Name: Robert T. Gormley
Position: President and chief executive officer of Citizens Bank of Rhode Island and Citizens Bank of Connecticut.
Background: Assumed his current position last October, after three years as chairman, president and chief executive officer of Citizens Bank New Hampshire. Previously was executive vice president and senior lending officer at Citizens Bank of Rhode Island. Before joining Citizens Bank in 1993, he was executive vice president senior loan officer at Fleet Bank of Connecticut.
Education: Received his bachelor’s degree from Providence College in 1970.
Age: 51
Family: Married, with two sons.
Residence: East Greenwich.
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PBN: What was the reason for this consolidation of Connecticut and Rhode Island, and what form is it taking now?
GORMLEY: It was driven by a couple of different reasons. Our Rhode Island bank, as you know, is the larger bank. We’re the largest bank in the state. The Connecticut bank is a smaller bank, although we have pretty good market share along the Connecticut coast. I had the experience of being from Rhode Island and working a good part of my banking career in Rhode Island. But I also worked in Connecticut for five years. The last five years I was at Fleet, I was the senior lender for Fleet in Connecticut. So part of this, I think, was drive by the fact I had familiarity with both markets. We also felt that we could use some of our senior manpower more efficiently, deploy our resources a little better – both our financial resources and our people resources. We have a regional president in Connecticut who reports to me, Ned Handy, who also worked in the Connecticut market for awhile.
Any job losses or additions as a result of the reshuffling?
We did some reshuffling. We eliminated some redundant positions, although interestingly we added a number of positions, primarily on the commercial side. On that basis there really were no positions lost and any positions we eliminated we were able to absorb into open positions.
Is the bank finished with everything it has to do with the acquisitions in the Massachusetts area?
We have just recently, a few weeks ago, completed the conversion of the US Trust branches, and we have the State Street Conversion coming up in a couple of weeks. Within a couple of weeks we will have the whole company on its systems.
State Street is different, however, it is commercial rather than retail?
State Street is really converting commercial loans and deposits, so we don’t have the issue of branches and changing signs and doing that sort of thing. It’s really converting – there’s about $2 billion of commercial loans and about a half billion dollars of commercial deposits, but a smaller number of customers. About 1,000 customers. The communications on that have been ongoing. We’ve absorbed State Street people into our organization now. It’s just a question of changing the systems over.
What’s next for Citizens?
As you know our parent company, the Royal Bank just entered into a large merger with National Westminster Bank that put them in the top 15 banks in the world. It certainly strengthens our position in terms of doing future acquisitions, and future growth. We’re really looking at that right now. We will continue to do some bank acquisitions. For example, in Connecticut we have a $2 billion bank. We’d like to be larger. In Massachusetts, although we’re a $14 billion bank today, there are still some markets we could fill in positions. We’re also looking at the broader spectrum of financial services today. For example, e-commerce. We’ve formed an e-commerce subsidiary in the last few months. We’re actually expecting by the end of this month to make some further announcements on the e-commerce front.
What will that involve?
We have on-line products today, both on the retail and commercial side, but what we’re really looking at is ways we can develop some strategic alliances that will allow us to perhaps bring other products to our customers or be able to use the Citizens distribution network to potentially sell other products. We’re trying to think broadly about this. We’re not exactly experts in this. We’re trying to think out of the box.
Will this allow Citizens to enter other markets without being physically present?
That’s a possibility. Maybe you could do second mortgage business in another market or sell products like consumer lending. But maybe primarily more within our existing franchises, being able to offer more products to our existing customers.
There are some pure on-line banks. What kind of a presence are they in the market?
We don’t see them as a real large presence. They are in this market, but I think they are having a fairly minor impact at this point.
Do you think people want to see physically their bank?
I still believe that. Our strategy has been to provide customers with the opportunity to do their banking when, where, how they want to do it. An awful lot of our customers, particularly in Rhode Island, want to do that in a bricks and mortar branch, a traditional branch. But we make on-line banking available today, we have 24-hour telephone banking, we have a broad ATM network. I think you want to make a broad array of options available to the consumer, and depending upon their preferences, they’ll make those decisions.
