Webster Financial Corp. puts its name on former FirstFed branches, creating New England's largest independent bank.

09:56 AM EDT on Wednesday, April 6, 2005

BY DAVID McPHERSON
Journal Staff Writer

SWANSEA, Mass. -- Another banking name disappeared from the southern New England business landscape yesterday as 26 FirstFed branches in Massachusetts and Rhode Island were renamed Webster Bank.

Journal photo / Steve Szydlowski

James C. Smith, CEO of Webster Financial Corp. and once an aspiring Broadway performer, entertains employees yesterday at White's of Westport, in Westport, Mass., at a party celebrating the renaming of FirstFed branches. Webster signs went up over the weekend at 19 branches in Southeastern Massachusetts and 7 in Rhode Island.

The new name for the former FirstFed offices comes 11 months after Webster Financial Corp. of Waterbury, Conn., bought FirstFed America Bancorp of Swansea, creating what is now New England's largest remaining independent bank.

"What a great competitive opportunity for us," Webster chairman and chief executive officer James C. Smith said yesterday as he prepared to unveil a Webster sign atop the former FirstFed headquarters adjacent to the Swansea Mall.

The Webster signs went up over the weekend at 19 branches in Southeastern Massachusetts and 7 in Rhode Island. The ones at the Swansea office remained under wraps until a countdown by Smith at a ceremony before bank employees.

In Rhode Island, Webster is a small player with just a 1.1-percent share of bank deposits in the state as of last summer, according to the Federal Deposit Insurance Corporation.

But Webster is looking to move up in the rankings, and Smith said yesterday that it is making plans to open new branches in Barrington and West Warwick. Later, in an interview, he said a dozen new branches could be opened in Massachusetts and Rhode Island within the next three to four years.

The new signs feature a blue-and-yellow logo for Webster that will be adopted throughout its four-state territory as it strives to become a dominant financial services provider from New York City to Boston.

"It's all about conveying the energy and the momentum the organization has," explained Jeffrey N. Brown, Webster's executive vice president for marketing, communications and strategy.

The new logo features a point in its northeast corner that symbolizes Webster's aspirations to be a major Northeast bank.

Founded in 1935 as the First Federal Savings Bank of Waterbury, Webster has become the largest independent bank based in New England by virtue of its own growth and the selloff by competitors to banks outside the region.

The three largest banks operating in New England are controlled from outside the region. They are Bank of America, based in Charlotte, N.C.; Citizens Bank, which is headquartered in Providence but owned by The Royal Bank of Scotland Group; and Sovereign Bank, based in Wyomissing, Pa.

Smith told Webster's newest employees the bank will try to capitalize on its New England roots.

"We intend to serve the local needs of our local customers, which is what we do best," he said.

To stress a community commitment, Smith announced the creation of a $20-million affordable mortgage program targeted at helping low- and moderate-income first-time homebuyers in Providence and Fall River, New Bedford and Brockton, Mass. The program will feature homebuyer education classes, reduced interest rates, flexible underwriting standards and waiver of mortgage insurance requirements.

To celebrate the name change, Webster hosted a party for employees at White's of Wesport in Westport, Mass., with entertainment that included a couple of songs sung by Smith, a once-aspiring Broadway performer.

The party was meant to boost the morale of the former FirstFed workers, who have seen some of their colleagues laid off and have been busy behind the scenes integrating the two banks with different corporate cultures.

Also yesterday, Webster mounted a daylong sales blitz featuring some 110 bank employees visiting existing and prospective business customers. To generate excitement, the bank hired for the day New England Patriots linebacker Ted Johnson, who went on some of the sales calls in Providence.

One business Johnson and Webster bankers visited was the accounting firm Piccerelli, Gilstein and Co. LLP, where its 55 employees have been working long hours recently during tax season.

Partner Bill Piccerelli said his firm has a number of clients that banked with FirstFed and now Webster.

"Webster Bank today is really the first FedFed bank of yesterday, and those guys were pretty aggressive," he said.

Piccerelli said he has seen no disruption in service in the FirstFed-Webster transition and predicted that Webster would be even more aggressive in the local banking marketplace.

Smith said some customers left FirstFed after the Webster acquisition was announced in October 2003, but he said that trend has been reversed.

According to the FDIC, Webster's share of bank deposits in the Providence-New Bedford-Fall River Metropolitan Statistical Area dropped from 5.2 percent in June 2003 to 4.8 percent in June 2004.

With $17 billion in assets, Webster ranks as one of the 50 largest banks in the United States, with branches in Connecticut, suburban New York City, Rhode Island and Massachusetts.

Since the FirstFed purchase, Webster's stock has struggled compared with those of its peers. The company's shares are up just 2 percent since the FirstFed deal closed, compared with a 13-percent gain for the Standard & Poor's Midcap 400 Financial Index. Year to date, Webster shares are down 10 percent, closing at $45.39 yesterday, up 29 cents for the day.

John S. Carusone, president of the Bank Analysis Center Inc. consulting firm in Hartford, said Webster's stock may be lagging because of long-term investments the bank is making, such as the FirstFed purchase and new branches in Connecticut's Fairfield County and New York's Westchester County.

"If you invest in yourself for the long term that comes at the expense of current earnings," Carusone said.

He called Webster a "formidable competitor" and "a disciplined organization" and said, "The Ocean State is key to their marketing plans."

Contact David McPherson at dmcpherson [at] projo.com