March 10, 2011

BANK MERGER DRAWS FIRE AT PUBLIC HEARING

By Mark Zaretsky, New Haven Register

NEW HAVEN -- It was a different bank executive pitching big changes for the bank at the corner of Church and Elm streets Wednesday night.

First Niagara President and Chief Executive Officer John R. Koelmel was largely opposed by a community even less willing to cut him slack than when NewAlliance Chairwoman and CEO Peyton Patterson sought approval seven years ago for the demutualization of the former New Haven Savings Bank.

Koelmel, who heads a growing bank in Buffalo, N.Y., is seeking state regulatory approval for a merger that would make NewAlliance part of First Niagara.

The two constants: a public hearing in front of the state banking commissioner -- this time, Howard F. Pitkin -- and a room packed with local residents concerned about their bank being hijacked.

Speaker after speaker from among more than 250 in attendance implored Pitkin to take to heart the lessons of the most recent recession.

"Tell me, Mr. Commissioner, what is the benefit for my community?" asked resident Gabriela Campos Madison, speaking deep into the four-hour public hearing at Conte-West Hills Magnet School. "What is the benefit to my children? I see none."

Since the demutualization of New Haven Savings Bank, "a lot of things that we were told were not going to happen have happened," said state Rep. Pat Dillon, D-New Haven.

Koelmel, speaking at the start and again at the end, said, "We are pleased to be able to reaffirm how the combination of two of the region's strongest banks will create an institution that will even better serve the needs of Connecticut's consumers."

He said First Niagara is in the final stages of recruiting a new regional president who will be based in New Haven.

First Niagara's New England Regional Center will be based in New Haven, he said.

He tried to allay other concerns, saying, "We will create an institution that will be among the top 25 banks in the country, with $30 billion in assets, $18 billion in deposits and 340 branches serving four states in the Northeast."

Koelmel called First Niagara "a poster child for doing it right," and said that last year, First Niagara made $4 billion in new loans and line advances.

First Niagara's business plan calls for it to make more than $1 billion in Community Reinvestment Act loans and other economic development initiatives within NewAlliance's market over the next five years.

Many speakers, including Mayor John DeStefano Jr. and, in a letter read by a staffer, U.S. Rep. Rosa DeLauro, D-3, expressed concern about First Niagara's recently announced plan to lay off 229 people in Connecticut, the fact that First Niagara earned only a "satisfactory" Community Reinvestment Act rating compared to New Alliance's "outstanding" rating, and the likelihood that after the merger, many economic decisions would be made 400 miles away, in Buffalo, N.Y.