Two locally-owned banks are opening in Nashua.
The last time that happened was in 1890.
Experts say the economy is ripe for these kinds of community-based banks.
But they'll succeed only if they can compete with the big national players.
NHPR Correspondent Sheryl Rich-Kern reports.
Street sounds.
On Main Street in Nashua most of the cafes, restaurants, and shops look to be locally owned.
No Gap stores. No Starbucks.
But a lot of widely-known banks, TD Banknorth, Bank of America, Citizens and Sovereign.
In fact, close to ten banks stand within a couple of blocks.
Fade sound under.
Teas: 1:45 Today they’re national banks. Eighty percent of deposits controlled in Nashua are by out-of state banks.
That’s Frank Teas, a veteran banker.
He was most recently the regional manager for Community Bank and Trust..
Teas sits in his new office wearing a casual shirt and tie.
He spares the proverbial pin-striped suit.
He says Nashua residents haven’t had a locally owned bank for almost 20 years.
And, he believes, they’re frustrated because they are tired of calling their banks and getting this:
(Sounds of bank phone routing system: if you want to reach checking, press 1...)
Teas: Our goal is you call and get a person on the phone that knows you, that can get your account balance.
Teas is planning to open his own bank next spring, and will likely call it the Nashua Bank.
He’s grouping local investors together to raise a minimum of ten million dollars.
Teas: We want the employees, directors, decision makers to live, eat, sleep in the community so we know what’s going on and understand the needs of the business owners.
Locally owned banks have diminished in number for several reasons.
Competition from larger banks is one.
But also Federal agencies have raised the regulatory bar since the savings and loan bust 15 years ago and anti-terrorism efforts since 9-11.
Smaller institutions scarcely had the resources to keep up with the paperwork.
New Hampshire Bankers Association President Gerry Little.
Little: 12:00 I don’t know anyone at a small community bank that’s afraid to compete. But I do know people at small banks who look at the regulatory world and see it evolving, and wonder how am I going to deal with that with only 20 employees.
David Fehr, directs the financial center at Southern New Hampshire University.
He says another reason for the loss of the local bank is consolidation.
The number of commercial banks has dipped to half of what it was 20 years ago.
And that leaves a void easily filled by what Fehr calls niche banking or boutique banks that will target small business.
But, Fehr says, they'll have to market themselves accordingly.
Fehr: 5:48 Can they provide a form of personalized service that will resonate with small businesses and individuals? Do they have a strategy to take advantage of demographic trends?
Forecasters say the economic outlook is good for new economic ventures here in Nashua.
A recent study by the Pioneer Institute says businesses face costs 20 to 30 percent lower than in Massachusetts.
And according to ESRI, a demographic data provider, median salaries for Hillsborough County are expected to rise twenty percent by 2010.
Jim Dunphy is primed to take advantage of these demographics.
He’s president of Hampshire First Bank, a second local lender-to-be.
His bank has raised over 30 million dollars, and plans to open in Nashua by the end of the month. with a Manchester branch not long after.
He says he’s not looking to displace national banks.
Dunphy: We’re going after the niche they leave behind. They continue to raise the bar as to what profitable customers are for them, how much they charge in fees, in how much they require for minimum balances.
Dunphy says he’s targeting loans up to only three million dollars.
2:00 If you fit in all the boxes, you’ll do fine with big banks. If you need someone to walk you through the steps, that’s where we’ll have our niche.
But Gerry Little of the New Hampshire Bankers Association says it's not as easy as that.
Because, larger national banks can succeed at appearing small.
4:10 They go about doing that by emulating at the branch level what they see going on in community banks. Which is trying to create stronger, tighter relationships, and having the ability to respond quickly to peculiar customer needs, desires and problems.
The heads of both the new banks say they are committed to serving the community.
But Jim Dunphy admits, he is still starting a bank.
And at the end of the day, his bank has to respect its shareholders and make sure they get a decent return on their investment.
Dunphy3: Our fiduciary duty is to the shareholders, and whatever is in their best interest is what we evaluate.
For now, he is ready to greet customers at the end of the month,
Meanwhile, banker Frank Teas awaits the green light from the FDIC.
For NHPR News in Nashua, I’m Sheryl Rich-Kern.
