Bridgeport-based People’s Bank was one of only two Connecticut banks that were among the state’s top 10 mortgage lenders in 2003. The other was Waterbury-based Webster Bank.
Most Connecticut banks that will compete against the now fatter Bank of America, after its purchase of FleetBoston Financial Corp., and against NewAlliance Bank, the combination of three existing banks, are looking at those transactions as an opportunity.
They hope those newly formed banks will experience the typical headaches associated with acquisitions and mergers that can frustrate customers and cause them to look elsewhere for a bank.
Customers who fall through the cracks during such transactions often look for a stable, hometown bank, and many of those have their doors wide open for new customers who want to open checking and savings accounts.
Connecticut banks are also hoping those customers will be a boon to their mortgage lending divisions. But in a market dominated by out-of-state lenders, those mergers could create unforeseen competition.
Only two Connecticut-based banks were among the state’s top 10 mortgage lenders in 2003, according to statistics compiled by The Warren Group, parent company of The Commercial Record.
Waterbury-based Webster Bank and Bridgeport-based People’s Bank both placed in the top 10 for 2003 and 2002. Webster ranked third both years, based on number of mortgages, and People’s fell from first in 2002 to fifth in 2003, although People’s transactions ranked third in dollar amount for 2003.
Seattle-based Washington Mutual Bank provided the highest number of mortgages in Connecticut in 2003, with 15,568, and also had the highest dollar amount at about $4 billion. San Francisco-based Wells Fargo Home Mortgage ranked second in both categories, with 14,754 mortgages totaling about $3.3 billion.
Webster earned its third-place ranking with 12,561 mortgages issued in 2003, but was fifth in the dollar amount category, with about $2 billion.
People’s issued 11,425 mortgages that totaled about $3.2 billion.
An ‘Important Product’
Although representatives from the Webster and People’s mortgage lending departments said they’re not too concerned about NewAlliance yet, if the newly formed bank holds onto the kind of numbers its three combined banks enjoyed individually last year, it could break into the top 10 next year.
NewAlliance was formed from the merger of New Haven Savings Bank, the Savings Bank of Manchester and Tolland Bank.
The combined lending of the three banks in 2003 would have ranked them sixth based on the number of mortgages provided and seventh based on dollar amount. The three banks issued 6,988 mortgages, totaling about $1.1 billion.
New Haven Savings Bank had made mortgage lending a priority before the merger, said NewAlliance Senior Vice President and spokesman Paul McCraven. That will continue with NewAlliance, he said, but he did not release any details, saying the bank is still in the process of strategic planning.
“Our plan is to continue to be very aggressive as we move into the new markets,” McCraven said.
But People’s Bank Residential Lending Sales Manager Christopher Dannen isn’t too worried.
“They have not been one of the big players in our market,” he said.
Dannen said he will watch to see if the new bank’s lending philosophy changes because of its conversion from a mutual to a stock bank, he said, and will keep up to speed on any new products the bank might offer.
“That could change their lending strategy,” Dannen said. “We’ll keep a very close eye on them.”
Sal Dias, vice president of residential market lending for Webster Bank, also will watch the new bank, but isn’t that concerned.
“We’re essentially competing with these lenders anyway,” he said. “It doesn’t really change our strategy any.”
Webster already competes with and consistently does more business than mortgage behemoths like New York City-based Chase Home Mortgage Corp., so the bank is used to competition, Dias said. He doesn’t believe NewAlliance will shake up the market, at least not right away.
“My opinion is it’s not going to change the landscape in the near future,” he said.
Dias keeps tabs on all of Webster’s competitors and said the bank will continue to be innovative and offer competitive products. Webster is competitive partly because it addresses all mortgage needs, from jumbo buyers to first-time homebuyers, Dias said.
“We want to address all the market needs,” he said.
Webster is also well placed because it is big enough to compete with national lenders, but is small enough to act quickly in serving customers, Dias said. He hopes Webster’s size and the fact that it is based in Connecticut will continue to attract customers.
People’s is counting on the same thing. The bank has launched an advertising blitz aimed to capture those customers who leave NewAlliance or Bank of America because of problems associated with the mergers. The “Switch to People’s” campaign has been well received, according to People’s spokesman Brent DiGiorgio.
“We think the combination of these organizations will be positive for us,” Dannen said.
About 5,000 people visited the bank’s Web site last week, DiGiorgio said.
“We think a lot of Connecticut consumers are going to make the change [from a] larger [bank] to a smaller organization,” he said.
Mortgage lending is a crucial component for People’s, according to Dannen.
“Clearly we consider it a very important product,” he said.
Mortgage lending is a large contributor to the bank’s assets, Dannen added.
What 2004’s numbers will show, however, depends on many factors. Last year was a record year for almost all lenders, but most are planning on doing between 40 percent and 50 percent less business this year.
“[Last year] was incredible,” Dias said. “It was a one-of-a-kind kind of year.”
Dannen agreed. Although People’s ranked lower in 2003 based on number of mortgages issued than it did in 2002, Dannen wasn’t disappointed. He placed more importance on dollar amount, a category in which People’s ranked No. 3 behind Wells Fargo and Washington Mutual.
The reason the number of mortgages stepped back was because of short-term second mortgages that competing banks offered and accompanied with heavy advertising, Dannen said. People’s, he noted, is working on increasing that number.
