If People's Bank's low profile in the credit card industry lulled its competitors to sleep, that would suit the thrift's executives just fine.
They'd be happy to keep intact their reputation for running a respectable but unremarkable card business.
But one look at the Connecticut company's 16-story headquarters should be enough to dispel any rival's complacency. The building, Bridgeport Center, designed by world-renowned architect Richard Meier, towers over abandoned factories and other empty edifices in the harbor area.
The message is that $6.7 billion-asset People's has grown into one of its region's retail banking powerhouses. It also has become a symbol of progress and wealth in a city that barely averted bankruptcy.
Two years ago, Ronald T. Urquhart, first vice president of consumer credit and head of credit cards, referred to People's as a "low-cost provider with a plain-vanilla card" that offers consumers a straightforward, low-priced product with no gimmicks.
Although cobranded cards and reward programs are clearly the rage today, Mr. Urquhart, in a recent interview, maintained that People's is sticking with the "plain vanilla" strategy.
He even advises his colleagues to "walk away" from cobranded deals, mostly because he feels they are not profitable for the issuer.
John A. Klein, executive vice president of consumer banking, to whom Mr. Urquart reports, added, "We are always looking for new and exciting things to do, but we also recognize that we have a formula that works. We will continue to leverage what we are doing."
Despite its unassuming manner, People's has been an indisputably aggressive player in the vanguard of some of the card industry's most innovative movements.
Several years ago, it was one of the first issuers to latch on to the trend toward low interest rates, which eventually became the bank's hallmark.
In 1991, People's launched the first nationwide bilingual credit card, targeting Hispanics.
More recently, People's Bank has joined a select few U.S. financial institutions seeking to expand in credit cards overseas. It has applied for regulatory approval to open in the United Kingdom, where two of the top 10 U.S. card issuers, MBNA Corp. and Household Bank, also recently established card businesses.
Advanta Corp., the 13th-largest card issuer, started a joint venture with Royal Bank of Scotland in June to issue credit cards in the United Kingdom.
People's move did surprise industry followers. According to The Nilson Report, People's is the 28th-largest issuer, with $1.7 billion of receivables.
Except for its credit card business, which accounts for 13.4% of managed loans, People's is a grass-roots thrift concentrating primarily on the Connecticut market. Credit cards are its only out-of-market product.
"It is ironic that People's is making such a bold move to expand into Europe, when its corporate strategy is so tightly defined, focusing on Connecticut exclusively," said Stanley T. Wells, executive vice president and director of Keefe, Bruyette & Woods Inc.
"People's has no interest in going to Massachusetts, yet it wants to go to England," Mr. Wells said.
Reluctant to discuss plans that are in a "preliminary stage," Mr. Klein would say only that People's interest in Britain is a "logical extension of what we are already doing."
Over the first half of 1993, People's was the fastest-growing major card issuer, posting a 37% increase in receivables, said RAM Research Group. Though other issuers might have been growing faster over a longer period, People's approach is "more measured, one we can manage," said Mr. Klein.
Creditworthy cardholders are the bedrock of People's strategy, said Mr. Klein, who believes People's will eventually be one of the top 20 issuers. He stressed that it will not be at the expense of taking risks.
The United Kingdom is obviously uncharted territory.
Mr. Klein would not discuss whether People's plans to export its low- pricing strategy, but analysts believe the bank would be wise to do so.
Only a handful of issuers there offer low-priced credit cards. Most charge interest rates of 20% to 25%, said Gautum Raj, a principal in the London operation of Gemini Consulting.
People's first challenge will be "to find warm customers" and build a card base quickly, said Mr. Raj.
Half a million is generally seen as the critical mass of customers a bank needs to start making money. MBNA has approximately 200,000, but its growth is considered strong, and analysts estimate that it will have $1 billion of receivables within six months, which is twice as fast as MBNA had expected.
Household Bank, meanwhile, has shaken up the U.K. market with aggressive advertising for its General Motors cobranding program, now at about 500,000 customers.
The card market is dominated by five British banks that control 75% of the business. When the General Motors card was launched nearly two years ago, the leading issuers responded by tripling their advertising budgets, said Mr. Raj. Barclays Bank formed a competing partnership with Ford Motor Co.
Mr. Raj warned that outsiders should not "underestimate the incumbents' muscle" and ability to respond to threats.
Another issue People's will have to consider, he said, is whether to enter the market with a partner.
"The overwhelming evidence suggests that going solo is a much longer route," Mr. Raj said.
At least two other top 10 U.S. card issuers are considering entering the fray in the United Kingdom. According to analysts, First USA has submitted an application to issue credit cards there, and Citibank has long expressed an interest in that market.
Mr. Urquhart downplayed People's interest abroad, saying its focus on the United States, its core market, will not change.
But Mr. Urquhart's travel schedule may indicate how committed the company is to the international start-up: He has been shuttling regularly between Bridgeport and London since July.
In his absence, Mark K. Vitelli, first vice president of consumer credit and an expert in technology and risk planning, is the day-to-day manager of the card business.
Mr. Vitelli focuses on keeping expenses down and profitability up. People's Bank, he said, has kept operating expenses as a percentage of total receivables between 2.5% and 3%, which is below the card industry average of around 5%.
People's close attention to profitability has kept it away from cobranding.
"We have bid on and looked at some of the most powerful deals in the country," said Mr. Urquhart. "But the payback period is now being stretched to a point where we wonder if it is ever going to be profitable."
A number of times, People's has come close to clinching a deal, only to lose out when another issuer sweetened its offer. People's unwillingness to absorb the costs of a major cobranding program has not kept it from signing smaller, affinity card partnerships.
Ultimately, Mr. Klein said, "the essential driver of our business will be what we have been and continue to do" - essentially, low-rate cards.
Rejecting the often-cited belief that consumers do not know the interest rates on their credit cards, Mr. Klein said, "Our customers certainly know."
