The Federal Deposit Insurance Corporation (FDIC) approved the New Haven Savings Bank’s plans to merge with Connecticut Bancshares, Inc., the holding company for The Savings Bank of Manchester and Alliance Bancorp of New England, the holding company for Tolland Bank on Feb. 27.
Additionally, the Federal Reserve Bank of Boston approved the application for a new holding company named NewAlliance Bancshares, Inc. which will acquire the New Haven Savings Bank, Connecticut Bancshares Inc. and Alliance Bancorp of New England. Shareholders at Alliance Bancorp will vote on the merger Mar. 18, and shareholders at Connecticut Bancshares will vote Mar. 30. Bank officials have announced that the acquisition and conversion to a public bank should take place around Apr. 1. The new bank will be called NewAlliance Bank.
The merger would make NewAlliance Bank the second largest savings bank and the fifth largest bank in Connecticut with 74 branches, $5.9 billion in assets, $3.8 billion in deposits, and equity of at least $1.1 billion. NHSB currently has 36 branches in the greater New Haven area and $2.4 billion in assets.
After two public hearings and a great deal of opposition from the New Haven community, the NHSB plan to convert from a mutual savings bank to a public company was approved by the Connecticut Department of Banking on Jan. 26 and by the FDIC on Feb. 9. Many depositors were angered because they were not given a chance to vote on the conversion although such a vote is not required by Connecticut state law.
Some lawmakers are trying to pass legislation that would amend state regulations for future bank conversions. On Feb. 26, Sen. Martin M. Looney, D-New Haven, testified on behalf of a bill that would give the state banking commissioner the option of requiring depositor votes for future mutual savings bank conversions. Legislators will vote on the bill this Thursday.
“The intent is to allow for broad-based participation by depositors,” Looney said. “It seeks in effect to lay out in statute some of the powers of the commissioner.”
Looney said the controversy over NHSB’s conversion plan pointed out the need for provisions that would give additional powers to the state banking commissioner.
He said some lawmakers oppose the legislation because they believe it might adversely affect other Connecticut mutual savings banks that are contemplating conversion plans for the future.
Although the proposed bill would have little direct impact on NHSB, provisions would allow the commissioner to assert greater authority over the ongoing conversion process including compensation packages for the bank’s board of directors.
Connecticut Center for a New Economy spokesman Bill Meyerson said the denial of a depositor vote in the NHSB conversion process was a “wake-up call” for the community, and he said he supported the proposed legislation.
“It’s been a long time coming — it will bring some sense of democracy and due process to the whole bank conversion process,” Meyerson said.
Meyerson said the primary issue of concern is a lack of accountability among the board of directors, many of whom hold positions in other large New Haven establishments including CEO of the Yale-New Haven hospital Joseph Zaccagnino.
“This is the same guy who is refusing to allow the depositors at the New Haven Savings Bank to vote on what happens to their money. It’s part and parcel of the same problem,” he said.
NewAlliance Bancshares, Inc. plans to offer between 65 and 89 million shares of common stock at $10 per share. Additionally, it will contribute four million shares to its charitable foundation, $25 million of which will go towards an independent foundation that will focus on community issues in New Haven.