by Carlo Cestra, President / CEO
by Jim Reagan, Senior VP / Chief Financial Officer
by Tim Garner, VP Marketing / Strategic Planning
A few months ago we learned that $660 billion Bank of America was acquiring Fleet Bank, at $196 billion, the largest regional bank in New England – our primary market area. This takeover removes the last major bank headquartered in Massachusetts. It leaves only three significant regional players – Citizens, Sovereign, and BankNorth – two of which are exploring mergers.
Because the branch networks of Fleet and Bank of America do not overlap, we do not expect to see large-scale divestiture of branch locations as we’ve seen in earlier regional consolidations. Fleet already has a reputation for poor service to retail customers based on published surveys and our own focus groups. The key advantage they offer is geographic convenience. They have more branches and ATMs in the market than any competitor. For most of their locations, we only expect to see the sign change.
Based on experience with local bank consolidation, this merger represents a significant growth opportunity not only for DCU, but also for most credit unions and locally-owned community banks in the Fleet Bank market.
Judging from the string of New England bank mergers we’ve experienced in recent years, the acquiring institution poorly handles service and service expectations to retail banking customers. The familiar branch manager and tellers in their branch disappear (if not the branch itself), account numbers change, statements change, checks change, fees change, and often mistakes are made when systems are converted. All the credit unions and community banks in the region we’re aware of have grown each time a bank disappears in their area. We’ve been told that past mergers driven by Bank of America and its predecessors (NationsBank, NCNB) have alienated many consumers. Consumers are likely to perceive that this one won’t be any different.
Bank of America’s timing was especially fortuitous for DCU. Well before the merger announcement, we were preparing a long-term brand awareness campaign in our primary New England marketplace. Our television advertising broke on November 10 – about six months before the expected merger date. It educates the public on who we are and that, as a credit union, we’re a smarter choice for consumers. We'll also use other targeted media to ask to ask non-members to let us show them how much money we can save them. As consumer anxiety over the merger builds, our message is out there offering a more stable, consumer-friendly alternative. We’re ready to welcome all disgruntled banking customers who want to make a change.
Going forward, we know we’ll continue to compete favorably against Bank of America. We’ve monitored their activities in the greater Atlanta area where we have one branch. We already do well against them there and with our members in California where we have no branch presence. New England will be no different.