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By All Accounts, a Very Rewarding Career

Joe LoBello Looks Back on 45 Years in Banking — and Ahead to the Future of the Industry

Joe LoBello admits that it wasn’t the kind of career move most bankers in his position would want to make — and he didn’t want to make it either, at least at first.

But then again, and looking back with the benefit of hindsight, he says it was a very logical career move, one he would likely regret not taking.

In was late 1991, and the local banking community was still recovering from its worst nightmare since the Great Depression. LoBello, who had joined Third National Bank as a management trainee in early in 1963 after earning his MBA at UMass, had risen through the ranks at that institution, which would later become part of New England Merchants Corp., then Bank of New England (BNE) and eventually Fleet — “I went through four mergers, but my desk never moved,” he joked — and part of history as that strange saga unfolded.

Fast-forwarding through that tumultuous period, LoBello said that he was still standing after an unsuccessful attempt to buy what was then Bank of New England West out from under the troubled BNE, and the eventual sale of a successor, bridge institution to Fleet. In fact, he was regional president for Fleet, which had big plans for him, when he was approached by a headhunter looking for an eventual successor to long-time Peoples Savings Bank Chief Executive Warren Rhoades.

“I told him I wasn’t interested,” recalled LoBello, adding quickly that he was urged by some of the board members at tiny Peoples to reconsider that sentiment — and he did, and eventually took over at Peoples in 1992. The rest, as they say, is banking industry history.

When he came to Peoples, LoBello did so with the goal of creating what he called “another Third National,” meaning a respected, community-minded institution, and by most all accounts, he did just that.

LoBello, who officially retired after 45 years in banking earlier this year, left what is now known as PeoplesBank much larger and stronger than he found it. Now with $1.5 billion in assets (five times bigger than when he started), Peoples has 14 branches, has moved well beyond its roots in Holyoke, and has more, quite aggressive expansion plans on the table.

This is a blueprint LoBello helped draft in his final years at the bank, a strategic plan crafted in response to changes within the financial-services industry, a firm belief in the concept of community banking, and forecasts for continued consolidation within the sector.

“Banks have to grow to make money,” said LoBello, noting quickly that growth comes hard in a region like the Pioneer Valley, which has been largely stagnant for many years. “We have far fewer banks than we did years ago, but most experts say there are still too many, and there will be more shaking out in the years to come.”

LoBello admitted to BusinessWest that there are times when he might be tempted to stay around the business and see how it all turns out — “it’s going to be interesting to watch; there’s going to be a lot of action.” But he’s content to watch from afar (Arizona, at the moment) while lowering his golf handicap.

In this issue, BusinessWest talks at length with LoBello, the now-former dean of the region’s banking community, about what he’s witnessed through nearly five decades in banking, and what the future holds for this still-changing business sector.

Generating Some Interest

Looking back on his decision to accept that offer and come to PeoplesBank, LoBello said he made it because he desired a return to where he started his career in this business, and where he flourished — community banking.

“I did it because I had a vision that banking was starting to change,” he recalled, citing the impact of deregulation and reiterating his basic mission to create another “old Third National” when he came to the PeoplesBank headquarters on High Street.

“Third National was the leading financial institution in the region,” he recalled, referring to the bank he knew into the mid-’80s. “It was very philanthropic and had a great reputation for caring. I always said of Peoples, ‘I’m going to rebuild it the way Third National was.’”

To achieve that end, he said, he would follow what he called the “Third National recipe,” which boiled down to hiring good people, assembling a strong board of directors, being a good corporate citizen (the bank had a strong philanthropic track record, and LoBello served on countless board and commissions), and focusing on the customer.

These were lessons he learned over the course of nearly three decades with Third National and, later, BNE and Fleet. “I had some great teachers — that was the best training ground anybody could have had,” LoBello recalled. “I had two great mentors in Buzz Harrington and Bill Brunelle, who were legendary bankers, and we had a very prestigious board, maybe the greatest collection of business leaders ever assembled on one board.”

The Third National experience didn’t end the way LoBello would have liked, but then again, few could have predicted how the banking community would be turned upside down in those dark days of the late ’80s and early ’90s, when many banks failed and hundreds of careers, including his, took unexpected turns.

LoBello first came to PeoplesBank as executive vice president, and just a few months later, he succeeded Rhoades, and took over with a plan — to expand the bank’s reach, in terms of both physical presence and products and services. Specifically, he added a commercial-lending component, which was another of the old Third National’s strengths, and a big part of his resume.

Indeed, he was head of the bank’s commercial-lending division for seven years, during which time he built a portfolio and acquired, in his words, a “very strong following” that he would soon put to his advantage.

“I took my board to Boston and spent a lot of money on them,” he recalled. “We went to the Boston Harbor Hotel, and I wined and dined them; I persuaded them to buy into the plan I was putting together.”

Branching Out

When LoBello came to PeoplesBank, the financial services industry was in the midst of change, specifically deregulation, or what LoBello also called “regionalization,” wherein banks were allowed to cross state lines and essentially expand wherever and whenever they desired.

“I could see that regionalization was coming, that Western Mass. was a region, and that you needed to be in every community,” he explained, noting that convenience is the main driving force in this industry today. “We knew we couldn’t just stay in and around Holyoke — we had to go regional. I said to myself that I wanted to beat everyone to the punch, especially the community banks, and create a franchise that is represented in every major city and town.”

The push outward started in South Hadley and continued in Longmeadow, Hadley, Amherst, and East Longmeadow. Today, the PeoplesBank franchise continues to expand its reach; in late 2006, LoBello announced a major initiative to build six new branches, a strategic initiative that will eventually take the bank to Springfield (a branch in 16 Acres has opened, and a second location in the city is planned), West Springfield, Northampton, and other communities where it has historically lacked a presence.

The territorial push would seem ill-advised at a time when many in the industry would say the region is already seriously overbanked, but LoBello says this is the direction in which in this sector is headed.

“If you’re going to stay in the game, you must have convenience, an effective distribution system,” he explained. “It’s counter-intuitive in some ways to have all these branches, but you have to do it. There’s too many banks chasing too little business, but you’re not going to get any of that business if you don’t expand geographically.

“And as a result of adding all these branches and incurring that expense, banks will eventually hit the wall down the line,” he continued, “and that’s going to be another driving force in them having to merge together. But there’s no other way; it’s a Catch 22 — if you stay where you are, you’re going to shrink.”

For all these reasons, building a large franchise will help properly position PeoplesBank for the day — probably not too far down the road — when some of the area institutions that have gone public in recent years will be acquired by larger, regional institutions, leaving PeoplesBank as the largest, and one of the few, pure community banks left in the region.

As he surveys the scene in the local banking community, LoBello says there are fewer players today than when he started, or even 15 years ago, but probably still too many, by most estimations. This fact of life will eventually lead to more consolidation that will change the size and character of the field in the years to come.

“There are a lot of small banks in this country, and what you’ll see is a lot of banks consolidate regionally,” he explained. “So you’ll have two levels of banking — the big, international megabanks, and more regional banks that are focused on areas like Massachusetts and New England.”

Safe Bets

As he talked with BusinessWest just before leaving for Arizona and the golf course, LoBello said he was spending some time looking back over archival material from his lengthy career — and enjoying the ride.

“It’s fun to look back,” he said, pausing again to review his career decision in 1991. “Going from big to small like that … it usually doesn’t go that way,” he said of career paths in banking. “But I’m glad that in my case, it did.”

That’s because he took the script he learned at the old Third National Bank and followed it, to the letter. And thus, he ended his career the same way he started it — helping to set the standard for excellence in community banking.

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