Bankers and landlords who welcome the opportunity to build anything these days say they covet modern satellite offices that give customers all the conveniences they want but in a footprint as small and cheap as possible to operate. The branches’ visibility also serve as “billboards’’ in some lenders’ quest to build market share.
Middletown’s Liberty Bank has a new branch under construction at 1300 Main St. in Newington, amid a cluster of branches run by four rivals. Slightly smaller than branches Liberty opened a few years ago, this one will bristle with technology to keep it the branch of the future, an official says.
In West Hartford’s Elmwood section, American Eagle Federal Credit Union of East Hartford has a branch going up on a former restaurant site at the corner of South Main Street and New Britain Avenue to accommodate its growing volume of existing and potential customers. The site isn’t far from Farmington Bank’s recently-opened branch at the opposite end of the Elmwood neighborhood.
Just last week, Naugatuck Savings Bank opened a new branch office at 2989 Whitney Ave. in Hamden. Perhaps coincidentally, Vernon’s Rockville Bank filed last week for a limited-services branch in an office building 1 ½ miles down the road, at 2319 Whitney Ave.
By contrast, Waterbury regional lender Webster Bank announced plans to close five Connecticut branches in coming weeks to fine-tune its 132-branch statewide network to end market overlap. It operates 176 branches in its Northeast region territory.
The closings are on the heels of Webster’s broad effort last year to expand hours at most of its branches to accommodate its busy customer base.
“Believe me, branches are not dead,’’ said Ann Slattery, Webster’s executive vice president for retail banking.
According to the state Department of Banking, Connecticut is home to about 1,500 branches run by lenders of all sizes — community, regional and national banks, credit unions, savings banks, even foreign-based lenders.
So far this year, state regulators have authorized the opening of five branches. Four were from applications made filed in 2010 amid dozens of branch requests and at least a half-dozen approvals, a banking department spokeswoman said.
State guidelines for approving branch offices aren’t complex. Unless the state has concerns about the applicant’s capital strength or compliance with banking regulations, most requests appear to go through.
The state also seems less concerned with the concentration of branches in a neighborhood.
Take Liberty’s planned Newington branch, for instance. The building going up on Main Street is just two doors away from a Bank of America branch. Both are within shouting distance of three other branches — TD Bank, First Niagara (formerly NewAlliance Bank) and Webster.
Deb Bochain, who runs Liberty’s retail banking operation as executive vice president, says her bank was more concerned with market research showing its customers needed a branch closer to where they live or work.
Branches are only one facet, Bochain says, of today’s “multi-channel’’ environment in which customers use mobile devices, computers and ATMs to do their banking.
“The more complex the transaction, customers still feel the need for face-to-face banking,’’ she said.
Liberty also kept a close eye on holding the branch’s operating costs as low as possible. For starters, Liberty is leasing the building, which at 2,400 square feet is smaller than the typical 3,000-square — foot locations it was opening as recently as five years ago, Bochain said.
Smaller branches also need fewer people. The Newington location will have five full-time-equivalent employees, including a manager, instead of the usual seven, she said. Installation of “cash recyclers’’ — machines that count currency — speeds customer service and frees tellers for more vital tasks.
To keep the lid on staffing, Liberty will use technology to boost future service levels without the extra labor burden. The new branch is being wired to someday accommodate video conferencing between a Liberty depositor and, say, one of its mortgage or investment advisers stationed at another location, Bochain said.
Liberty, like most financial institutions, uses its branches like sponges to soak up area deposits through checking and savings accounts and certificates of deposit that they transform into loans.
It is the buildup of deposit market share that banks, savings and loans and credit union rely on to generate much of their profits. They make money on the difference, or “spread,’’ between the interest they pay depositors and what they charge borrowers.
Lately, however, it has been small- to mid-size community banks like Liberty, American Eagle, Farmington Bank and Naugatuck Savings that have been busy expanding their branch networks.
Farmington Bank in the past 14 months has opened four branches in Hartford County, including the Newington Road, West Hartford location, and in Berlin and Glastonbury. The bank, according to local industry sources, also seeks a Newington Center location.
Chairman and CEO John Patrick Jr. declined comment on his bank’s potential Newington plans, except to say Farmington Bank is serious about building its retail and commercial market share.
All this branch-building has put some locations and towns at a premium, observers say.
Michael Gallon, principal in Reno Properties Group, the landlord building Liberty’s Newington location, says the building — which includes drive-thru teller lanes and one for the automated teller machine — will open later this summer.
In Farmington, Reno plans to redevelop perhaps later this year an existing retail-commercial site at the Route 4/Route 10 junction to make room for a future bank tenant, Gallon said.
In West Hartford, American Eagle Federal considered sites in the town center and Bishops Corner, before settling on the former site of Szechuan Tokyo Restaurant, on Elmwood’s western fringe.
The site’s accessibility from two busy thoroughfares made the difference, said Dean Marchessault, chief operating officer for Connecticut’s No. 2 credit union with $1.4 billion in assets.
“It’s a strong billboard location for us,’’ Marchessault said. “We will get West Hartford, Newington and I-84 traffic.’’
But American Eagle, founded by Pratt & Whitney engineers, is looking well into the future with its 11th branch accessible to the public. Its smaller, 2,500-square-foot size, too, will require fewer staff and will be wired for interactive video.
“We’re going to be positioned,’’ he said, “in the market so when the economy picks up… we’ll be very well positioned for the long haul,’’ Marchessault said.
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