
JOHN CARUSONE – A unique approach
A well-established New Canaan bank hopes to see its presence grow along Connecticut’s Shoreline, but it will not be expanding in a traditional way. Instead of opening new branches or acquiring another bank, the organizers of the 4-year-old Bank of New Canaan intend to start a de novo bank in nearby Fairfield, and to create a holding company that will own both banks.
The organizers of The Bank of Fairfield hope to replicate the success they have seen with The Bank of New Canaan, according to bank President Frederick Afragola. The organizers believe in the value of locally controlled banks, he noted, so they want to grow the business with a new bank rather than with branches of The Bank of New Canaan.
“We believe that communities are better served with local boards and local management,” Afragola said. “We’re approaching it embryonically rather than through acquisitions.”
The approach is rather unique, said John Carusone, president of the Bank Analysis Center in Hartford, who prepared the bank’s application for organizers. Most community banks branch into neighboring towns, but the organizers of The Bank of Fairfield made it clear to Carusone they want to establish a completely separate bank.
“This is a different business paradigm,” he said. “I think that The Bank of New Canaan has refined a business model that has resulted in success in Greater New Canaan, and they feel that can be extended to neighboring communities.”
Some banks have tried other approaches. New England Bancshares, which controls Enfield Federal Savings Bank, last month acquired First Valley Bancorp, which controls Bristol-based Valley Bank. But instead of Valley Bank taking on Enfield Federal Savings’ identity, the bank will remain a separately chartered commercial bank, and will retain its own board of directors, management team, employees and branches.
As a part of the process, Afragola and other managers are now raising more capital for The Bank of New Canaan. When that is finished, they will create the holding company, which will have shared holdership of the two banks.
‘An Explosive Town’
According to Afragola, the founders of The Bank of New Canaan studied their options for expansion over the past four years. He said Fairfield seems like a good place to expand: It is “an explosive town,” he noted, and there is no community bank there.
“We’ve done a lot of demographic studies,” he said, and the demographics are similar to New Canaan’s. “I think it would be practical of us to do the right thing in Fairfield.”
Afragola said the organizers of the new bank plan to open several branches there. The organizers also hope to expand into New Haven County in the future, he added.
Although The Bank of New Canaan is a community bank, its management team has focused on staying competitive with larger institutions such as Charlotte, N.C.-based Bank of America.
“For us to compete with the Bank of America, we have to have the same structural organization,” he said. “We’ve strengthened our organization to understand the regulatory issues and hired a compliance officer.”
The bank offers loans and “can be as competitive as anyone in the country,” Afragola said. It also underwrites loans and offers secondary loans, or can put loans into its portfolio. In addition, customers of the bank get perks that are not available at most retail banks.
“We’ve approached [service] somewhat uniquely,” Afragola said.
When a customer of the bank deposits money, instead of having to wait a day or more for funds to become available – as is the case at most banks – he can take cash out right away.
Afragola hopes The Bank of Fairfield will be open by the last quarter of 2007. The organizers are going through the regulatory approval process, choosing a location and selecting members of the bank’s board of directors.
The state Department of Banking also is considering the application of another Fairfield-based de novo, Harbor Bank and Trust.
De novo banks have been opening in Connecticut at the rate of about one per year since 2004, when The Connecticut Bank & Trust Co. opened in Hartford. It was followed by the opening of RBS National Bank’s opening in Stamford last year and the opening of the Darien Rowayton Bank earlier this year.
In Connecticut, three de novos have applied for a temporary certificate of authority, which allows them to raise capital. Higher One Bank in New Haven, a bank that would back a business that fuses college IDs and debit cards, has extended its certificate for several years. The Bank of Greenwich received a certificate last year, and Quinnipiac Bank & Trust Co. of Hamden received one earlier this year.