Banking on the Future

Westfield Bank prides itself on maintaining the same reputation for personal service over its century and a half in business. But in many other respects, the institution has had to change with the times — and bank officials are keeping their eyes on the shifting needs of its residential and commercial markets, looking to continue a pattern of measured growth in a highly competitive region for banking.

When Westfield Bank — then known as Westfield Savings Bank — opened its doors for the first time in 1853, 13 people, most of them residents of the growing town, opened savings accounts.

Today, as it celebrates its 150th anniversary, Westfield Bank boasts 10 locations, $813 million in assets, and the third-largest market share in Hampden County. However, ask President Donald Williams about the bank’s long history, and he’ll tell you that more has changed in the past two decades than in the 13 before them.

"When I was hired in 1979, Westfield Savings Bank was a thrift," he said. "Our assets were primarily stocks, bonds, and real estate loans, and our liabilities were passbook savings accounts and CDs."

But by the late 1990s, the bank had taken the word ëSavings’ out of its name to reflect how commercial lending and other business services had become a crucial part of the company’s business. And a decision in 2001 to offer shares in the company for public trading has led to a dramatic increase in the bank’s capital for lending and its flexibility in making larger loans.

In a highly competitive region for banks — one that has seen many growing towns in Western Mass. become overbranched in the past few years — Westfield Bank is taking a cautious look at growth, strengthening its presence in areas where it already has a footprint before turning to new markets.

Yet, steady growth has been one constant in this bank’s 150 years, and Williams told BusinessWest that it intends to remain a strong regional player in savings and lending services.

Humble Beginnings

Back in 1853, Westfield — a community already 184 years old — was a growing town, with a population of 4,300 and rising, a number of growing industries, and a need for more banking services. "We were primarily a provider of low-cost deposits and mortgage loans. That was the reason for the bank’s existence, according to its charter," said Alice Babcock, vice president and director of community banking.

In its first days, the institution shared space — a common practice among banks of that time — with First National Bank until 1866, when Westfield Bank moved upstairs. Continuing its growth largely in the personal-savings arena, the institution had built $1.8 million in assets as the 1900s dawned.

Geographical expansion began with a West Springfield office in 1940 and an Agawam branch in the 1960s. Today, the bank boasts 10 offices in seven communities, including East Longmeadow, Holyoke, Southwick, and Springfield — the latter of which replaced teller windows with a more business-oriented, one-on-one style of banking in an effort to boost the commercial-lending side.

Meanwhile, the bank’s assets have steadily grown through the years, to $3 million in 1913, $7 million in 1923, and $100 million in 1975. That’s a far cry from the $813 million the bank held at the end of 2002, as the last 20 years have brought the most change, with commercial and business banking services leading the way to a new focus, Williams said.

Those changes have hardly come by accident, however. In fact, the bank launched a strategic plan about a decade ago that incorporated three elements: taking ësavings’ out of the name, opening a branch in Springfield, and increasing the bank’s volume of consumer lending. All those elements have come to pass, and the business-lending emphasis is still a developing one, said Williams.

"We’re trying to diversify the balance sheet," he explained. "It’s a long process, and we’re hoping to be where we want to be in 10 years." Going public was a major step toward building more flexibility — and allowing loans of up to $15 million — all the while keeping 53% of the ownership in the hands of the bank’s customers.

The push for more commercial lending has, of course, been slowed to some degree by the sluggish economy over the past few years, as businesses are slower to make capital investments.

"It’s a very competitive environment right now," Williams said. "But we’ve maintained a good backlog, and when the economy gets better, we expect to pick up some growth in that area. But, in this region, with so many banks, it will always be competitive."

Branch Boom

That competition is partly the result of a branch boom among area institutions, who have moved quickly and aggressively to place offices in growing communities such as Ludlow, Belchertown, and Easthampton.

Williams said that, for now, Westfield Bank’s strategy is not to compete for additional territory with the community banks that already have footprints in such towns.

"It wouldn’t be in our best interest to compete with some of those community banks solely on rates," he said. "We don’t want to jump markets. Those are local institutions that do a good job. It would be better for us to look for additional opportunities where we already are."

That means expanding the brand in communities that already have Westfield Bank offices, including the placement of additional ATMs in strategic locations, such as in Shriners Hospital and in the American International College campus center, two recent Springfield additions.

Further cultivating existing geographic strengths without building several new branches makes sense, he said, because it’s consistent with the way the bank has grown throughout the years.

Williams noted that, while Westfield ranks behind only Fleet and Banknorth in Hampden County market share, those banks have 30 and 20 branches, respectively, while Westfield has only 10 — so success has clearly been a matter of making each of a limited number of locations as productive as possible. "We’re looking for ways to really solidify that presence."

One challenge for a 150-year-old bank, Babcock said, is balancing the needs of two different clienteles: a new breed of younger customers who value convenience over anything, as well as a number of older customers who have been with the bank for generations and appreciate personal service most.

Leading up to the 150th anniversary celebration, she said, some longtime customers showed tellers decades-old mortgage books from the days when mortgages were paid in person monthly and the books were stamped accordingly. Nowadays, the process is more impersonal — mortgages are billed and paid by mail, and they may be bought and sold by multiple institutions over the life of the loan.

The dilemma, if one could call it that, Babcock said, is that a bank with many decades of history must give older, longtime customers the personal touches they have come to expect, while also investing aggressively in Internet banking — including a Web-based cash-management system launched last year — as well as ATMs and other convenience-minded services that appeal to younger depositors.

"The good news is that we’re 150 years old," Babcock said. "But that’s also the bad news. If we’re going to continue to thrive, we need to meet those different expectations that customers have."

A Banking Continuum

But the bank simply considers that another challenge. What bridges the gap between both types of clients — those who need bricks-and-mortar, personal contact, and those who are happy banking from home — is an emphasis on a relationship, Williams said.

"We’re not looking to get a customer who wants to do just one service with us," Babcock said. "We’re looking at a relationship" — and that means offering a wide-enough variety of services to draw in new customers, such as cash management services and lockboxes, and then making an effort to get to know customers and their needs personally.

It helps, she said, that the bank has very little turnover among its loan officers, and makes an effort to cultivate a continuum of services by not passing customers from employee to employee. "The client gets to know the lender, and vice versa," she said.

The relationship priority also extends into the community at large, as Westfield Bank continues to donate to local organizations through its Future Fund, with an eye on spreading the wealth evenly into all the cities and towns it serves.

Those seven communities could be joined by others in the future — the institution certainly isn’t abandoning all geographic expansion — but, for now, Westfield Bank seems well-positioned to rely on its strengths in building a greater presence in Hampden County.

"Our financial strength, combined with our non-financial assets, like good customer service and strong relationships with our communities, positions us well for our next 150 years of measured growth," Williams said.

There’s that word measured again. And, by any yardstick, Westfield Bank has been one of the county’s financial success stories.