Opening Statement

Perhaps a year behind the original timetable, Nuvo Bank, the region’s first new bank in more than 20 years, is set to open its doors. Principals Jeff Sattler and Jim Gardner acknowledge the skeptics who say this isn’t the place — ultra-competitive Western Mass. — or the time to be opening a new financial institution. But they believe they have a product and an operating mindset that will prove those skeptics wrong.

Jeff Sattler says Nuvo Bank will have a commercial-lending limit of roughly $1.2 million per transaction.

That will cover maybe 65% to 70% of the requests for this region, said Sattler, president of the region’s newest bank and a long-time commercial lender with TD Banknorth. “That represents the meat and potatoes of this market, and means we can handle the needs of nearly all the small businesses in this region.”

Sattler and Jim Gardner, chairman and CEO of the bank set to open its doors in Tower Square next month and also a long-time bank administrator, know all about the needs of small-business owners — and also the challenges, headaches, frustrations, expectations, hopes, dreams … all of that.

That’s because they’ve lived that life for the past few years and continue to live it today.

It was early in 2006 when they first started laying the groundwork for the region’s first new bank in more than 20 years, and to say that there have been hurdles to overcome on the way to the traditional ribbon-cutting ceremony would be a huge understatement. The timetable for opening the facility has been pushed back several times as the partners worked to raise the requisite capital for the venture — a task made more challenging by factors ranging from a softening of the economy to competition from other financial institutions seeking the attention and dollars of investors.

Meanwhile, there have been the typical issues with getting the physical space ready for prime time, as well as other matters, such as gaining some flexibility with parking regulations downtown (they’ve secured several metered spaces on Bridge Street), finalizing a business plan, and putting a marketing and advertising strategy into place.

“We certainly have a great appreciation for what small-business owners go through because we’ve been through it all ourselves,” said Sattler, adding that he and Gardner intend to use those learning experiences to grow Nuvo’s portfolios of business. “In the end, I think that will only make us more responsive to our customers, and better able to serve them.”

Almost all of the hurdles are now in the rear-view mirror, and the entrepreneurs who have been relegated to using the future tense — about what they hope and plan to do — for far longer than anticipated can now finally use the present tense and discuss what they are doing.

Indeed, while the final touches are being applied to the once-cavernous space in the northeast corner of Tower Square, Sattler and Gardner are already doing business. They’ve written a few commercial loans to date, with many of the parties earning somewhat distinctive designations. One obviously became the first customer, said Sattler, while another was soon awarded at least temporary status as the institution’s largest customer.

Such levity will soon be the stuff of nostalgia, quickly supplanted by the day-to-day rigors of operating a bank, said the partners, but what will continue is a mindset to make each customer feel in some way special.

This is part of an operating model designed to change and enliven the banking experience, said Gardner, who also emphasized connections to the community.

In this issue, BusinessWest looks at the highly anticipated opening of Nuvo Bank, and what the partners are expecting as they enter — finally — what is an ultra-competitive banking environment in Western Mass.

Accounting Class

As they gave BusinessWest a tour of their bank-in-progress several weeks before the scheduled opening, Sattler and Gardner pointed out some of the features they believe will make their institution different and refreshing.

First, they stopped within what will be known as the ‘community room,’ which, as the name suggests, will be a facility (1,200 square feet) set aside for the community, meaning everything from nonprofit groups that need a meeting space to business organizations that want to conduct informational get-togethers.

They then stopped at the conference room, which will have windows on all four sides, an architectural nuance designed to highlight openness and transparency, said Sattler. “We want our customers to see what we’re doing,” he said, as he moved on to show how everything — from the lobby to the corporate offices to spaces where the works of local artisans will be displayed — will soon take shape in this space where the ceiling has been lowered from 60 feet to 15.

Bringing all this to reality has taken far longer than the two principals could have anticipated, but that is part and parcel — in most cases, anyway — to getting a new small business off the ground. And that’s what Nuvo is.

Specifically, it is the region’s first de novo bank, the name given to start-up operations, be they commercial or community banks, that follow one of what are now many blueprints for getting such ventures off the ground. The concept has worked successfully in many other regions of the country, but hadn’t been tried in Western Mass., what most consider to be a saturated market for banking, until Gardner approached Sattler about testing the local waters.

After a thorough vetting process, the partners became convinced that there was need for such a facility, and went about amassing a group of investors, or organizers. They then applied to the state Board of Bank Incorporation for the OK to move forward, and received that simple but important document in April 2007.

Soon thereafter, they commenced the task of raising the capital needed to launch the venture. The projected floor was around $10 million, but the partners set a more ambitious goal of $15 million. Getting there was complicated by a number of factors, they said, listing everything from the softening of the economy to unfamiliarity with the de novo concept to that aforementioned competition for investor dollars.

Eventually, the campaign topped $13 million this past spring, and the partners moved from fund-raising to the next stages of the operation — putting the facilities and team in place. Those steps are still in progress, but the finish line is clearly in sight, said Gardner, noting that the bank should open by mid-October, with formal grand-opening ceremonies set for Nov. 13.

“The barriers to entry in this business are considerable, and that’s by design — if this was easy, you’d see new banks on every block,” he said while explaining why the timeline for opening has been stretched repeatedly. “There are thousands of decision points in the process, and none of them are I what I would consider easy decisions.”

