money and space. He’s looking for a 7,500-square-foot facility and plans to put money into the front end of the business by offering competitive salaries for top customer-service people.
We look to be very lean and mean in the background and spend more money on one location. We’re not looking to branch [out], so we’re looking to do an awful lot of growth out of this one location.
While Sidon is looking to shake up the 15 to 20 percent of banking culture that’s changeable, he’s a conservative banker by tradition.
Sidon is currently on leave from his position as a consultant with Shatswell MacLeod. He also served as senior vice president of operations at Gloucester Bank & Trust for more than 10 years and as president and chief executive officer of Gloucester Co-Operative Bank.
At Navis, he will serve as the bank’s president and chief executive officer. As proof of his conservatism, the bank chose to obtain the more stringent state charter rather than a federal one, although other factors played into the decision.
Most of it is emotional, said Sidon. We thought that if we really wanted to portray ourselves as a community bank, that we needed to do as much as we could do with every aspect of this as close to home as we could do it … The [capital-raising] threshold to become a state-chartered bank is higher than the federal, he said. According to state requirements, at least $8 million of capital must be raised instead of the $6 million required for the national charter.
Navis is aiming to raise between $10 million and $14 million. But the goal of our projections are based on $10 million. We think that’s safer and sounder. At $10 million in capital, that also positions us as second on Cape Ann, said Sidon, who hopes to raise the necessary money within three to six months.
Originally we were going to try to raise as much as we could locally first before we went out to investment bankers. We’re now escalating that because of the market opportunity; we’ll do that concurrently, he said.
The prospectus should be out by mid-January and will call for a minimum investment of $10,000 for stock, which will be offered at $10 per share.
‘Interesting Environment’
Although Sidon said he doubts that all of the capital will be raised on Cape Ann due to the population of the area, he hopes to generate a groundswell of community support first, before drawing the largest investors. He envisions about 300 to 400 investors. I don’t expect or want a lot of big investors, he said.
The biggest reason, said Sidon, is control. Additionally, when local people talk about the old community banks being taken away, they usually refer to the big stockholders of the banks that voted to sell.
Sidon began thinking about starting the bank when Gloucester Bank & Trust was purchased by Andover Bank. The recent purchase of Andover by Banknorth solidified his resolve. As a result of the first purchase, more than 20 people were laid off as operations were moved out of town.
I think the key of the story is this is very symbolic as to how the free market works, said Daniel J. Forte, president of the Massachusetts Bankers Association. When there’s a perceived opening or market niche, given transitions in the competitive players in particular areas, someone will step in and try to fill that void, he said.
So, this is an opportunity for them; it doesn’t mean there still isn’t a lot of competition out there … It’s an interesting environment [in which] to start the bank. The key will be to not try to do too much too soon and ease into it, said Forte.
The bank’s four senior people are made up of experienced bankers and some with no background in banking whatsoever. That’s by design.
Part of our concept, too, is we intend to hire a lot of non-bankers. We’re looking at a 50/50 mix, especially with the customer-contact folks. We intend to do a lot more with customer service and sales attitude and that just doesn’t seem to happen in bank lobbies, said Sidon.
Of the four senior partners, Sidon would name only the two who aren’t currently working at a bank: Brian G. Beaudry, owner of Cape Ann Advertising & Design, will be in charge of marketing and Kevin Nunes, who currently serves as a consultant, will manage operations for the bank.
It’s interesting, in meetings [Beaudry] may throw out 10 ideas. We may grab one but it’s really interesting to have those 10 ideas and really think differently about how banks can do these things, said Sidon.
Although fishing is often the first thought when Gloucester is mentioned – the town has gained national attention as home port to the Andrea Gail, the swordfish boat featured in the movie The Perfect Storm – Sidon’s local experience and subsequent research for the application has shown there is more to the community.
I think the one need that has sprung up here is that Gloucester, because it’s so close to Boston and has attracted a lot of commuters to Boston, has also attracted a lot of entrepreneurial and work-at-home businesses and a lot of start-ups. So, Gloucester’s profile has really changed, he said.
According to research performed by economist Edward Moscovitch, 60 percent of those residents who work do so in Gloucester. Of those, nearly 20 percent are self-employed, based on 1990 U.S. Census figures.
Gloucester’s also been very active in the last 10 to 15 years in developing their industrial parks, said Sidon.
Currently, Navis has its organizational offices on Duncan Street in Gloucester, and Sidon said he’s already experienced a lot of community support.
The day before New Year’s I could have done two CD rollovers and a refi[nance], he said. We think we’ve got the customers lined up. People are enthusiastic and waiting for us to open.
