Bank merger is up for vote

February 8, 2008
By

JOHN RUCH

Roxbury Highland customers pose questions at meeting

JP CENTER—Roxbury Highland Bank of Jamaica Plain depositors were scheduled to vote on a proposed merger with South Boston’s Mt. Washington Bank as the Gazette went to press Thursday night. [See www.JamaicaPlainGazette.com for updates.]

If comments and low attendance at an informational meeting staged by Roxbury Highland last week are signs, the merger is likely to be approved. Some depositors expressed concern and disappointment, but it was a far cry from the chanting crowd that shot down a previous merger proposal in 2003.

“After talking to [Roxbury Highland president Wayne Gove], after hearing what I’ve heard tonight, I’m fully in favor of this merger because I think it’s the only way this bank can continue to exist,” said Rob Werner, the depositor who led the 2003 merger opposition campaign, at the Jan. 29 informational meeting at the Curley School. About 25 depositors attended.

“We’re very committed to preserving the legacy of Roxbury Highland Bank in this community,” said Mt. Washington president Ed Merritt, addressing depositor concerns that largely focused on keeping the independent bank’s homey feel and community roots.

Roxbury Highland is a 119-year-old, one-branch bank at 515 Centre St. With roughly 2,500 customers and $24 million in assets, it is the second-smallest bank in the state.

Mt. Washington has been around almost as long as Roxbury Highland, but is much larger: five branches in Southie and Dorchester, about 20,000 customers and more than a half-billion dollars in assets.

While the proposal is technically a “merger,” it essentially means that the JP bank would become the “Roxbury Highland” branch of Mt. Washington.

Both banks are cooperative or mutual, meaning they are owned solely by depositors, not by public stockholders or giant corporations. Both were founded to provide loans to immigrant communities, putting a focus on community service rather than generating large profits.

Bank officials and outside observers have said Roxbury Highland is too small to survive in the modern industry, making a merger inevitable. The bank doesn’t offer many services now considered standard, such as access to a large ATM network or online banking.

Gove told depositors that Roxbury Highland’s deposits have been shrinking, its customer base aging and its industry more expensive than ever due to increased regulatory requirements. Board member Apolo Catala said that in JP’s expensive real estate market, Roxbury Highland often lacks the capital to offer mortgage loans—a crimp in one of its core missions.

“We’re at a point where we can’t continue because of things working against us—basically, our size,” said board president Thomas Carrigg, explaining that remaining independent is not a viable option. “We’ve tried. We’ve tried to go forward.”

Pressed for details, bank officials said Roxbury Highland isn’t on the edge of collapsing, but would die a slow death in coming years as its customer base dwindles away. Catala said he wouldn’t guarantee the bank’s survival for even 10 more years.

In light of those struggles, bank officials say, they looked for a merger partner that came as close as possible to matching Roxbury Highland’s values and character.

In 2003, Roxbury Highland proposed a merger with Brighton’s Peoples Federal Savings Bank, which already had a JP branch. Depositors voted down that merger amid complaints of poor communication and the possibility the Roxbury Highland office would close. The deal was controversial among Roxbury Highland board members as well.

This time, Roxbury Highland improved its outreach, including through the informational meeting. The board is unanimously supporting the Mt. Washington merger. And Mt. Washington is pledging it will keep the branch open and is offering to keep all the current staff members in place.

As part of the deal, one current Roxbury Highland board member would join the Mt. Washington board. The remaining Roxbury Highland board members would act as an advisory group for at least a year after the merger to make sure the JP focus is maintained.

“I’m not interested in coming here and trying to change everything,” Merritt said, adding that someone would have to be “crazy” to even think of closing the office. “I don’t think anybody’s going to get culture shock out of this.”

Mt. Washington would also keep the Roxbury Highland Charitable Foundation, which donates a portion of the bank’s profits to community organizations and funds the annual Kite Day festival at Jamaica Pond. Merritt said Mt. Washington would start by contributing $100,000 to the Roxbury Highland foundation for distribution over the next three years.

