Fitchburg Savings goes commercial
For many banks, the way to grow seems obvious: open new branches and expand into new markets.
But Fitchburg Savings Bank - with its $368.5 million in assets - is taking a different approach.
The bank's growth strategy involves two moves that might seem contradictory at first. It is reaching out to commercial customers outside its traditional base, in communities as far away as Oxford and Brookfield. At the same time, it is emphasizing its role as a local bank, as symbolized by the fact that it is opening a new $1 million plus, 8,000-square-foot lending center in a former GE building in downtown Fitchburg.
"With all the things you hear about downtown Fitchburg and other banks moving out and moving to other towns, Fitchburg Savings is remaining dedicated to downtown Fitchburg," said Michael Olson, the bank's executive vice president and senior lending officer.
While many banks are opening new locations, Olson said experts that FSB has consulted suggest a different route.
"They feel that the way things are, opening bank branches and just hoping that you're going to get deposits from it is a very big risk," he said.
That's because other, more established banks have already built up their market share, and at the same time, many customers are depositing less in savings banks.
Technology's reach
Instead of increasing its geographic reach, Olson said, Fitchburg Savings is expanding in a different direction, supplementing its traditional mortgage offerings with commercial lending. Over the past few years, Olson said, the bank has increased its commercial loans about 60 percent, and it is getting ready to open a new commercial lending center.
For the past few years, Olson said, the bank has been concentrating on hiring experienced commercial lenders with connections in the region to bring in new business. He said commercial customers are able to use the bank even if there is no branch in their neighborhood because of new technological tools. For example, the businesses can use a special scanner to send accounts receivable checks into their accounts electronically.
On the individual banking side, Olson said, many young people never walk into a bank and rarely write a check. For customers like that, Fitchburg Savings offers an account that lets them pay bills online, get direct deposits from employers and earn 6.01 percent interest.
Olson, who previously worked as the senior lender at Flagship Bank, said keeping a local focus helps Fitchburg Savings to make good lending decisions. Instead of running proposed loans by corporate officials at a parent office, he said, he can now rely on staff members and trustees with a wealth of local knowledge.
"They're all people that grew up here, they know the local economy, they know the people here, a lot of times they know their families," he said.
He said that kind of familiarity makes a difference in vying with larger banks for the 80 to 90 percent of businesses that are not looking for enormous loans.
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