Hartford Business Journal

8 Hartford Business Journal • November 25, 2019 • www.HartfordBusiness.com By Matt Pilon mpilon@hartfordbusiness.com M ergers and acquisitions have reshaped Connecticut's banking landscape in recent years, erasing well-known and established brands from the community-lending scene. It's also provided opportunities for other local banks like Middle- town-based Liberty Bank, which has steadily grown its deposit market share, becoming the third largest Connecticut-headquartered bank, and 10th largest among all lenders doing business here. But if you're wondering whether the mutual lender could be the next acquisition target, think again, says Liberty Bank President and CEO David Glidden. Few chief executives make guar- antees about their bank remain- ing independent, especially in this era of perpetual M&A activity, but Glidden, who is only eight months into his job, is unequivocal. "Liberty Bank is absolutely more likely to be an acquirer and we will absolutely not be acquired," the long- time New England bank executive said in a recent interview at Liberty's leafy Middletown headquarters. There are a few reasons for that. For a mutual bank, which is owned by its depositors, to be acquired by a non-mutual lender, it first must make an initial public offering and then wait three years. It's easier for a mutual to buy a fellow mutual, but Liberty's size is unrivaled in Connecticut (and most of the country), which means there are few legitimate mutual suitors. Either way, strike the thought, says Glidden. "Myself and our board are 100 percent committed to mutuality," he said. Liberty Bank has been an ac- quirer in its own right this past decade, which has helped it just about double in size, to nearly $6 billion in assets, as of the October closing of its $71-million purchase of Simsbury Bank & Trust. That five-branch deal followed acquisitions of Naugatuck Valley Savings and Loan's nine branches in 2016; Bank of Southern Con- necticut's four branches in 2013; and Connecticut River Community Bank's three locations in 2010. Glidden, 57, who spent the past 24 years at TD Bank, said he's aiming to keep Liberty on its growth path. That could mean more acquisi- tions — as long as they make sense and fit in with Liberty's overall strategy. Or, the bank can stand pat for awhile and grow organically, which also poses significant oppor- tunity, Glidden said. As a well-capitalized and profitable mutual bank, Liberty doesn't have the same quarterly earnings pres- sures that its public competitors do. It allows for a longer-term strat- egy, and investing earnings back into technology, talent and other initiatives, rather than dividends. "The nice thing is I'm willing to look at anything, but I don't have to do anything," he said. "We can be a little more patient and long term." Mark Fitzgibbon, a banking equity analyst with Sandler O'Neill who covers several publicly traded Con- necticut banks, said lenders across the country are feeling pressure from low interest rates and the need to invest in cybersecurity, technol- ogy and regulatory compliance. Those pressures exist for Lib- erty, too, but its balance sheet and mutual charter give it a different outlook than big public banks. "They can take their time doing acquisitions, they can spend a longer period integrating them," Fitzgibbon said. There's a downside to keeping more capital on hand, which mutuals often do by necessity, since they can't raise outside capital without doing an IPO or forming a holding company. "It depresses their return on equity," Fitzgibbon said. Liberty doesn't appear too con- cerned. It's booked steady profits over the past decade, hitting a net-income high of nearly $72 million in 2018, ac- cording to its financial statements. Leveraging a unique position As he looks ahead to 2020, Glid- den plans to leverage what he sees as a unique position in the Con- necticut market. Liberty is the oldest mutual bank in the state, which allows it to cater to a hometown customer base. But it also has a lot of financial firepower to compete in the acquisition game and box with larger rivals on commercial lending and other offerings. Glidden calls it "out-localing national banks and out-nationaling local banks." "We can do most things a very large money-center bank can do and we can do some things from size and scale that smaller banks might have a problem doing," he said. "But we can distribute that in a local fashion as a community bank, which I think still resonates with people." It's that mix of factors that con- vinced him to part ways with TD Bank, where he had most recently The Liberty Bank torch will burn for years to come, so long as David Glidden is at the helm, the new CEO insists. FOCUS: BANKING & FINANCE Staying Independent Amid perpetual M&A activity, one CT bank CEO pledges 'we will absolutely not be acquired' HBJ PHOTO | MATT PILON

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