Fairfield County, Conn., and Westchester County, N.Y., are two of the most crowded and competitive banking markets in the country, but an investor group is gambling that there is room for another community bank.
The 34-person group, headed by Fred A. DeCaro Jr., a former Connecticut automobile dealer who founded Patriot National Bancorp in Stamford, Conn., in 1994, intends to open a bank in Port Chester, N.Y., this summer.
Mr. DeCaro, 61, said USA Bank will be better capitalized than Patriot National was in its early days, and nimbler than the money-center institutions that dominate both Westchester and Fairfield.
He said he founded Patriot National with 18 backers and $5.5 million of capital, which he now realizes was not enough.
“The first four or five years at Patriot, I spent all my time” looking for additional capital, he said.
Mr. DeCaro, who left Patriot in July 2003, said in an interview this week that USA Bank aims to raise $12 million to $17 million through an initial public offering — well above the average for a start-up. It plans to use the funds to offer extended hours, high-touch service, and a high-yield savings account.
“This bank is going to open at 8 a.m. and stay open until 7 p.m.,” Mr. DeCaro said. “When you make a deposit at 7 p.m., it’s going to post that day. And there isn’t going to be any voice mail. When you call, a real person is going to answer from 7:45 a.m. to 7:15 p.m.”
As for the savings account, “I’m going to look around and make sure our rates are a little higher” than the high-yield accounts offered by online outfits such as ING Bank and by all of USA Bank’s local rivals, Mr. DeCaro said.
USA Bank plans to start with a branch in Port Chester, a village in Westchester County with a population of approximately 27,000. Within a few years, Mr. DeCaro said, it expects to expand into Greenwich and Stamford in Fairfield County, which adjoins Westchester.
Michael M. Ciaburri, the president and CEO of the $82.4 million-asset Southern Connecticut Bancorp in New Haven, which he said plans to expand east into New London this year, questioned the ability of a small community bank to compete in Fairfield and Westchester.
Westchester and Fairfield average 3.6 branches per 10,000 people, versus 2.7 per 10,000 in the 10 largest metropolitan areas, according to the Federal Deposit Insurance Corp.
“Those are two of the most overbanked places in the Northeast,” Mr. Ciaburri said. “The cost of real estate is prohibitive. To make money in those counties, you’ve got to be very big.”
Indeed, while a number of money-center and regional banks such as the $10.8 billion-asset People’s Bank in Bridgeport, Conn., and the $17 billion-asset Webster Financial Corp. in Waterbury, Conn., have been opening branches in Westchester, no new banks have opened there in almost two decades.
And New York has hardly been a start-up hotbed. Only four new banks have opened in the state since 2000, against 20 in New Jersey.
Barry I. Spiegler, a New York attorney and a member of Mr. DeCaro’s investor group, predicts that Bank USA will succeed in the same way community banks in other parts of the country do — by taking market share away from larger banks.
Money-center banks control more than 60% of the Westchester-Fairfield deposit market, and Mr. Spiegler said small-business owners and middle-class individuals prefer to deal with smaller, local banks.
“When you go for a small-business loan, or even a mortgage, it’s torture,” he said. “Small businesses want a bank that will attend to their needs with loving care.”
Mr. DeCaro said USA Bank expects to receive its charter from the New York State Banking Department in about 60 days.