Are we headed toward teller-less banks?
I think as the demographics change, and certainly the younger generation becomes older, we’re going to see a gradual shift. I still think there’s going to be a position for what looks like a traditional branch. We have today 60 branches in supermarkets, where people are feeling quite comfortable doing their banking now because it ties in with people having less leisure time. They can go to the market, they can go to the supermarket. We’re testing a couple of situations now with people like Wal-Mart to also do those kind of things. So I think there will still be physical locations. They may gradually shift to not just being the stand alone bricks and mortar branch on the corner, but it may be more in places where people have to go to do other things and banking will be something else they do while they’re there.
Are supermarket branches moneymakers for banks or are they more of a convenience?
They started out as being a convenience. Our supermarket branches now have turned profitable. It’s really a question of not only building up the deposits in those branches but also selling other product, being able to do consumer lending and credit cards and other business out of the branches.
Are people becoming more comfortable in that setting?
People are becoming more comfortable, and the other thing, I think, banks have learned that you have to sell your product in the supermarket in a different way. Your employees have to be more sales oriented. They have to be willing to actually walk out into the aisles and approach customers as opposed to waiting for the customer to come to the counter. Some of our very best sales people we’re finding are developing in the supermarket branches, because it is a different way of banking.
We’re two-three weeks into the Sovereign presence in Rhode Island, and several weeks into the marketing campaign for many banks, how is Citizens doing in its efforts?
We’re pretty pleased with what’s been happening. This is sort of a very unique opportunity in my banking lifetime, not only with Sovereign entering the market, but with Fleet and Bank Boston merging together, so we have our two largest competitors merging and an out of region competitor coming in to pick up the domestic branches. We see it as a fairly large opportunity to acquire new customers. We have launched some initiatives and some new advertising campaigns that basically have also introduced some new products for us, that are aimed at trying to acquire those new customers. We’ve seen quite an increase in activity, particularly over the last few weeks since Sovereign has entered the market. But we don’t think it’s just Sovereign entering, but we also think it’s some of our products. For example, we have a 6 percent money market account out there, a 6 + percent CD, we’ve got a 30-minute small business approval. We think some of those products, combined with our convenience and our experienced staff, are all factors in helping that come together.
Sovereign may be in this market, but it’s New England headquarters is in Boston. BankBoston is gone. Fleet’s headquarters are in Boston. Do you think this market has lost something?
I hear from people, and I hear particularly from the non-profit community that there is great concern about losing another company that would have either been headquartered here or had more of a physical presence and more of its senior people here. We like being headquartered in Rhode Island. We’ve had quite a bit of growth ourselves, but Rhode Island is our home. We consider ourselves to be the hometown bank. We’ve got a number of people throughout the bank doing things in the community. Not only is it the right thing to do, it’s good for business and it gives us a competitive advantage.
Does this put more pressure on Citizens philanthropically?
I think you could view it as pressure or you could view it as an opportunity. There are some things that we have been able to get involved with, just in the last few months that we were not involved with before because they were being done by BankBoston or Fleet. We tend to try and spread our philanthropic dollars and sponsorship over a pretty wide variety of things. I’d rather view it as an opportunity. The reality is pretty much everyone comes to us. We’re a big company here. We can’t say yes to everyone, but we do try to spread it around.
This Frozen Four was in, we were a sponsor for that. It was a great event. Not only was it good for the local merchants, but it brought a lot of people in. It would really be a shame if we can’t have it again because of the size of the Civic Center.
Where do you see banking in five years from? Is it going to be the all-purpose insurer, bank, broker car dealer?
I don’t know if we’ll get to cars, but we’ve already gotten to the point where in our own product line we are offering investment products today, mutual funds, annuities, we offer insurance. We really already have gotten to the point where banks are more of one-stop shopping for financial services. I think the way it is going to continue to change in the last five years is the way we’re going to deliver it. This change in the distribution system, with banks doing more business on-line and out of the traditional branches, with banks being more pro-active in their selling efforts as more customers don’t come into a traditional branch to do things, like telemarketing, more direct mail, and those types of initiatives to reach customers and be able to expand the relationship with them.
