Danbury area’s lasting mutual banks provide stability

BY DIRK PERREFORT
Hearst Connecticut Media

When capital dried up during the Great Recession and larger banks refused to open their coffers, it was the local mutual banks that continued to fund construction projects and provide mortgages to homeowners throughout the region.

In fact, most officials will note that part of the strength of Greater Danbury’s economy comes not only from its diverse industrial base but also from an unusually high number of strong mutual banks. The four mutual banks that call the Danbury area home, including Union Savings Bank and the Savings Bank of Danbury, have combined assets of more than $5.5 billion.

Unlike other banks that are owned by shareholders and have to report their earnings to Wall Street on a quarterly basis, mutual banks are owned by the depositors, are focused on community growth and can plan for the long term, according to Lindsey Pinkham, president of the Connecticut Banking Association.

$1 billion or more in assets

“Most banks have to give dividends to their shareholders; our dividends are reinvested in the community,” said Cynthia Merkle, president and chief operating officer of Union Savings Bank, the second-largest mutual bank in the state, with more than $2.3 billion in assets. “I wouldn’t even consider working for a different kind of bank. As a mutual bank, our focus is on the community, the customers and our employees.”

Pinkham said there are about 500 mutual banks left in the U.S., with clusters in New England as well as in the country’s northwest corner. Because mutual banks, most of which are a century old or older, are limited in their ability to raise capital in that they can only raise funds through organic growth and net income, many mutual banks over the years have converted to shareholder banks to survive.

While most mutual banks in the country have less than $150 million in assets on average, mutual banks in the region have close to $1 billion or more, he said.

“Our forefathers before us planned well,” Merkle said. “They put the kind of reserves aside so that we could be sustained and grow well into the future.”

Making loans when big banks wouldn’t

Kathleen Romagnano, president and CEO of the Savings Bank of Danbury, said it was the local mutual banks that helped their customers survive during difficult times. Romagnano is only the seventh executive to serve at the helm of the bank since it was founded in 1847.

“Throughout the recession we continued to provide (U.S. Small Business Administration) loans and construction loans where appropriate,” she said, “and that makes a huge difference when the economy is struggling. Because we know the community and understand the local marketplace, we were able to make loans on numbers that larger banks wouldn’t.”

Romagnano said she couldn’t begin to count the number of times a customer would come in at risk of losing a down payment on a home because larger banks couldn’t get mortgages closed in a timely manner.

“We’ve stepped in and been able to close some of those loans in less than a week,” she said. “For us it’s really all about the customer. We can call a loan committee meeting whenever we need one.”

Danbury is ‘blessed’

Bruce Tuomala, Danbury’s economic development director, said mutual banks help the region’s economy by providing capital when it is needed most.

“Businesses in the region need that availability of capital if they are going to invest in their operations, grow their businesses and hire more employees,” he said.

Stephen Bull, chairman of the Greater Danbury Chamber of Commerce, said the Danbury area is “blessed” to have so many strong mutual banks in the region.

“These banks are huge philanthropic supporters of hundreds of organizations in the area, not only in cash, but also in people power and volunteering,” he said.

Since forming its own charitable foundation in 1999, Union Savings has contributed more than $2 million to more than 275 different organizations, Merkle said, including sponsoring events like the Ives Concert Park Summer Concert Series and supporting local hospice care and organizations that help the disabled.

“It’s not just the foundation,” Merkle said. “The bank itself is expecting to fund close to 350 different events and organizations this year.”

Building a stronger economy

Officials with other area mutual banks, including Newtown Savings Bank and the Fairfield County Bank based in Ridgefield, also support the community through philanthropy.

Romagnano noted that the Savings Bank of Danbury’s charitable foundation has given away more than $1 million in the past decade. The bank itself, she said, gave more than $250,000 in donations to area organizations in the past year.

“By taking our depositors’ money and lending it out to local businesses and consumers, we are helping to build a stronger economy,” she said. “And we know that because we are committed to the mutual bank model and want to be in the community for a long time, we have to do it right.”

Hearst Connecticut Media includes four daily newspapers: Connecticut Post, Greenwich Time, The Advocate (Stamford) and The News Times (Danbury.) See newstimes.com for more from this reporter.