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When the Great Recession hit in 2008 and mortgage foreclosures soared, Webster Bank took a different route than many other lending institutions.
The Connecticut-based bank, which also operates in Rhode Island, Massachusetts and New York, launched a mortgage-modification program to help families keep their homes, despite whatever financial upheavals they faced. Bank staff worked with those customers to shrink monthly payments, lower interest rates, waive fees and penalties and lengthen loan terms.
“Our program has helped 120 families in Rhode Island and southeastern Massachusetts avoid foreclosure,” said Robert Twomey, Webster’s regional president for Rhode Island and Massachusetts. “Foreclosure is a lose-lose. We can modify mortgage payments until you’re back on your feet.”
In a glowing report, The Wall Street Journal noted Webster’s program is not only civic-minded, but good for the bank as well. The business broadsheet cited documents showing just 1.84 percent of the mortgages serviced by Webster were at least 30 days past due, while the national average stood at 8.15 percent. That kind of innovative response to the challenge of tough times has helped Webster Bank grow at a vigorous rate in recent years.
Webster first entered Rhode Island in 2004 by acquiring First Federal Savings Bank. At that time, the bank had seven branches in the Ocean State; that number has since doubled, and it has expanded into southeastern Massachusetts, too. Today Webster Bank employs 308 people in the two states, including at a regional headquarters in Kennedy Plaza in downtown Providence and an office in Boston’s Financial District. In total, Webster now has 167 branch offices in the Northeast.
At the same time, Webster is still small compared to Bank of America, Sovereign Bank and other big competitors in the region. For that reason, executives boast they can still provide the trusted, personal service of a small-town lender.
“We’ve only had two CEOs in the history of the bank,” said Ana Dyer, senior vice president and regional manager, who runs the bank’s small-business division in Rhode Island. “Not a lot of banks can say that. A can-do attitude pervades the institution.”
“We’re in the sweet spot,” added Twomey. “We’re large enough to offer the sophisticated products and services small banks might find it hard to justify, but we’re also very up-close and personal. You can call here and talk to someone at the bank – not someone at a call center overseas – and get a problem solved very quickly.”
Waterbury native Harold Webster Smith founded Webster Bank in 1935 in part to help the people in his community buy and sell homes. His son, Jim Smith, is now chairman and CEO. In recent years the bank’s expansion has garnered coverage by several national news organizations. Noting Webster’s community spirit, ABC World News Tonight compared the institution to the fictional Bailey Building & Loan in the film classic “It’s a Wonderful Life.”
The numbers also tell a story of success. Webster has gone from a net loss of $6.1 million in the first quarter of 2010 to 10 consecutive quarters of profits. The latest figures, from the third quarter of 2012, show the bank grew net income 7.2 percent year over year to $44.4 million. From the depths of the recession, when the company’s stock price dipped below $3 a share, Webster has made a significant recovery, closing at $21.82 on Nov. 2.
Personal service has been part of Webster’s strategy since it first expanded into Rhode Island. Twomey tells how the bank used that approach to successfully woo several state agencies and municipalities as customers.
“We recruited a terrific person who handled government banking for Rhode Island at Bank of America,” he said. “We invited state officials for a face-to-face meeting with our people. We showed them we had our own lock box, a secure post office box for receiving checks. We demonstrated we could do things very efficiently and make their money available very quickly because we have our own processing facility in New Britain, Conn. We were able to customize our services to meet customer needs.”
As a result, Webster bested the two largest banks in Rhode Island to become the new bank of the R.I. Division of Taxation, and later the Division of Motor Vehicles, the Student Loan Authority, the Higher Education Authority, and other state agencies. Also on board as customers: 19 Ocean State cities and towns.
Individuals get the same efficient service. “Some banks might take two or three months to process a mortgage application,” Twomey said. “We can do it in a month.”
“We like to say we’re the Goldilocks bank,” added Brenda Greene, vice president for public affairs. “Everyone gets the services that are just right.”
To keep the growth plan on track, Webster executives used their personal networks to recruit experienced employees with proven skills. The bank also set up a strong training program – dubbed Webster University – for employees at every level. The classes, which are taught at the New Britain facility, cover banking operations, as well as broader subjects such as leadership development, computer skills, business writing and public speaking. Instructors even coach executives on making video presentations.
The company also has turned to employees at every level for suggestions on how to increase revenue and reduce costs. A review committee has given many such proposals the green light.
The bank is often quick to adopt the industry’s latest innovations. Twomey points to remote check deposit as one example. “Even customers just a few blocks from a bank branch are using the system, and they tell us it saves time.”
Webster also has lived up to its reputation as a community bank by supporting a host of charitable and arts organizations in Rhode Island and southern Massachusetts.
On the cultural side, the bank has provided sponsorship support for efforts such as WaterFire Providence, Roger Williams Park Zoo and the Providence Performing Arts Center.
The bank offers financial support and employees serve as volunteers for local Boys & Girls Clubs, Junior Achievement, Habitat for Humanity, the American Red Cross, and other organizations.
Beyond that, Webster has developed a financial-literacy course which is offered to schools. And employees volunteer with the Financial Coaching Corps, a program set up by R.I. General Treasurer Gina M. Raimondo and the Capital Good Fund, a Providence-based nonprofit that provides microloans and personal financial coaching to small businesses.
“The biggest philanthropic entity we support is the United Way,” said Twomey. “Between gifts from our employees and our corporate gift, we raised $1.2 million last year.” •