How has Citizens been changing through this whole process with Sovereign, Fleet/Boston, your own acquisition. This has been a frenzied period here. The bank has to look a little different than it did two years ago.
We’ve had our own fairly rapid growth. I’ve been with Citizens six and a half years and when I joined we were a $5 billion company, primarily in Rhode Island with a small presence in Massachusetts. Today we’re almost a $30 billion company, the largest bank in Rhode Island, the largest bank in New Hampshire, and a large bank in Massachusetts. We’ve had our own growth. What we’ve been able to do is hold onto our core values of staying very focused on customers, customer service, not trying to make customers try to do business our way, but still stay responsive to customers, continuing to treat our employees very well. I think Citizens continues to be viewed as a good place to work. And continuing to invest very heavily in the community. We’ve kept that circle of customers, employees and community as our core value and been able, in most cases as we’ve done acquisitions, been able to integrate other companies had some of those same values. It still feels the same here. It’s a little bigger, but in terms of the things we really concentrate on it feels the same to me.
We’ve had a pretty strong economy. From you vantage point do you see any slowing of the economy?
I haven’t seen any signs it’s slowing up. We have enjoyed a pretty good stable economy, although we’re not getting the double-digit growth that other areas of the company are getting. Compared to the way things were in the early ’90s, everyone has felt this economy for the last four or five years has felt pretty good. I don’t see some of the excesses that happened back in the ’80s, particular with commercial real estate and that type of thing. I think it is inevitable that the economy is going to slow down a little bit. But I don’t see any signs that it’s dramatically slowing down right now.
While we have had the great renaissance of Providence, we’ve also had Plunder Dome. Does Plunder Dome add to the perception that Rhode Island politics are on a different playing field that much of the world?
As a native Rhode Islander whose worked in a couple of other markets – I’ve worked in Connecticut for five years and New Hampshire for three and a half years, I certainly heard that in other markets. I always told people I felt Rhode Island suffered from a little bit of a reputation that really wasn’t totally deserved. I think people’s attitude about Rhode Island has improved a lot. I think Rhode Island as a place to do business has improved. I think our state and local government officials are much more pro-business and aware of business issues than they ever were before. I think things like Plunder Dome are unfortunate, but hopefully are not going to be a major distraction to being able to do business in Rhode Island. Fortunately for us the Massachusetts economy is so hot right now, and it is so expensive to do business in Massachusetts, I think Rhode Island continues to enjoy a little bit of a cost advantage, with residential housing, will continue to be a plus for us if we continue to capitalize on it.
In what areas do you think the legislature and the administration need to address to make this an even better pro-business state?
I think continuing to work on issues like the port, being able to take full advantage of what might be able around port expansion, like down at Quonset. I think continuing to work on mass transit issues. One of the things that’s happened here in Providence, with some of the growth, now we’re into a parking issue that’s probably only going to get worse. I think continuing to target those types of industries that can bring more, better paying jobs to Rhode Island are all things we should be thinking of doing.
Are you comfortable that Rhode Island still is quite competitive with its financial services legislation?
Yes. Actually we’re pretty happy with where things are today on that front. We have found basically that the legislature is pretty aware in the last several years of some of the issues and have helped; for example, companies like us bring more jobs to Rhode Island.
You’re still in the midst of the conversion in Cranston?
We’re still in the process of expanding and finishing out that facility. We’ve already moved a couple of hundred people into that facility. We’ll ultimately wind up with about 400 to 500 people there. What we project in the next couple of years is we’ll wind up with about 3,500 employees here in Rhode Island, which is a substantial increase from where we were. We think this will put us in the top couple of private sector employers if you put aside the hospitals.
How many employees now?
We’re in the 3,200, 3,300 range.
Are we moving into another period when mergers and acquisitions will dominate financial services?
I don’t think it will be dominant. I think it will continue to be some consolidation, there still are an awful lot of banks out there, if you look around the country. I think you’ll continue to see some consolidation, but not at the pace of the last five years. I think there’ll be fewer, maybe potentially, fewer bigger combinations now.
