After Rocky Years, 3 Start-Ups Seek Conn. Charters

Connecticut's banking industry-ravaged by failures and a wave of mergers-could soon become home to three new banks.

Caribbean First Bank, Hartford; Greenwich Bank and Trust Co.; and Castle Bank and Trust Co., Meriden, are seeking state commercial bank charters.

Forty-eight banks and thrifts were chartered in the state in the 1980s, but the deep recession that began in 1989 sent a shock wave through the industry. Thirty-nine Connecticut thrifts and banks failed over the past seven years.

Some observers say the new-bank activity is proof the market is bouncing back.

"It's a rebirth," said John Carusone, president of the Bank Analysis Center in Hartford. "As the economy in Connecticut is slowly inching back," the banking industry "is beginning to rebuild."

Besides the three pending start-ups, Mr. Carusone said, he's aware of at least two other groups, including an out-of-state bank, that are considering chartering new banks in Connecticut.

The state hopes to stimulate even more charter applications with a proposed community bank charter that would require only $3 million of start-up capital, compared with the current $5 million. The new charter is expected to pass the General Assembly easily this week.

"We went through a dearth of de novos," Connecticut Banking Commissioner John P. Burke said. "People were reluctant to put money in them. Now there's a lot of new capital available."

But the group trying to organize Caribbean First, which would target immigrants from the West Indies and Hispanics in general, is having trouble raising $7 million of start-up capital and may give up, said its chairman, Calixto Torres.

He said Connecticut banks' recent troubles are to blame, but expressed hope that some "new possibilities" will pan out.

Mr. Torres said a strong need remains for community banks, especially since Connecticut is dominated by out-of-state superregionals.

The last start-up bank in Connecticut also had a hard time raising capital. It took Simsbury Bank and Trust Co. three years to do so; the bank opened in 1995.

Now investors in some areas are loosening up. Capital doesn't seem to be a problem for Greenwich Bank and Trust.

Michael Cassell, who has been designated its president and chief executive officer, said the organizers would raise $10 million of start-up capital once it receives a preliminary charter. He said there's been much enthusiasm for a bank in Greenwich, a suburb of New York, because the affluent town of 60,000 lacks a community bank.

Officials at the proposed Castle Bank and Trust Co. could not be reached for comment. However, an analyst who follows the Connecticut banking scene said he wonders why anyone would want to open a bank in Meriden, which is already teeming with them.

"Everyone is in Meriden," said Stanley Wells, executive vice president and director of Keefe, Bruyette & Woods Inc. in Hartford.

But Mr. Wells said he's generally not enamored of start-ups because they typically take three years or more to turn a profit.

"These organizers always claim they have an interesting niche," he said. "I guess a cynical bank stock analyst wonders why investing in these things is an attractive opportunity."

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