An iconic piece of downtown — the First Niagara tower across from the Green at the corner of Elm and Church Streets — is for sale.
A First Niagara bank spokeswoman, Karen Crane, confirmed the plans to put the building up for sale Friday afternoon in response to an inquiry from the Independent.
The move comes as the Buffalo-based bank is cutting costs amid a changing industry landscape as well as some recent negative financial news. The bank announced Friday that it is cutting 150 to 200 managers’ positions. It is also closing its Westville branch in January
The building at 195 Church used to be known as the New Haven Savings Bank building. The bank built the 18-story, 210,369-square-foot tower in 1974. Then it sold to NewAlliance Bank in 2003, which in turn sold to First Niagara in 2011.
The building symbolized the rise of a once-sleepy local mutual bank to a position of prominence in town; the upcoming sale reflects the changes in the industry since then.
First Niagara plans to keep its operations in the building on a leasing basis, while getting out of the real estate business, according to spokeswoman Karen Crane.
She emailed the Independent this message:
“It is true that First Niagara has decided to initiate a sale-leaseback of the building. The transaction will entail the transfer of title of the building to a new owner, with First Niagara leasing back the space which currently houses our bank operations.
“Like most companies with extensive real estate holdings, First Niagara continuously re-evaluates those assets to ensure they continue to meet the bank’s objectives. A sale-leaseback is a common real estate transaction employed by many companies, and makes good business sense for those companies who, like First Niagara, are not in the real estate or property management business. First Niagara originally acquired 195 Church Street in 2011 as part of our merger with New Alliance and it was never our intention to become long-term property managers of the building. At this time, the sale-leaseback of 195 Church Street is the right decision to best meet the infrastructure needs of the bank.
“I do want to stress to you that the Church Street building will continue to serve as First Niagara’s New England Regional Market Center and our operations within the building will remain. This includes the continued operation of our street-level branch for the convenience of our downtown New Haven customers. The announcement of this sale will not affect the 130 First Niagara employees who work at this location, nor the tenants who currently lease office space in the building.
“Maintaining a strong commitment to the City of New Haven has always been, and will always be, a fundamental part of who we are at First Niagara.
Managers Laid Off
Meanwhile, the bank is eliminating the 150 – 200 managerial positions across its 410 branches in four states.
The layoffs took place in recent weeks, a number of them here in New Haven.
“We don’t tell businesses what to do or how to do it. We accept whatever comes down the pike with them. But obviously the pulling back is disappointment. I’m sure that this will hurt lots of folks in the New Haven region. They’ve been a terrific community player,” Greater New Haven Chamber of Commerce President Anthony Resigno said Friday. “I hope it’s just a reshuffling of the deck and they’ll remain strong. It would good to hear from them at this point.”
Bank spokesman David Lanzillo declined repeated requests to break down how many of the 150 – 200 layoffs are in New Haven. He forwarded an official bank statement that called the layoffs a cost-saving measure aimed at “enhanc[ing] our competitive position and better serv[ing] our customers. As the financial services industry continues to evolve, we continue to change in order to remain competitive and keep pace with changing customer needs.” The statement said the bank will be creating an equivalent number of new positions as part of that change.
The move comes as the company has been struggling. What the bank called a “process issue” with deposits led to an $800 million write-off and a quarterly loss.
The company is investing in mobile technology, which 200,000 of its customers use, and online banking, used by 500,000 customers.
Click here for a story about the bank’s decision to close its Westville branch next month.
“I was very disappointed that they were closing our local branch and understand that there are a lot of changes going on, not only in banking but at First Niagara,” said State Rep. Pat Dillon. “I hope they’ll continue to be a positive partner in economic development.”
To me the course of New Alliance bank typifies what is wrong with corporate America. Harvard Business Review should do a case study on it. It was a very successful regional bank at one time. When it sold out to First Niagara, then-CEO Patterson and other execs took a HUGE payoff. As CEO, Patterson's job is to act in the best interest of shareholders. However when First Niagara offered to purchase New Alliance they offered to give the New Alliance executives a huge payoff if they accepted the deal. There is a clear conflict of interest there. The executives are supposed to decide yes or no to the acquisition based on the best interest of the shareholders, but at the same time if they agree to the acquisition they become filthy rich, if they reject the acquisition they continue making whatever salaries they were making at the time (a lot of money but peanuts compared to the payout they receive by agreeing to the acquisition).
So of course they agree to the acquisition. At the time this happened I remember being disturbed by the conflict of interest and also as a New Haven resident I was worried that New Haven would lose a lot of great jobs. Patterson is hailed as a successful leader in the industry because she headed a large bank and navigated it through a major acquisition. But how did the shareholders make out? how did the other New Alliance employees make out?
I don't blame Patterson; it happens all the time and most CEO's would have made the same decision. But the system is wrong to allow executives to take major payoffs during acquisitions as it puts them in a position where there is a massive and obvious conflict of interest. Unfortunately as the former headquarters of New Alliance, New Haven is one of the casualties of this debacle of an acquisition.