A New Connecticut Bank Gets a Warm Reception from Its Community

It took three years, during a difficult economic time, to raise $6.3 million from investors in Simsbury, Conn., to start Simsbury Bank and Trust Co.

Good things come to those who wait.

Simsbury Bank and Trust Co., which takes its name from a community bank that was gobbled up by Fleet Bank a few years back, opened its doors in March. In its first months, it took in an incredible $1 million in deposits a week. It has slowed to a still meteoric $500,000 a week, according to Barry R. Loucks, president.

"People were used to having a community bank here," Mr. Loucks said of the $25 million-asset bank. "We just got a great reception. People were very willing to go to a local institution again."

This year's jump in new bank formations, a trend that reverses a 10-year decline, is different from surges in the past. First, no one expects the level to hit the 300-plus new banks that mushroomed in the mid-1980s. Second, like Simsbury, new bank organizations today are driven more by demand than by the promise of an acquisition payoff.

Simsbury is growing fast, despite what Mr. Loucks terms a "stable, but not growing" economy, one in which memories of defense industry layoffs and plummeting real estate prices are still fresh.

Still, the bank's fortunes may give heart to the hundreds of efforts currently under way to start community banks across the country, because its formation shares traits with almost all of them.

Simsbury's employees are mostly castaways from the region's big-bank consolidation. It's in an area in which the merger wave has reduced the number of banks greatly. And it has given new life to a local business community hit hard by defense cutbacks, the leaders of which have a huge stake in the bank's viability.

The bank is focusing its efforts on individual customers, and on the small and medium-size businesses in the area.

Mr. Loucks said that based on current projections, Simsbury should be profitable within four months. The traditional wisdom is that it takes three years for new banks to become profitable.

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