Business as Usual

Chicopee Savings Bank celebrated its 150th birthday this year. While much has changed since the first transaction was completed in the original office — the homestead of its first president, Jerome Wells — the bank’s basic business strategy hasn’t.

Chicopee Savings Bank turned 150 this year. Exactly when, President William Wagner isn’t sure.

"There were no big celebrations," said Wagner, who summoned the bank’s annual report and its section on the institution’s history to pinpoint the exact date it opened (March 6). "Some banks make a big deal out of things like that. We don’t; it’s not our style.

"People know we’ve been around a long time," he continued. "We have other things to celebrate around here — for us, it’s been business as usual."

That means life as a small ($350 million in assets) community bank, slugging it out in a city and a region where there has never been any shortage of competition and it appears there is more of it every day.

Take credit unions, for example.

Chicopee is a credit union-rich community, said Wagner, noting that there are perhaps $700 million in assets in credit unions in the city, as opposed to maybe $15 million in Westfield. "And those credit unions aren’t paying any taxes," said Wagner, noting a special exemption that he and other banking officers have long opposed. "They should be, but they aren’t."

The list of competitors also includes a number of other community banks, mortgage companies, predatory lending businesses, and regional powers such as Fleet/Bank of America. Chicopee Savings has thrived despite all that competition because it hasn’t deviated from its basic mission or style of doing business, said Wagner.

This sentiment is reflected in the fact that while many area community banks (Westfield, Peoples, and Hampden, among them), have dropped the word ’savings’ from their title. Chicopee hasn’t, and won’t any time soon.

"We’re going to keep our name the way it is — we like what that word ’savings’ means to our customers," said Wagner. "We believe that it doesn’t just connote savings accounts, but also the fact that they can save money by doing business with us.

"I like the word savings," he continued. "Especially since we might soon be the only bank around that uses it."

To grow, CSB has been focused on providing its core services to a wider customer base. The institution has gradually expanded its scope beyond Chicopee, and now does roughly one-third of its business with residents and businesses on the west side of the Connecticut River.

To better serve those customers — and attract more of them — the bank will open its sixth branch on Morgan Road in West Springfield. A grand opening is slated for February, said Wagner, who told BusinessWest that additional sites are being scouted and that more territorial expansion is likely in the next few years.

He noted, as other area bank presidents have, that many Pioneer Valley communities, including East Longmeadow, Ludlow, Amherst, and, yes, West Springfield, have become heavily populated with competing branches. He is focused not on the quantity of banks, however, but the quality of locations.

CSB has recorded steady, if unspectacular growth the past several years — net income actually fell from $2.4 million in 2002 to $1.5 million in 2003 — but some of this has been by design, said Wagner.

"We could have grown the bank quicker, but instead we took some steps to ensure continued growth down the road," Wagner said. "Our philosophy is not to grow for the sake of growth, but to manage growth so that we properly serve our customers."

He told BusinessWest that CSB has made a number of investments in personnel and support systems as part of an infrastructure-building process to better serve customers. With that infrastructure, which includes the new West Springfield branch, in place, the bank is well-positioned for the future.

Safe Bets

As he talked with BusinessWest, Wagner noted a newspaper article and accompanying photograph concerning the new, spacious Boston Road headquarters of First Pioneer Credit Union, formerly the Monsanto Credit Union (one of many in or near Chicopee), and its new branch within the Wal-Mart that recently opened on Memorial Drive.

"They look like a bank to me," he said. "And if it looks like a duck and quacks like a duck, then it’s a duck — or, in this case, a bank."

It’s easy to get Wagner started on the subject of credit unions, their affinity for Chicopee and surrounding communities, and what he considers a unlevel playing field when it comes to providing financial services. "I don’t blame the credit unions; I blame the elected officials who allow them to have an unfair advantage."

But he also believes the proliferation of those institutions has in some ways helped CSB.

"I think they’ve made us a better bank," he explained. "They’ve prompted us to focus on customer service, and to move into some areas sooner than other banks have."

At the top of this list is commercial lending, said Wagner, who has a background in that realm and made it one of his priorities when he came to CSB in 1984. When he arrived, less than 5% of the bank’s lending activity was on the commercial side of the ledger; now, it’s more than half the total volume.

Getting to this point has been a combination of personnel — both from a quality and quantity standpoint — and also calculated risk-taking and seizing upon opportunities that have come about through ongoing mergers and acquisitions.

Russell Omer, CSB’s senior vice president and senior lender, told BusinessWest that in the seven years he has been at the bank, the commercial lending staff has grown from one lender to five. And during that period, volume has increased at a steady 8% to 10% per year.

Omer described the past three years as one of transition for the commercial lending department, or "infrastructure-building" as he called it. This process includes the hiring of new lenders, but also the development of back-room operations that support the lenders and their clients.

With that infrastructure in place, the bank is positioned to achieve even better numbers in the years ahead, said Omer, who is projecting 15% growth for ’05, based in part on an improving economy, but also the bank’s strong focus on that area.

Omer said that Chicopee Savings, like all community banks in the region, has seen its commercial lending portfolio helped by the recent spate of mergers and acquisitions. The unsettledness in the market has prompted many small business owners — and their lawyers and CPAs — to pursue relationships, rather than banks.

"Most of the larger institutions take a cookie-cutter approach to commercial lending … if you don’t fit the mold, they don’t want or don’t need your business," he said. "With community banks, especially this one, it’s different.

"Here, you don’t need five meetings to discuss what you want to do with a new piece of equipment," he continued. "We can probably do it in one."

A strong focus on relationships has enabled the bank to record steady growth in other areas, including residential lending, said Wagner. Putting aside the drop in net earnings in 2003 — which Wagner attributed to investments in new facilities, personnel, and technology, as well as a decision to sell, rather than inventory, $50 million in residential loans — the bank achieved most of its other goals.

Assets grew by $24.3 million, or 7.5%, he said, while deposits grew by 6%, and total loans grew by 6%.

To continue and enhance this pace of growth, the bank has moved beyond its Chicopee roots. In 2002, it opened a branch on Center Street in Ludlow, joining a number of banks establishing a physical presence in that community.

The next step will be the West Springfield branch, which Wagner believes will help CSB add to the $125 million in loan volume it has on the west side of the Connecticut River. West Springfield already hosts a number of competitors — Westbank and United Bank are headquartered there and most area institutions have branches in the community — but Wagner, as usual, isn’t concerned about the volume of competition.

"If you made judgments based on whether you thought a community was over-banked or not, you’d never open another branch," he explained. "Instead, I look at locations; if I can get a good spot, I’ll go there — I don’t care how many other banks are there.

"Every town you look at — Longmea-dow, East Longmeadow, Ludlow … they all have a lot of branches," he continued. "You can’t go in with the attitude there are too many. If you did, you couldn’t expand. Instead, you have to find the right location and then make the most of it."

As for future expansion, Wagner couldn’t say where it will take place — or even on what side of the river — but only that it will.

"We have at least one more expansion in mind that’s probably three years down the road," he said. "Where will that be? We’re still working on it."

The Bottom Line

When asked to pinpoint the reasons for his bank’s success, Wagner said much of it has to do with the relationship between the institution and the people it serves — especially those in Chicopee.

"When people come here, they act like they own the place," he explained. "That’s good, because people aren’t going to leave a bank they own."

That special relationship is one of the things the bank will celebrate; even as it makes little note of its 150th birthday.

George O’Brien can be reached at[email protected]