Community banks that missed out on branch sales in last year’s bank mergers may have a chance to buy in the post-merger sell-off by Fleet Bank and Citizens Bank. The banks are selling a combined 27 branches in the Bay State.
Community banks jockeyed for a spot at the table when Fleet divested branches from its merger with BankBoston. Sovereign Bank bought the bulk of the package, with 285 branches, while community banks in Massachusetts bought 20 branches and Connecticut banks bought 10 branches.
Fleet will close an additional 23 Massachusetts branches in early July because of overlap in Fleet and BankBoston’s networks. The bank owns 13 of the sites and is marketing those branches to potential buyers. Fleet held leases at the remaining 10 branches. In New Hampshire the bank will sell one branch and lease two more.
Citizens closed 37 branches in the Boston area after acquiring USTrust. The bank owned 14 of the branches and has already sold 11. Citizens is negotiating with buyers for two more branches and marketing the last branch, said spokesman Brad Minnick.
Both banks are selling the branch buildings without the deposits and loans.
“This is I guess what we would call the aftermarket,” said Donald S. Glass, president of the Community Bank League of New England. “We have heard from several members that they have expressed interest in purchasing some of these branches.”
Although community banks were not shut out of divested branch sales from the Fleet/BankBoston merger, competition for the branches sent prices too high for some small banks. Rockland Trust bought 12 branches from Fleet and bought another four Cape Cod branches from Sovereign Bank. Eastern Bank purchased four branches, and Cape Cod Bank & Trust and Enterprise Bank and Trust Co. each bought two Fleet branches. The community banks will convert the Fleet branches throughout the summer.
“I don’t think the Department of Justice or Congress felt that the community banks were necessarily shut out in the first round of things,” Glass said. “I’m not so sure the community banks have that same opinion.”
Citizens and Fleet are selling the branches without restrictions on their future use, allowing banks or retailers to use the space. In the Citizens consolidation, more branches have gone to retailers than to banks. The $104.4 million-asset Scituate Federal Savings bought a branch in Norwell, expanding its branch network to four sites. Auburndale Co-operative Bank bought a branch in the Auburndale section of Newton. The acquisition brought the $189.6 million-asset bank’s branch network to four branches.
The remaining nine branches to have closed have been bought by retail firms. Atlantic Retail Properties bought six buildings, and Finagle a Bagle bought a branch at 59 Washington St. in Norwell. Brian Spillane and Donald Cornell bought the branch at 60 McGrath Highway in Quincy, and K.B. Realty Trust bought the building at 138 Franklin St. in South Quincy.
In many neighborhoods Citizens and USTrust had branches next door or across the street from each other. In those cases the bank assessed customer flow, traffic patterns and services offered at the branches to determine which one to retain. Customers from the closed branch were moved to the nearby branch that remained open.
“The branches were sometimes across the street or in the same block,” Minnick said. “We picked one of them that made the most sense and consolidated operations of the two banks into that facility.”
Fleet has not announced any sales or leases of the sites it will close. The companies that take occupancy of the sites will make the announcements, said Fleet spokesman Jim Schepker.
“We’d make these sites available to the best offer, for-profit entities or financial firms, or it may also be not-for-profits,” Schepker said.
Customer Shuffle
The mergers have resulted in a change of landscape in many neighborhoods. Peoples Federal Savings Bank, headquartered in Brighton Center, has benefited from the resulting customer confusion, said President and Chief Executive Officer Thomas J. Leetch. A USTrust down the street has closed and the building will be leased to a new tenant. Customers who used the USTrust branch were moved to a Citizens branch directly across the street. A Fleet Bank branch two doors down from Peoples Federal is moving across the street into a BankBoston branch, and Sovereign Bank will open in the old Fleet branch the weekend of June 16.
Peoples Federal, a mutual with three branches and $150.1 million in assets, has signed up more new customers since the mergers began than any time in the last 30 years, according to Leetch. He expects to gain more customers when people that banked at the old Fleet branch are switched to Sovereign Bank.
“We literally have to spend five minutes with customers coming in so aggravated with their commercial banks because they had to wait two hours to be helped,” Leetch said. “We guarantee they won’t have to wait two hours here to get an answer.”
Peoples Federal bid on the neighboring Fleet branch when Fleet was selling off the divestiture package, but its bid was not high enough to win. Although mergers present opportunities for community banks to buy branches and gain customers, communities lose out when banks merge, Leetch said. Large banks are not as likely to sponsor little league teams and community bake sales after they merge, he said.
“What we see, when these banks merge there is a certain level of social responsibility which is gone,” Leetch said. “We honestly don’t think that these larger banks are picking up the share they should be picking up when the banks merged.”
Fleet will close a number of branches in Western Massachusetts, where small banks have already begun to bid on them. The bank will close Massachusetts branches in Agawam, East Longmeadow, Easthampton, Hadley, Longmeadow, Ludlow and Wilbraham. In addition, the list includes two branches in Holyoke, two in Northampton, three in Springfield and one in West Springfield.
In Southeastern Massachusetts, eight towns will lose one branch: Attleboro, Dartmouth, Fairhaven, Fall River, New Bedford, North Attleboro, Seekonk and Somerset.
Approximately 65 percent of the closed branches have an alternative Fleet branch within one-half mile, and 77 percent have an alternative branch less than one mile away. When deciding which branches to close, bank officials considered the distances between branches and the upgrade capabilities of branches.