Mt. Washington already has its own foundation as part of a commitment to donate 10 percent of its profits to the communities it serves.

“As a mutual banker, it’s about the legacy. It’s not about how much money I’m going to make,” Merritt said.

While most questions about dollars-and-cents and the bank building had clear answers, several depositors had concerns about less tangible qualities like identity, community and atmosphere.

Both institutions may be “community banks,” one depositor noted, but there’s a difference in exactly which community it is headquartered in.

Merritt emphasized that branch managers are given lots of authority and control to suit the bank to the community. He said that is why he wants the staff to remain in place. Gove is set to remain the branch head.

No one said it explicitly, but there seemed to be an air of suspicion involving the broad stereotypes of JP as liberal and diverse and Southie as conservative and white.

Roxbury Highland is particularly known for serving Hyde Square’s Latino community, where many depositors know it by the term of endearment El Banquito (“Little Bank”).

Roxbury Highland board member Juan Lopez—a well-known JP activist—noted that he wanted to make sure Mt. Washington has a truly diverse staff and community commitments. He described how he visited its branches in person and talked to local organizations. He said he was completely satisfied by what he saw and heard.

There was also suspicion of commercialization or a more corporate approach.

Merritt often speaks in the peppy tone and lingo of a salesman, freely using such terms as “product menu.” At one point in the meeting, he pulled out a sticker reading, “Ask me about totally free checking” and slapped it onto his suit jacket.

One depositor objected when Merritt referred to JP as an “attractive marketplace” rather than a neighborhood. Others questioned the need for high-tech services like online banking. A man who opened a Roxbury Highland account 40 years ago with his newspaper delivery money asked whether the bank’s name can stay the same.

Merritt said that Mt. Washington doesn’t want to be “big bank lite.” The branch would have to carry the Mt. Washington name, but the building would change little besides a renovated lobby.

Mt. Washington is expanding, but Merritt has pledged it will remain a Boston-only bank. And high-tech banking services are just a way to allow customers to bank any way they want, Merritt said. Many Mt. Washington customers don’t even have debit cards, he said, while his own kids wouldn’t think of going inside an actual building to do banking.

The overall goal, Merritt said, is great customer service. Among his promises was that customers can always get a bank employee on the phone without any sort of voice-mail button-pushing.

“It’s that homey feeling,” he told a depositor after the meeting, referring to his plans for free coffee in the bank lobby. “We do a lot of hokey things.”

That includes sometimes literally giving away toasters to new customers—the ultimate banking cliché, but one that works, he said. Meeting attendees were offered a Mt. Washington giveaway bag that included such old-school freebies as a calendar.

Some depositor concerns amounted to a wish that Roxbury Highland could do business differently against all odds and trends.

“I haven’t seen Roxbury Highland try to sell itself as a community bank,” said one depositor.

She contrasted it with the local outreach efforts of Wainwright Bank & Trust Company. But that may only underscore Roxbury Highland’s situation: Wainwright is a publicly traded bank owned by outside stockholders and has branches in such suburbs as Watertown and Newton.

“Our problem always was, how do we get people to know about us? And that takes resources,” Gove said. “We just couldn’t do it.”

At least in the short term, customers would notice few changes if the merger went through—especially if the existing staff agrees to stay.

Account-holders would essentially just see a different bank name on their statements. Their accounts would shift to earning Mt. Washington’s interest rates a short time after the merger, according to a document handed out at the meeting.

Mortgages held by Roxbury Highland would simply shift to Mt. Washington.

“If you have a mortgage [at Roxbury Highland], we’re not going to sell it,” Merritt told the Gazette.

He said in the meeting that Mt. Washington sells some of its mortgages to a couple of select outside firms as a way to get customers better interest rates—but only with the customer’s knowledge and approval.

“It’s up the customer,” Merritt told the Gazette.

If Roxbury Highland depositors approve the merger, the next step is a similar vote by Mt. Washington depositors scheduled for Feb. 12.

The deal would then still need approval from federal and state banking agencies.

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