2 Webster Insurance Deals Eye N.Y. Suburban Banking
Reich-Hale, David, American Banker
Webster Financial Corp. of Connecticut would like a banking presence on Long Island, and its purchase last week of an insurance premium financing business there could be its entering wedge.
"Obviously we'd love to buy a bank in a contiguous state," said Nathaniel C. Brinn, executive vice president, corporate development at the $13.5 billion-asset Waterbury thrift. "We look at everything that comes around, but the market is difficult.
"But it's not only in banking but in our other businesses" that the company is looking, he said. "To get our name out there and get presence, we'll move in with something other than banking. That's part of our strategy, and this is an example."
Friday's purchase of Budget Installment Corp., an insurance premium finance company in Rockville Centre, N.Y., was Webster's first foray onto Long Island. "Long Island is an expensive but a desirable market to be in," Mr. Brinn said.
The deal was Webster's second out-of-state this year. On Jan. 6, it bought Mathog & Moniello Cos., a commercial property/casualty agency with expertise in risk management. The company has an office in Harrison, N.Y., in the wealthy Westchester County suburbs of New York City.
Bank deals are hard to come by in either Westchester County or the Nassau-Suffolk market on Long Island, analysts said. Three of them mentioned Westchester first as a likely expansion area for Webster. Neither area is impossible to break into, said Joseph P. Beebe, a senior investment banker at Swiss Re Group's Fox-Pitt, Kelton Inc.
"They're both very competitive markets, but they're attractive because they're high-income markets," he said. "If you can get into those markets, you can make a lot of money. But look at Long Island, it's very competitive, and banks like North Fork have covered the area."
Westchester would make the most sense, Mr. Beebe said, because it borders Fairfield County, the wealthiest county in Connecticut, where Webster Bank has a growing presence. "That part of (Connecticut) is part of the New York media market to begin with, and there's a lot of crossover, so it's quite logical," he said. "Then again, Long Island is only separated by the Sound."
Jared Shaw, an analyst at Keefe, Bruyette & Woods Inc., said Webster would not immediately move to Long Island. "Westchester makes sense because it's right there, but Long Island, that's harder to get to, and you have to go through Westchester and more of metro New York to get to it" from Connecticut, Mr. Shaw said. "Other than Westchester, I think the Springfield (Mass.) market makes sense."
Springfield is considered part of the Hartford media market, and Webster already has a big presence in Connecticut's capital city. There are banks that could be picked off in Springfield, too, Mr. Shaw said. "A $1 billion to $2 billion bank, that would be a nice, easy acquisition for them," Mr. Beebe said. "I'd guess they could go make a couple of those deals first. Springfield is less competitive to get into, and it makes sense."
Laurie Hunsicker, an analyst at Friedman Billings Ramsey Group Inc., said Webster could target an acquisition of up to $3 billion. She also said it would not rule out buying in Connecticut. "There's still room there, though it is saturated," she said. "But they can expand not only into Westchester or Springfield but really into other parts of New England and New York State. Though I don't see them in New York City or Boston" because they are too expensive. …