Talk about good timing.
Just as Slade’s Ferry Bank of Fall River, Mass., embarked on a branding campaign that promoted itself as a “Pleasantly Different” alternative to large banks in its market, its three biggest competitors up and sold themselves to even bigger, out-of-state companies.
The spate of mergers and acquisitions — which affected nearly half of the deposits in Bristol County, home to all 10 Slade’s Ferry branches — has given the $522 million-asset bank a “monumental opportunity” to gain market share, said Mary Lynn Lenz, its president and chief executive.
“Bank acquisitions cause turmoil,” Ms. Lenz said. “It’s generally a time for customers to ask themselves who they want to bank with. We’ve got to reach out to those customers and ask for their business.”
It appears Slade’s Ferry’s efforts are paying off.
Last year its deposit base shrank slightly, but deposits rose 23.6% in the first half of this year, to $411.7 million. That rapid growth will almost certainly reverse the slide in deposit share between 2000 and 2003.
The 45-year-old unit of Slade’s Ferry Bancorp is also improving its bottom line. Its net income through June was up 36% from a year earlier, to $1.25 million.
Customer runoff from the acquired banks does not explain all the good fortune, though. Ms. Lenz said Slade’s Ferry might not have benefited much if not for a series of upgrades it has made over the past two years.
In addition to refurbishing its brand image, the bank has substantially increased its marketing budget and introduced a host of new products and services, including online banking and cash management. It also adopted a more aggressive pricing strategy — increasing its deposit rates while slashing its borrowing costs.
Still, Ms. Lenz, a veteran retail banker who served as the director of retail banking at Citizens Financial Group Inc. before joining Slade’s Ferry in September 2002, acknowledged that it has been lucky. Community banks typically benefit when large local banks are acquired by out-of-state banks, but they rarely get runoff from three competitors at the same time.
The upheaval began Oct. 7, when the $2.7 billion-asset FirstFed America Bancorp Inc. in Swansea decided to sell itself to Webster Financial Corp. of Waterbury, Conn. The $196 billion-asset FleetBoston Financial Corp. dropped an even bigger bomb three weeks later, announcing its agreement to be sold to Bank of America Corp. Finally, on Jan. 26 the $4.5 billion-asset Seacoast Financial Services Corp. of New Bedford said it was being bought by Sovereign Bancorp Inc. of Philadelphia.
All three of those deals have since closed.
Ms. Lenz cannot state precisely how much runoff Slade’s Ferry has captured, but she said that the amount is significant and that the bank has taken full advantage. At one point it ran ads showing how far the three acquirers’ headquarters were from Bristol County.
“We have really focused on marketing and positioning ourselves as one of the last remaining community-based banks,” she said.
The challenge now is to keep up the momentum. The mergers brought retail powerhouses B of A and Webster into Bristol County and solidified Sovereign’s position there.
Slade’s Ferry also faces tough competition from Ms. Lenz’s former employer, Citizens, a unit of Royal Bank of Scotland Group PLC. The Providence, R.I., bank has added steadily to its deposit share over the past five years and is now No. 5 in the county.
Also, BCPBank, a Newark, N.J., unit of Banco Comercial Portugues in Oporto, has opened three branches in Fall River and New Bedford in the past eight months. Slade’s Ferry has five branches in the two cities, which have large Portuguese-American communities.
Slade’s Ferry increased its deposit base only slightly in the 2000-2003 period compared with the overall market. As a result it lost ground to competitors. On June 30, 2000, the bank was Bristol County’s No. 7, with $329.2 million of deposits and a 5.53% share. Three years later its deposit base had grown to $352.6 million, but its share had shrunk to 4.76% and its ranking had fallen to No. 10.
Given her background, it is not surprising that Ms. Lenz considers retailing skill critical to a bank’s bottom-line performance. “You’ve got to be branded and merchandised, or else you don’t know what you’re selling,” she said.
Before she arrived Slade’s Ferry put almost no effort into retail operations. It offered customers high-touch service but little else, Ms. Lenz said.
“The company had gone public in the mid-1990s but had continued to behave similar to a mutual thrift rather than a publicly traded company,” she said. “The bank was predicated on extraordinary customer service. There was no advertising and no branding. We didn’t even have interior merchandising. Our customers were looking at blank wallpaper.”
Samuel Hall, a principal at Semaphore Inc., a merchandising firm in Holliston, Mass., said that though the industry has become more sophisticated in retailing, small community banks like Slade’s Ferry still often neglect it and rely too heavily on their status as local players.
“Service alone isn’t going to cut it anymore,” Mr. Hall said.
Ms. Lenz compared the changes she has made at Slade’s Ferry to renovating an old house.
“What we tried to do is to preserve the cove molding and the natural wonders of this institution and to bring it current with technology, products, services, and marketing,” she said. “I think, as you can see from our numbers, it’s worked.”
