Recently, Money magazine named the best bank in each state of the union. Its pick as best bank in Connecticut was New Haven Savings Bank, a mutual. That piqued my interest.

Didn't Money know that mutual savings banks are archaic enterprises, plain-vanilla companies? As I spoke with Charlie Terrell, president, treasurer, and chief executive officer of New Haven Savings, I realized he didn't know it either.

In some regards, New Haven Savings has blazed trails in customer service to specific segments. The bank has been offering a VIP-level service to its best customers for eight years.

VIPs are selected from the top decile in terms of deposit balances among the households served by New Haven Savings. That translates into 3,000 customers with an average balance of $100,000.

Each customer is assigned to a personal banker. A software system tracks the status of those customers, as well as all phone and mail contacts with them. Personal information is also included.

"If we know the person goes to Florida in November and returns in February every year," said Mr. Terrell, "we'll put it in and change the mailing address automatically. Our personal bankers also visit people's homes and work places to provide services, open accounts, etc."

The VIPs get an ID card and quarterly newsletters with analysis of banking industry events, recent developments, and New Haven Savings Bank's products.

The newsletter offers packages of products with special pricing (that is, relationship pricing), such as no-fee checking or no charges for cash reserves, credit cards, automated teller machine service, or bill paying. The VIPs also get lower rates on loans and other services.

"These customers are our most profitable customers," says Mr. Terrell. "And we intend to keep them."

The bank uses the Maxell system to track customer relationships. All products are in the system and are assigned costs based upon federal cost study data. (That could be a problem since the data are generic and may not accurately reflect individual institutions' profitability or costs.)

The system then tallies the profitability of each household, and that's how an elite group of most-profitable VIPs is identified. These 350 households are called the "elite households." The bank makes at least $15,000 a year profit on each of these customers.

The elite customers are assigned a senior officer. Every officer has five or six such customers. The officer profiles the relationship and contacts the customer at least quarterly.

Special treats such as tennis, symphony, and baseball tickets are given by the officers to the customers.

The elite program was started last fall. Forty percent of the officers have covered all their people, but 60% have failed to do so. While the bank needs to improve its follow-up, Mr. Terrell is satisfied that the program is working very well.

"We were able to head off problems through this early warning system and also got additional business from our most valuable customers," he says.

New Haven Savings manages to give this level of service while maintaining an efficiency ratio of 40%. The company outsources its data processing and avoids labor-intensive functions. As a result, its asset-to- employee ratio is high. With $1.8 billion of assets and 400 full-time employees, the bank has about $4.5 million of assets per employee.

Further, employee turnover is low. Thirty percent of its employees have been with New Haven Savings 10 years or longer.

Most of the branch managers have been with the company 10 to 15 years. This produces improved employee productivity and a better efficiency ratio.

New Haven Savings was the only bank in Connecticut with more than $1 billion of assets that was profitable every year of the recent recession during which 35 banks in the state failed.

The bank weathered the bad times without liquidating problem loans because "we did not want to put our community properties in the hands of outsiders," said Mr. Terrell.

Mr. Terrell's emphasis on quality service, unique service features, and value added for the company's best customers appears to have paid off.

Quarterly external customer surveys are conducted, and as might be expected, the personal bankers who handle VIPs get better grades for service. As an incentive, New Haven Savings offers each department a "quality day" - one day off per year - for attaining a threshold grade in the customer survey.

New Haven Savings is a mutual, but that does not make it a plain-vanilla company.

While the bank uses its ownership structure to further what management and the board perceive as the community's best interest - for example, in not selling bad loans to improve profitability - it manages itself so as to achieve customer satisfaction and has recognized early on the value of its most profitable customers.

Studies have shown that the top 5% of customers produce up to 40% of the profits. New Haven Savings has recognized that and taken major steps to retain both customers and employees, achieving value added on both sides.

Ms. Bird, chairman of the New York consulting firm Finexc Group LLC, was named this spring as chief operating officer of Roosevelt Financial Group, St. Louis.

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