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    Friday, February 03, 2023

    Bucking trend, some local banks still bullish on branches

    The Charter Oak Federal Credit Union Groton branch, Saturday, Nov. 26, 2022. The branch, located on Long Hill Road in Groton, permanently closed at the end of business Saturday. (Dana Jensen/The Day)
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    Customers use the drive-through at the Charter Oak Federal Credit Union Groton branch, Saturday, Nov. 26, 2022. The branch, located on Long Hill Road, permanently closed at the end of business Saturday. (Dana Jensen/The Day)
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    Customer Bobby Moulton of Groton leaves the Charter Oak Federal Credit Union Groton branch, Saturday, Nov. 26, 2022,. The branch, located on Long Hill Road, permanently closed at the end of business Saturday. (Dana Jensen/The Day)
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    A bank branch closed for good Saturday in Groton, the kind of event that’s become more and more commonplace during the digital age.

    But that’s not the case in New London County, where the last day of business at the Charter Oak Federal Credit Union branch at 625 Long Hill Road was an anomaly among the mutual banks and credit unions that do business in the area. The closing had little to do with the forces shrinking the rolls of U.S. bank branches and left Waterford-based Charter Oak with 15 branches in New London and Windham counties.

    “It’s the first branch we’ve closed in the 18 years I’ve been here,” Brian Orenstein, Charter Oak’s president and chief executive officer, said. “We’re not planning to close any more.”

    Though Orenstein estimates Charter Oak customers now transact 90% of their transactions online, he believes bank branches still serve a purpose. He said the closing of the Long Hill Road branch was a business decision that had more to with the expiration of Charter Oak’s “expensive” lease of the sizable property than with any decline in customer traffic there.

    Displaced customers were encouraged to visit another Charter Oak branch, of which there are two nearby, one at 32 Chicago Ave., Groton, and one at 4 Hendel Drive in the Mystic section of Stonington.

    Orenstein acknowledged some customers objected to the closing.

    “For any type of complex transaction ― mortgage applications, any type of loan ― they’re still valuable,” he said of branches. “Demographically, you’re probably right to say it’s mostly older people who prefer brick-and-mortar, but there are some studies showing young people use branches for complex transactions.”

    Most of the respondents to a query The Day posted about banking preferences favored in-person over online banking. In an email, Donna Palumbo of Niantic said she was grateful Norwich-based CorePlus Federal Credit Union has kept open the branches she visits in East Lyme and Waterford.

    “I usually go in to get cash and recently I needed help on my on line banking,” she wrote. “It’s nice to have a live person to speak with and get the help I needed. Over the phone is not the same. But I have to say it probably has something to do with being a senior.”

    Robert Lee of New London wrote that he prefers brick-and-mortar banking, “seeing faces and a good relationship with people. And keeping jobs local.”

    Chelsea Groton Bank and Norwich-based Dime Bank, two of the largest local, federally insured banks doing business in New London County, are at least as bullish on branches as Charter Oak. Both are mutual banks, which like credit unions are owned by their customers rather than shareholders.

    FDIC data analyzed by Bill Hoelzel, a Simsbury freelancer who has done market research for The Day and the Hartford Courant, show that as of June 30, 2022, both Chelsea Groton and Dime were operating the same number of New London County branches as they were a decade earlier ― 14 and 10, respectively.

    Over the same period, Hoelzel noted, the overall number of bank branches in New London County fell from 95 to 74. Providence-based Citizens Bank, which has branches in 14 states, trimmed the number of branches it operates in the county from 14 to eight. Bank of America, another national bank, cut its count of branches in the county from 11 in 2012 to four in 2022.

    FDIC reports also show that since 2018, Chelsea Groton has held the top ranking among FDIC-insured banks doing business in New London County in terms of their market share of deposits in the county. As of June 30, Chelsea Groton’s $1.31 billion in deposits represented 19.4% of the market. Citizens, which had been No. 1 in 2017, ranked fourth with less than $1 million in deposits in the county, or 14% of the market.

    Charter Oak, not included in the ranking of FDIC-insured banks, had $1.42 billion in deposits as of June 30.

    It’s no coincidence that Chelsea Groton’s surge in market share followed its 2017 launch of a program to reinvest in its branches, according to Lori Dufficy, the bank’s executive vice president and chief experience and engagement officer.

    “It indicates we know what we’re doing,” she said.

    More than mere renovation projects, the Chelsea Groton branch upgrades, dubbed “reinventions,” involve changes in the design of physical spaces, the introduction of new products and “upscaling the employees” through training and education, Dufficy said. “We’re unbanking the bank.”

    Starting with its Center Groton branch in 2017, Chelsea Groton has now completed or begun the transformation of eight of its branches, including its Groton headquarters, and expects to complete the process by the end of 2024. Branch improvements include lending libraries with books that can be read at the branch or borrowed, video-conference rooms, private spaces for opening accounts and processing loans, and video ATMs that can connect a customer to a banker in Groton or Norwich.

    And all this, Dufficy said, despite the steady migration of banking business to online platforms. In 2010, Chelsea Groton recorded about 100,000 teller transactions, a number that had shrunk to 50,000 by last year, she said.

    Far from closing branches, Dime Bank, ranked fifth in market share of deposits among FDIC-insured banks doing business in New London County, has been opening new ones as it expands outside the county.

    On Tuesday, Dime plans to open a branch, its 14th, in Vernon, a Tolland County town. It also has branches in the Hartford County towns of Glastonbury and Manchester, both of which opened in 2020, and in Westerly.

    “We did close a branch in a supermarket several years ago,” Nick Caplanson, Dime’s president and chief executive officer, said. “But we’re opening branches, not closing them. Tuesday will be our third in 23 months.”

    For a bank seeking to expand in a new area, having a physical location there is a critical marketing tool. And when banks that are leaving a market abandon space, the combination is irresistible. Such was the case with Dime’s acquisition of its three newest branches, which other banks had vacated.

    “When I see an opportunity for a reasonably priced location, I’m going to think long and hard about it,” Caplanson said. “For me, a physical location is more than a place to do business; it’s an advertisement.”

    Grabbing market share in the Hartford-area locations is going to require a high profile in places where Dime is less well known. And the customer service that a branch can provide is a must, too.

    “There’s still a segment out there that values branches,” Caplanson said.


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