PEYTON R. PATTERSON ‘So pleased’ with deal

New Haven-based NewAlliance Bancshares, the holding company for NewAlliance Bank, has made its first move toward significant expansion since the merger that created it. The bank last week reached an agreement to acquire a Hartford-based trust company for $19.3 million in cash and stock.

“This gives us the opportunity to grow our wealth management division significantly,” said Senior Vice President Paul McCraven.

The acquisition of Trust Co. of Connecticut adds more than $700 million to the bank’s assets under management. The acquisition is expected to close early in the third quarter of this year, after which the bank’s trust division expects to have more than $1 billion in assets under management. The bank hopes the larger trust division will help attract new clients who like to work with bigger firms, McCraven noted.

Trust Co. of Connecticut was a much sought-after firm, a fact that might have led to the price NewAlliance paid for the acquisition.

“It’s clearly one of the richest transactions in investment and trust management that I’ve seen,” said John Carusone, president of the Hartford-based Bank Analysis Center. “I think it was a preemptive price [to keep other companies from buying the firm].”

‘Competition Heat’

Trust Co. of Connecticut is a state-chartered trust company that was established in 1992. NewAlliance’s acquisition agreement will keep the firm based in Hartford. The firm also will keep its name and operate as a separate trust division of NewAlliance within the bank’s wealth management group. The president of Trust Co. of Connecticut, Nancy G. Dean, will become president of the trust division and senior vice president of NewAlliance Bank. The chairman of Trust Co. of Connecticut, David B. Payne, will become chairman of a trust advisory board to the bank’s trust division.

The expansion was a considerable one for NewAlliance, which had $300 million under management before the acquisition.

“It’s certainly significant to us,” McCraven said. “Strategically it is important to us [to reach the next level].”

The acquisition will likely help the bank have a more competitive trust division, and an acquisition was the quickest way to reach that next level, according to Carusone.

“I think they felt some competition heat from other institutions that had multibillion-dollar trust departments,” he said.

Bank executives said they hope the acquisition will expand their client list.

“We are so pleased to have Trust Co. of Connecticut join us,” said Peyton R. Patterson, chairman, president and chief executive officer of NewAlliance, in a prepared statement. “They bring an excellent reputation for service that complements our own wealth management area and expands our client base in the Greater Hartford area and throughout central Connecticut.”

The greatest challenge for the bank will be to retain Trust Co. of Connecticut’s clients, according to Carusone.

“The key is going to be whether they can retain the clients,” Carusone said. “With a shift like that, the work is going to be complex.”

Besides expanding the bank’s trust division, the acquisition also will allow NewAlliance to establish a presence in Hartford. The bank already is looking at some branch locations in the city, according to McCraven. The trust company’s reputation for personal service also fit in well with NewAlliance’s community banking model, he said.

“It was just a great opportunity,” McCraven said. “We thought their values lined up with our community banking strategy.”

Trust Co. of Connecticut executives agreed.

“We see this combination as a wonderful opportunity for Trust Co. of Connecticut,” Dean said. “We have built our business on our expertise and with the personal relationship we have with each of our clients. We now have a chance to expand our geographic reach through the NewAlliance wealth management team that adheres to the same value of personal service that we do.”

At least 51 percent of the consideration for the acquisition will be in NewAlliance stock. The transaction is subject to regulatory approval and the approval by Trust Co. of Connecticut shareholders.

NewAlliance has no public plans for more acquisitions.

NewAlliance Bank was formed in April 2004 through the merger of New Haven Savings Bank, Savings Bank of Manchester and Tolland Bank. At the end of 2004, the combined bank had assets of $6.3 billion and deposits of $3.7 billion. NewAlliance is the third-largest banking institution that maintains its headquarters in the state.

The state approved the merger of the three banks on March 30, 2004. The banking commissioner first approved the conversion of The New Haven Savings Bank to NewAlliance Bank and the formation of that bank’s holding company, NewAlliance Bancshares. The commissioner then approved the acquisition by NewAlliance Bancshares of The Savings Bank of Manchester’s holding company, Connecticut Bancshares, and Tolland Bank’s holding company, Alliance Bancorp of New England, according to documents from the Department of Banking.