They say there are no second acts in American lives. Except in Massachusetts banking.
Jay Sidhu, pushed out as chief executive of Sovereign Bancorp in 2006, could be making a New England comeback as the Pennsylvania bank he now leads agreed this week to buy two bank branches — one in Boston and one in Providence. Sidhu, credited with building Sovereign into one of the nation’s biggest regional banks, said he plans to expand the New England presence of his new company, Customers Bank of Wyomissing, Pa., into a $1 billion operation with up to 15 branches.
If he succeeds, Sidhu, 61, won’t be the first bank executive to make such a New England banking comeback. Lawrence Fish, the former chairman and chief executive of Citizen’s Financial Corp., was edged out of the line of succession at the old Bank of Boston, moved to California, and returned a few years later to try to save the teetering Bank of New England, only to preside over the greatest bank failure in the region’s history.
He soon after assumed the leadership of a small Rhode Island bank, and, with the backing of its owner, the Royal Bank of Scotland, built Citizens through acquisitions into one of the nation’s biggest banks.
Sidhu, who became CEO in 1989, achieved a similar transformation of Sovereign, which was a small community bank also based in Wyomissing. He moved Sovereign into the New England market by buying branches divested in the 1999 merger of Fleet Financial Group and BankBoston, eventually building Sovereign into a $90 billion institution.
Sidhu resigned from Sovereign in 2006 under pressure from shareholders who were unhappy that he had negotiated the sale of a 20 percent stake to the Spanish company Banco Santander SA without seeking shareholder approval.
Customers Bank, with $3.2 billion in assets, said Wednesday that it would pay roughly $149 million to buy the two branches that make up Michigan-based Flagstar Bank’s commercial business in New England. Under the deal, which is expected to close by March 1, Customers will assume nearly $151 million in outstanding loans.
Customers Bank already has a presence in New York, New Jersey, Pennsylvania, and Washington.
Sidhu said Wednesday that he does not plan to recreate Sovereign. Customers will focus on making its local business one that attracts privately held companies, families who keep more than $5,000 in the bank, and tech-savvy students who use cellphones and other mobile devices to do their banking. Sidhu said his bank has seen the growth rate double every three months for a service that allows customers to deposit checks using their cellphones.
“Hardly anyone wants to go to a bank branch anymore. It’s a pain in the neck,” he said. “We are not going after being a bank for multinationals [or] trying to do business with every household in our franchise. We think that model is obsolete.”
The deal to buy Flagstar’s Boston and Providence branches came about as the Michigan bank is retrenching, according to a statement from the company.
“This agreement represents another milestone as we enhance our focus on our community banking operation in Michigan and our national mortgage business,” Flagstar chief executive Michael Tierney said in the statement. “Going forward, our commercial banking efforts will primarily relate to small business and middle market companies in Michigan.”
Sidhu said he sees acquisitions of banking operations like Flagstar’s as an ideal and affordable way to expand and “own a bank in New England” again.
“By March 1, we will be there,” Sidhu said.