WATERBURY, Conn. - If Jim Smith wants to tell the story of Waterbury's economic revival , he can refer to a bright yellow hardcover book "Waterbury: A Region Reborn," leaning against one side of his bookcase.
But if he wants to talk about Waterbury's new financial prominence in Connecticut, he could point to himself.
"We are trying to become more like Shawmut was in many ways," Mr. Smith said. "Our bank will look like some of the leading Connecticut franchises did 10 to 15 years ago."
Since 1991, the 46-year-old Mr. Smith, chief executive of Webster Financial Corp., has taken a sleepy, local thrift founded by his father through five acquisitions, progressively shifting its asset mix toward more profitable commercial banking and making Webster the second-largest financial institution headquartered in Connecticut.
Hot on the heels of its fifth purchase, Webster Financial is poised to take over 20 branches and $1 billion in deposits divested by Boston-based Fleet Financial Group as part of Fleet's merger with Boston's Shawmut National Corp.
The purchase, to be completed in early 1996, would create a $4 billion- asset stock institution with 63 branches spanning the state from Massachusetts to Long Island Sound. And it would establish little-known Webster as the largest Connecticut-based institution in the embattled market of Hartford, the state's capital, with 8% market share, versus about 43% for Fleet.
All that means a new level of leadership and responsibility for Webster, observers say. But they agree that Mr. Smith is well-suited for the burden.
"The entrance into Hartford brings with it, like it or not, a deeper, broader sense of responsibility to the state, even though the bulk of the bank is still where it is now," said Gerald M. Noonan, president and chief executive of the Connecticut Bankers Association. "It brings more leadership demands and that will be a burden for the bank to carry, but one that Jim Smith can easily shoulder."
Mr. Smith, who took over the corporate reins in 1987 from his father, Harold Webster Smith, has followed a conservative growth strategy throughout his reign, acquiring banks only when it was accretive to earnings within the first year.
"Our opportunities have been created by doing what we do best," Mr. Smith said. "We ... have the services of a big bank but the personality of a hometown bank. That's what we work to be."
So far this year Webster has reported a record high $14.4 million in earnings, although its return on equity still lags at about 13%, up from a lackluster 6% four years ago. "The challenges ahead for Jim Smith are to integrate and digest these latest acquisitions while generating value for his shareholders," said John Carusone, president of Hartford's Bank Analysis Center.
For about 60 years, Webster has been a mainstay of central Connecticut banking, in recent years surviving unscathed the worst recession in the state since the Depression.
That's because, despite the feverish growth in the last year, almost everything the Waterbury company does is modeled along cautious principles originally articulated when the thrift was founded in 1935, particularly, "Never take a risk you can't afford."
"We view our history as a series of stepping-stones, each one leading to a new opportunity," Mr. Smith said. "My father always said we should try to hit singles, not home runs. You never know when you might hit one anyway."
That guided the thrift through the 1980s and early 1990s, when then $700 million-asset Webster limited its exposure to the commercial real estate market while so many of its competitors stumbled - some falling into Webster's waiting arms. The thrift had even prepared for such opportunities, putting the capital from its 1986 stock conversion into reserves and building up its management skills and commercial experience, not its asset size.
"We put our toe in, but not our whole foot," Mr. Smith said. "We exercised some of the discipline that is a hallmark of the institution. Our success is as much due to what we haven't done as to what we did."
When the growth did start, it came fast and furious. The thrift bought $200 million-asset Suffield Bank in 1991 from the Federal Deposit Insurance Corp. Webster doubled in size a year later with its purchase of $1.1 billion-asset First Constitution Bank, also from the FDIC.
In early 1994, Webster added another $500 million to its assets as Bristol Savings Bank converted from a mutual and joined the Waterbury company, one of the last merger-conversions permitted by federal regulators. Later in the year, the thrift also bought one-branch Shoreline Bank and Trust Co. in Madison, then just last month it acquired Shelton Bancorp.
The last purchase propelled the bank over the $3 billion-asset mark and convinced officials that the time was right to merge the subsidiaries into a new lead institution, Webster Bank, taking the middle name of the company's founder.
The recent deals were also designed to fuel Webster's transition to a more bank-like balance sheet. The Fleet branch purchase, for example, will bring another $250 million in commercial loans and an influx of demand deposits to Webster.
Leveraging its high-profile expansion, the thrift initiated a massive advertising campaign last month, with two television, two radio, and two newspaper ads touting the thrift's commitment to customers despite its growth and name change.
But the thrift's adherence to its founding philosophy is most apparent in the Fleet deal.
During negotiations, Providence-based Fleet insisted that the buyer would have to retain all branch employees, while the state was demanding that something be done with the 50,000-square-foot office space in downtown Hartford that would be abandoned by Fleet.
Webster agreed to both requirements, and plans to hire an additional 40 to 50 displaced personnel to staff a new commercial banking and administrative center in the Hartford site.
"As a Connecticut-based institution, we understand the state," he said. "This is our home. We will do everything in our power to make Connecticut a more business-friendly state, because that will benefit our customers. We want to be a catalyst for growth in Connecticut."
