Paul Bass Photo
Guarded doors shielded bank brass before and after Monday’s vote.
Shareholders Betsy & Richard Fiske: “This was stacked.”
Five shareholders spoke for a total of five minutes. Then the votes were tallied: a landslide in favor of turning New Haven-based NewAlliance into an outpost of a Buffalo bank, which plans to cut 230 local jobs.
The quick work took place Monday morning at a NewAlliance Bancshares special shareholders meeting at the Crowne Plaza in Cromwell.
A reported 96 percent of shareholder votes favored a pending $1.5 billion takeover of NewAlliance, the last major New Haven-headquartered bank, by Buffalo-based First Niagara Financial Group — but not before at least one voice offered a momentary dissent. (At a First Niagara meeting, 90 percent of shareholders gave a similar thumbs-up.)
NewAlliance execs needed the vote to proceed with the deal, which needs approval from federal and state regulators. Critics of the deal — most prominent among them New Haven Mayor John DeStefano and the Connecticut NAACP—stayed away from Monday’s meeting; they hope regulators will hold a public hearing so they can register dissatisfaction there.
Monday’s proceedings took just 30 minutes. Even by the standards of other shareholder meetings in NewAlliance’s six-year history, it was a swift, controlled, public-averse affair.
Shareholders, most of them seniors, signed in before trickling in to the Essex Room.
About 50 shareholders showed up to take seats in the 11 rows of chairs assembled in the Crowne Plaza’s Essex Room, divided into half the size from past meetings, a now-narrow expanse fortified by a security team. The front rows were reserved for NewAlliance board members and managers.
The board members and bank CEO Peyton Patterson stayed away from the mini-crowd in the guarded Kent Room before the meeting started. They were ushered into the room through a separate entrance, then returned to the guarded, closed-door Kent Room immediately upon the meeting’s conclusion. Contact with shareholders or reporters was barred; reporters were forbidden from asking questions during the meeting.
Shareholders were permitted to ask questions. They could speak for up to one minute each, standing at a mic placed mid-way through the aisles with a sentry stationed to monitor their behavior.
Five shareholders chose to speak. Three, including Gerald Clark of New Haven’s Dixwell Plaza merchants group, praised the deal. Clark did express the hope that the new $39 million First Niagara bank would lend money to local small businesses, especially minority-owned businesses. Opponents of the deal have cited research showing that First Niagara cut community lending after gobbling up banks in other communities .
Earlier Monday morning First Niagara/New Alliance had anticipated that question. The banks issued a joint release promising more than $1 billion in community lending following the expected April takeover date, including doubling its Small Business Administration loans as part of a $750 million small business-lending commitment; “$250 million in low- to moderate-income lending, including a $30 million loan pool with special rates and reduced fees”; and $100 million worth of “community development loans” in poorer areas. (Read that release here.) The release noted that the NewAlliance Foundation would spin off as an independent charitable organization after the merger. And NewAlliance will pony up the last $6.7 million of the $25 million it promised to give to a local not-for-profit community-lending group the last time regulators OK’d a controversial expansion (when New Haven Savings Bank demutualized and became NewAlliance). That last commitment funded a small-scale competitor in New Haven, START bank, set to open next month.
CEO Patterson referred to the newly announced $1 billion community-lending commitment when she responded to Clark’s remark at Monday’s shareholder meeting.
“We’re very familiar with Dixwell,” Patterson said. “I’m sure there will be much you can put your arms around.”
Patterson left out a key fact from that same release when she responded to another questioner, who asked how the takeover will affect Connecticut.
Paul McCraven (pictured), NewAlliance’s senior vice-president for community development, is expected to stay on after the merger.
Patterson said that all 88 Connecticut and Massachusetts branches will stay open after the merger. First Niagara may even open new ones, she said. She noted that some jobs may be lost; “Every position that is lost is important,” she said. “A lot of thought and care went into” the planning.
But she didn’t mention that the release confirmed that the newly expanded bank plans to cut 230 local jobs. Sixty of those jobs’ occupants “have already elected to take severance, retire or pursue opportunities outside the bank,” according to the release. That leaves 170 potentially newly unemployed people, 65 of them in New Haven.
NewAlliance
Peyton Patterson.
Patterson cited a different figure at Monday’s meeting: an alleged net gain of 50 jobs. She called the disappearing jobs mostly back-office positions.” The bank will create more than than number of “customer-facing positions” in bank branches, she claimed. Monday’s press release makes no mention of such a commitment.
The only outright opposition Monday came from Richard Fiske, a semi-retired home-builder from Woodbridge. His argument: The deal enriches NewAlliance brass while shortchanging shareholders like him.
“There’s an enormous payday being paid out to the executive committee and the directors,” he said during his alloted one minute. “It seems like a conflict of interest.”
“Our interests are 100 percent aligned with shareholders’,” Patterson responded. “We are all shareholders.”
She reported that while much of the banking industry has tanked during the recession, NewAlliance has prospered, giving shareholders a 65 percent return since its inception while the S&P 500 has risen only 26 percent. She said the proposed First Niagara deal featured a 26 percent premimum above NewAlliance’s stock price the day it was announced last August, and that shares have risen 26 percent since that announcement.
New Haven Alderwoman Maureen O’Sullivan-Best cast one of the few “no” votes. She didn’t speak at Monday’s meeting.
The deal “will make us one of the top 25 banks in the country and well-positioned to capitalize” on competitors’ current weakness in the market, Patterson said.
After the 96 percent vote tally was read, the meeting was adjourned, and Patterson & co. were whisked away, Fiske was asked what he thought of her response and of the meeting.
“I just don’t think we got a fair deal. For six years, we got four bucks? The president [Patterson] is walking out with $14 million.
“This was stacked.”
In terms of financial wealth and securities, the deck has been "stacked" for quite some time.
Here are a few useful charts:
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
The bottom 90% of the population (in income) owns less than 2% of stocks.
According to a major survey this year, Americans believe that the top 20% owns about half of the nation's wealth. The reality is that they own almost all of it.