Taking Stock

United Financial Bancorp, the holding company for United Bank, is nearing the end of its first year as a publicly traded institution. The bank is putting some of the $72 million generated from last July’s initial public offering to work in expansion efforts, including two new branches slated to open later this year, and acquisition, in the form of a Northampton-based financial services company. More initiatives to seize market share are in the planning stages.

Richard Collins says he and others at United Bank are still adjusting to life as a publicly traded institution.

“It takes some getting used to — there’s a learning curve,” Collins, the bank’s president and CEO told BusinessWest. The playing field has been altered, starting with new and different layers of regulations, including the dictates of the Sarbanes Oxley Act, that the bank must now comply with. There’s also more scrutiny, he said, noting that it comes in many forms, from Wall Street analysts to depositors who want some help interpreting first-quarter financial statements.

There’s also the $4 million charitable foundation the bank created in association with its IPO, a vehicle to increase its giving within the cities and towns it serves. “It makes us a bigger player in the community,” said Collins.

And then, there’s the matter of where and how to utilize the $72 million in capital generated by last year’s public offering. A strategy is unfolding, said Collins, noting that one of its early elements is an expansion into the Northampton market, the bank’s first major thrust into Hampshire County.

The West Springfield-based institution, has begun work to renovate a former Chinese restaurant on Northampton’s Main Street, said Collins, who called the city a “logical next step” for the bank and the branch there a vehicle to better serve its 600 customers in that city — and grow that number.

The bank also purchased a financial advisory firm in Northampton, the Levine Financial Group, adding $88 million in assets under management in the process.
The push into Northampton is part of a larger strategic plan to build the “franchise,” as Collins called it, into a larger, stronger network of branches, one that will soon stretch from Ludlow to Northampton. The basic plan is to continue to add branches in areas where United does not have a strong presence and that are contiguous to current locations.

The north side of Westfield is an intriguing example, said Dena Hall, the bank’s vice president of marketing and public relations, noting that it builds a bridge of sorts between the bank’s downtown Westfield location and its Holyoke and Huntington locations. The North-ampton branch will extend the network farther north.
Hall said residents of the northern section of Westfield do not have many banking options close to home, and are often inconvenienced by travel to the city’s downtown, where several banks have locations.

“This was something that made sense for us,” she said, noting that the branch, to be located on Southampton Road, will open late this year. “This will enable us to better serve households in that area; it’s a good opportunity.”

BusinessWest looks this issue at how United is crafting a strategy to seize more such opportunities in the months and years ahead.

Taking Interest

Commenting on life as a partially public company — the bank retains more than half the stock issued — Collins stressed repeatedly that the change in format does not fundamentally alter the way the instituition conducts business.

“It doesn’t change the way we run the bank, make loans, or take care of our customers,” he said. “But there is a different mindset now; we have a responsibility to our shareholders. We have to pay attention to thoughts and perceptions of people who bought our shares.

“We have a new set of challenges,” he continued. “That’s fun and it’s exciting; we’re much better capitalized now than we were before, and that gives us the chance to do things that we have been contemplating.”

These include the new branches in Northampton and the north side of Westfield, as well as the Levine Financial Group acquisition, said Collins, noting that the bank’s leaders are working with a team of advisors to identify opportunities and possible geographic targets for further expansion.

As he talked about the elements of the bank’s strategic plan (to the extent that he could given regulations limiting the dissemination of information on public companies), Collins acknowledged that the Western Mass. field is already crowded and that new competitors, such as Connecticut-based Webster Bank (see related story, page 28) are pushing their way into the Western Mass. market.

“But competition is a fact of life in every business and it keeps us on our toes,” he told BusinessWest, adding that United, like every other bank in the region, will be energetic and imaginative in its efforts to grow market share in a region that is seeing very little residential or commercial growth.

“You find ways to be good enough at what you do to have people want to bank with you,” he said. “It’s as simple as that.”

Elaborating, he said the bank, which had assets approaching $1 billion ($947.6 million) at the end of the first quarter, will look to continue to create growth opportunities through a mix of services, physical expansion when and where it’s appropriate, and acquisitions.

By All Accounts

As one example, he pointed to the new branch on Westfield’s north side. United has a strong presence in that city, and has plans to renovate and expand its downtown office there. But the north side is in some ways a separate community, one he characterized as underserved by the banking community.

What’s more, the city will be soon be building a second bridge over the Westfield River that separates the north and south sides, a lengthy project likely to create traffic headaches.

“People are not going to want to cross that bridge if they don’t have to,” said Hall. “If they can stay on the north side to do their banking, they will.”
The Northampton branch and the acquisition of Levine Financial — an expansion of non-banking services — are more examples of seizing opportunities for growth, said Collins, noting that the Northampton market holds significant promise of the bank.

“It’s an obvious next step for us,” he said, noting that it will enable the bank to build on the small base it had there — it has had a loan office in the city in the past — while building visibility for possible further expansion in the Five College area. “We currently do business with nearly 600 households in the Northampton market and with the addition of the clients from Levine Financial Group, we expect increased opportunities to grow our market share and and expand the financial services portion of our business in this market.”

He said the bank will continue to explore opportunities like the Levine acquisition — where a long-time professional with an established client base was in a position to sell his business — in the non-banking-services realm.

Beyond Northampton, Collins said only that additional territorial expansion will happen; where it will take place is still to be determined.

Connecticut is one possible destination, he said, noting that United, like other banks based in the region, have long considered that market, just as banks south of the bordered have eyed — and in some cases penetrated — this market.

“We have a presence in Connecticut,” said Hall, noting that residents there are served by some of the bank’s existing branches. “It would another logical step for us to go there.”

The Northampton and second Westfield branches will give the bank 13, said Hall. In addition to the Ludlow, Holyoke, downtown Westfield, and Huntington locations, United also has branches in West Springfield (where it also has its corporate headquarters and operations center as well as its Financial Services Group), and also East Springfield, Longmeadow, downtown Springfield, Indian Orchard, Sixteen Acres, Feeding Hills.

Further expansion will come where it makes sense, said Collins.

“We can, and will, find new areas where our brand of banking with be well-received,” he explained. “There are opportunities for us to grow.”

The Bottom Line

Returning to the learning curve that has accompanied the bank’s transition to a publicly traded company, Collins said there is indeed a heightened level of scrutiny — on the part of competitors, market analysts, and even some of the bank’s smallest depositors, for whom the acquisition of a few shares may have been their first and only stock purchase.

“They’re not shy about telling us what they’re thinking,” he said of depositors. “They’re taking this very seriously, and they should; they’ve acquired a financial asset that want, and expect, to appreciate.

“People are watching us,” he continued, with a look that blended satisfaction with a touch of anxiety. “They’re watching us more closely than ever.” And based on the first year’s activities, and the promise of more to come, such individuals should have plenty to watch.

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