Can a Mutual Beat Fintechs on Their Turf?

Article by: Diane McLaughlin, Banker & Tradesman 

Tom Senecal

Thomas Senecal 
President and CEO, PeoplesBank 
Age: 60 
Industry experience: 33 years 

Tom Senecal wants Holyoke-based PeoplesBank to remain a mutual bank, and recent moves at the lender mean it will not likely convert to a stock company any time soon. After a strategic planning process last year, the bank decided to change two bylaws to help preserve mutuality: increasing the number of corporators who would need to vote in favor of a stock conversion and prohibiting management or the board of directors from participating in an initial public offering, removing a financial incentive to convert to a stock bank.

Senecal began his career at KPMG as a public accountant working with community banks primarily in Western Massachusetts and other parts of New England. PeoplesBank was one of his clients, and he left accounting to join the bank as its controller in 1995. He became president in 2016 and was recently appointed to the Massachusetts Bankers Association board of directors.

Q: What are some benefits of remaining a mutual bank? 

A: We make decisions that are long-term in nature that might be detrimental short-term financially, but we realize long-term have the benefits of improving the bank. We believe in mutuality for our local decision-making, and mutuality allows us to stay local and make those decisions locally. 

We're noticing huge growth as a result of the merger and acquisition market going on around us. Every time there's a disruption in the market from an acquisition, we have garnered significant growth from that. I came to the bank in 1995. We had $400 million. We're at $3.6 billion now, and that's all organic growth, other than a $275 million acquisition [in Connecticut] in 2018. 

Q: What are some of the steps you've taken in terms of bank operations to continue as a mutual bank? 

A: Everyone knows mutual has less opportunity for capital than public banks do. The only way we have to grow is through growing our capital through earnings. Over the past three years we've more than doubled our earnings, which has enabled us to grow. Certainly not at the pace or opportunity that a public bank would, but we realize that the only way we stay in business is through growing our capital. That allows us to do things that smaller mutuals can't do. A public bank can invest in R&D and innovation and technology. But as a mutual, our growth allows us to reinvest in technology, innovation and really different things that we would never have entertained, I don't think, because the expensive nature of some of the things we're looking at doing will impact our earnings growth. But long-term, they will allow us to compete with a lot of what's going on in the fintech industry these days. 

Q: What are some investments that will help you compete? 

A: We are taking a very serious, strong look at our core technology, and we are positioning ourselves to improve the technology that we operate today. 

Q: What are some other challenges to staying a mutual bank? 

A: We've grown organically, we continue to grow organically. I think the biggest challenge is investments. I talked about investing in technology. You look at some of the largest banks in this country, and they have billions of dollars that they're investing in technology. We don't have that capability. What we have to do is be selective of the technology that we invest in. I'd love to do more with that, but we have to be selective with the things we pick and choose to invest in - for example, fintech partners and technology that we think that will help us grow immediately. 

Q: Is the board committed to mutuality? 

A: Very much so. Actually, a board member asked me the question at the last board meeting: What is our commitment to mutuality? What does it look like? We have doubled our community outreach efforts; we anticipate doubling them this year over last year as a result of mutuality. In our market, a lot of mutual institutions have disappeared, and I've been told throughout the community: "I used to go to eight banks and have a request for donations. You're the only bank left that I can go to and ask." The board feels strongly about our ability to support the community, and we're probably going to be up somewhere close to 6 percent of our pre-tax earnings this year in charitable giving. 

Q: What was the percentage in the past? 

A: Probably 1 [percent] to 2 percent. 

Q: Has the disappearance of mutual banks in Central Mass. changed the business landscape? 

A: Absolutely. I've talked about the benefits of the business model. We don't advertise commercial business at all. Everything we've had in our growth - we've probably averaged 10 percent to 12 percent growth over the past 10 years - all of it is by word of mouth and by customers who want continuity in the relationship with the bank. We're not the only mutual in the state - actually, Massachusetts is the largest mutual territory in the country. But I do think the business model breeds continuity, commitment and loyalty. And there's nothing else like it. A significant amount of growth over this past year is a result of the primary question of: How long have your lenders been there and what are their ages? They just don't want change anymore. And I think it's something that most mutuals can offer, and it's one thing we offer in this part of the state.

Q: Do you have your eye out for M&A opportunities? 

A: We are extremely opportunistic. We clearly recognize that there will be opportunities, and having done a merger three years ago [with First National Bank of Suffield], our eyes and ears are open. We have unofficial conversations all the time. There's nothing happening right now, but yes, we are always opportunistic. As a $3.5 billion dollar institution, we will not convert, and we will not be acquired. But we certainly are interested in partnering with other organizations that are of a similar culture and thought as we are.

This article originally appeared in Banker & Tradesman.

About: PeoplesBank is a leader in innovation, corporate responsibility, environmental sustainability, and employee engagement. Our three LEED® certified offices are environmentally friendly, and we have financed more than $188 million in wind, hydroelectric, and solar energy projects.

As a community bank we have a unique ability to help the communities we serve through volunteer efforts and millions of dollars in donations to charitable and civic causes.

PeoplesBank is a mutual bank and therefore is responsible to our depositors, employees, and the community. This organizational structure allows us to focus on the long-term viability of the bank and the best interests of our customers. We currently have 20 banking centers located in Massachusetts and Connecticut.

Media Contact
Matthew Bannister, Senior Vice President, Marketing & Corporate Responsibility, PeoplesBank
413.493.8704
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