But in retrospect, Sattler said the delay in hitting the fund-raising number, while frustrating, may have a blessing in disguise in many respects. Elaborating, he said that opening a year ago, when real estate values were still significantly inflated, would have put Nuvo in a more difficult situation than what it will face when the doors do open in October.

“I’d be more worried today if we’d opened a year ago,” he said, referring to the current conditions and question marks hovering over the financial-services sector and real-estate market. “Because I’d have a portfolio we’d have to retrace and backtrack on. We’re at the bottom of that cycle from an asset-value standview, and from the standpoint of caution — business owners are regrouping.

“I don’t have a portfolio that is downgrading,” he continued. “I’ve got a portfolio that at this economic time is strong and credit-worthy and local. And that’s building a great foundation, so that when this market picks up, we’re going to be in a good position.”

Summing things up, he said that a bank just getting started is in some respects better off than some larger, existing institutions with sagging portfolios and pressure from shareholders and elsewhere to somehow bring those numbers up.

How to Generate Interest

Like all other bank administrators in the region, Sattler and Gardner acknowledge that this is what amounts to a no-growth market when it comes to the financial-services sector.

Thus, growth — or, in the case of Nuvo, simply getting started in the process of accumulating assets and deposits and building loan portfolios — comes down to taking business from others.

And both business partners believe there will be ample opportunities for them to do so.

Why? Because over the past few years there has been considerable change within the local market, said Sattler, noting that several banks — Hampden and Chicopee Savings, most notably — have gone public, while there have been some acquisitions, such as NewAlliance absorbing Westbank. And this change — and the promise of more to come, by most accounts — equates to opportunity, according to Nuvo’s principals.

“Go back to when we started with this in June of ’06 … how many banks have changed or merged since then?” Sattler asked, before quickly answering that question with a simple, “quite a few.”

“And change is opportunity for us,” he continued. “Customers have become pretty sophisticated over the past several years, especially since the ’80s when there were so many changes and mergers. Things are happening in this marketplace … there are policy changes in some of these institutions; things are not the same at some of these banks. Business owners know that, and we can capitalize on that.”

Overall, the two partners said, to seize on those aforementioned opportunities, they plan to focus on value, in whatever ways it can be delivered.

They listed several, from the community room — which they will likely name the ‘Resource Room,’ to accurately convey what it is — to CDAR (certificate of deposit account registry), which enables the bank to insure deposits up to $50 million, not the FDIC’s ceiling of $100,000, to the fact that when one sits down with Sattler to discuss a loan, they will be meeting with not merely with a lending officer, but the president of the company.

“That’s a tremendous advantage, to have a principal with the company sitting there with you,” said Gardner, “because he’s the decision-maker, and in the current climate at most banks, the decision-makers are maybe hundreds of miles away, and they don’t really know the person who’s going to be most affected by that decision.”

The concepts of value and a fresh, new approach to banking will be the main thrusts of the bank’s marketing initiative, said Michelle Abdow, president of Market Mentors, the firm that is developing the campaign for the institution.

She said the primary goal, obviously, is to raise awareness about the latest addition to the market and the fact that it is open for business. Also, it will stress that Nuvo will feature a different look and feel when it comes to the banking experience, what she described thusly: “Starbucks meets Barnes & Noble meets a bank — that’s the ambiance Nuvo is going to have.”

But beyond that, the marketing efforts aim to stress that the bank can help customers — from homeowners to small-business owners — accomplish their goals and dreams.

A series of print, radio, and TV ads will feature a somewhat risqué variation on Nike’s ‘Just Do It,’ by depicting a diverse set of consumers explaining how they “did it” — meaning everything from putting an addition on their home to starting a new restaurant, and how the bank helped — while inviting viewers, listeners, and readers to “get ready to do it.”

As he talked about Nuvo, the anticipated opening, and what he and Gardner might expect in the short and long term, Sattler acknowledged that questions and doubts about the venture are not restricted to timing or the competitive nature of the market.

Indeed, the location — in downtown Springfield in a struggling Tower Square — has also raised some eyebrows. But here again, the partners feel good about their decision.

They admit that Tower Square has certainly seen better days — it has lost several retailers over the past few years, including Hannoush Jewelers and Edwards Books earlier this year — and that the revitalization of downtown Springfield remains a work in progress. But the partners are optimistic about recovery for both entities, and intend to be part of that process.

“There has been some progress downtown, and we’re certainly optimistic that the picture will continue to brighten,” said Sattler, noting, as one example, the prospects for re-tenanting the nearly vacant federal building across Bridge Street from the bank and the resulting benefits to businesses in the central business district. “It’s not going to happen overnight … these things take time, but things can and will improve, and we intend to be part of the solution.

“The key is to bring people and activity to downtown,” he continued. “We will help just by being here, but we can also bring people downtown through the Resource Room and other ways we intend to connect to the community.”

The Bottom Line

Summing up the past 30 months or so, and especially the past year, Sattler and Gardner said they’ve overcome a great deal to get their doors finally open.

Navigating that whitewater has been a tiring, frustrating experience, they told BusinessWest, but also an exhilarating one in many respects, a roller-coaster ride of emotional swings that has provided some confidence — and some kudos.

“Some people have told us that, if we can get through all this, if we can survive all this adversity, then we can probably serve our customers effectively,” said Gardner. “That’s just what we were thinking, too.”

And with that, they went back to work making sure their institution would be in all ways ready for opening day — and also for its first customer and its largest customer, whoever that might be by then.

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