Charter One Bank plans Indiana growth: Acquisition allows new owner to leverage 60 branches

Two and a half years ago, Charter One Bank had nary a single Indiana branch. Since then, it’s quietly built 60.

Charter One is preparing an all-out assault on the Indiana bank market. Under the leadership of its new Indiana president and CEO, Norman S. Hatch, the bank plans to add 10 branches in 2005 and increase its Indiana head count from 400 to 500 employees.

Hatch, who took charge Jan. 2, had been vice president of middle-market banking for Bank One, where he oversaw a $1.2 billion portfolio. His challenge is to transform a no-frills organization into a full-service bank.

“I wanted to be somewhere where I felt I would make a real difference and have an impact in a growth-oriented organization,” Hatch said. “Charter One is dedicated to local management. It was a business model I really liked.”

Until last year, Charter One was based in Cleveland, with $41.3 billion in assets and 680 branches in nine states. Its strategy had been to inexpensively establish ubiquity. That mostly meant creating basic branches inside grocery stores or at the ends of strip malls. In Indiana, Charter One has 50 scattered around Indianapolis.

Tactics changed when Charter One was acquired Aug. 31 by Providence, R.I.-based Citizens Financial Group. After the deal, Citizens had $137 billion in assets, 1,600 branches and 26,000 employees in 13 states, making it one of the nation’s 10 biggest banks based on deposits.

But Citizens is itself the subsidiary of an even larger bank. Since 1988, Citizens has been the American arm of the Royal Bank of Scotland Group, one of the oldest banks in the United Kingdom. It’s the second-largest bank in Europe and the fifth-largest in the world in terms of market value.

In Indiana, the bank will continue to be known as Charter One. It plans a hiring spree to fill out the ranks of divisions that currently exist only on the drawing board, such as corporate banking. To find qualified personnel, Hatch said, Charter One will likely have to poach talent from other Indiana banks.

Its ultimate ownership means Charter One has access to the financial resources it needs to grow. But despite his bank’s complicated parent structure, Hatch said the authority for all local matters is his.

“This is our market,” he said. “They have left the decisions to each of us in this market. It’s a wonderful position to be in.”

To convince customers that Hatch’s clout is in more than name, Charter One has already begun tying its brand to Indiana. Last October, it started sponsoring the Indianapolis Colts. In February, it hosted a day of free admission at The Children’s Museum of Indianapolis. And Hatch said Charter One will devote 1 percent of its pretax earnings to local charities and economic development. In 2005, he said, that should total $30 million.

Richard Bonds, a retired Bank One human resource manager, knew Hatch from two decades together in local banking. Now a consultant for the Indianapolis Private Industry Council, Bonds particularly praised Hatch’s skill in selecting personnel.

“He has a long history of producing good results,” Bonds said. “He’s going to take off and put the right strategies in place to be a major player in this marketplace.”

But banking consultant Mike Renninger, president of Carmel-based Renninger & Associates LLC, was more guarded. Although Charter One has quickly established lots of Indiana branches, its market share remains infinitesimal. And while supermarket storefronts are less expensive to build, many bankers believe they aren’t nearly as valuable as stand-alone branches.

“[Charter One has] obviously bought into that mode of entry into a market,” Renninger said. “They’re now recognizing they need to do free-standing branches. To the extent they do that, they’ll be one of many competitors in this market that provide basically similar services.”