A small, 113-year-old Massachusetts thrift has jumped on the investment-products bandwagon.
Earlier this month, $135.3 million-asset Mansfield Co-operative Bank began selling mutual funds and annuities.
This month, the thrift began leasing a space in its lone branch to Financial Insurance Services Co., a Lincoln, R.I.-based firm that manages community bank brokerage programs in Massachusetts.
"It was a tough decision, because we were traditional bankers," said James E. Tumbleson, Mansfield's president and chief executive. "But we know other banks are doing it, and we have to remain competitive."
Mr. Tumbleson said the move was a defensive one, illustrating that even the smallest institutions have been forced by competitive pressures to transform themselves into complete financial services companies.
Mansfield Co-operative won't make much money from the new service, Mr. Tumbleson conceded. Revenues will come from renting space to Financial Insurance Services, and from referral fees.
He declined to offer more details about the financial arrangement between the two companies.
The lone broker in the Mansfield branch will offer a dozen mutual funds and annuity products.
Mr. Tumbleson said he is responding to a nationwide clamor on the part of bank customers for mutual fund investment options but doesn't want to encourage an outflow of the thrift's $126 million in deposits to outside mutual-fund companies. The new bank-affiliated fund offerings, he said, may well keep customers close at hand.
"If we have that capability here, then customers won't go to Fidelity Investments or to a larger commercial bank that manages its own funds," he said.
Indeed, Bay Banks Inc., a $10.8 billion-asset Boston-based bank, which manages BayFunds, has a branch in Mansfield that could draw away some of Mr. Tumbleson's customers.
Mr. Tumbleson's thrift is also responding to changes in its environment. Mansfield, located 25 miles southeast of Boston, has been transformed from a farming community into a suburb with younger residents.
"Our depositor base was an older, traditional, townie that grew up here - but that's changed," Mr. Tumbleson said.