🔒Bank Of The Future: Fairfield County-based Bankwell Financial sees room to grow in New Haven market

While the bulk of Bankwell Financial Group’s brick-and-mortar branches are in Fairfield County, its president and CEO Christopher R. Gruseke sees growth opportunities in Greater New Haven.

Bankwell, headquartered in New Canaan, already serves all of Fairfield and New Haven counties.

It currently has 10 branches, including two in both Stamford and Fairfield, and one in Darien, Hamden, New Canaan, Norwalk, Westport and Wilton.

It has had several real estate changes in recent years. In 2020, Bankwell signed a 10-year lease for a 30,000-square-foot, three-story office building at 258 Elm St., in New Canaan, to serve as its headquarters.

Bankwell plans to vacate its Wilton property at 47 Old Ridgefield Road, as it doesn’t need that much space. It is currently weighing its future plans in Wilton.

The bank has been streamlining in recent years, including consolidating space, and offering a voluntary early retirement incentive plan to employees. Meanwhile, it upgraded its digital banking platform with an eye toward expanding deposits and new and existing commercial customers.

According to Gruseke, he anticipates the changes will improve the company’s operating results.

Bankwell was first established in 2002, and as of December 2021, it had $2.1 billion in deposits and $2.46 billion in assets. It reported $26.6 million in profits in 2021, up from $5.9 million in 2020, a year impacted by the pandemic and one-time charges related to cost-saving and streamlining efforts.

Gruseke was involved as an investor when the bank, first called the Bank of New Canaan, launched in 2002. Bankwell physically expanded into New Haven County when it purchased Hamden-based Quinnipiac Bank & Trust Co. in 2014.

His prior background was in investment banking. At Bankwell, he has served as a board member and took over in his current role in 2015.

New Haven Biz recently spoke with Gruseke about the bank’s recent changes, growth plans and future outlook. Here is what he had to say.

Most of your branches are in Fairfield County, with one in Hamden. Do you forsee more expansion into the New Haven County area?

Yes, but that doesn’t necessarily mean with branches. I think there is business to do. There is a vibrant community of businesses in New Haven and a whole bunch of incubators, technology and health sciences. So there is the potential to bank there more. We look forward to doing that. That doesn’t necessarily require us to open a branch in downtown New Haven to do it.

We will visit someone personally, we will meet in your business. Small or midsize businesses, they aren’t going to branches anyway. They need us to set them up with their bank payments technology and their online banking so they can send wires and payrolls.

They do that from their offices. It really is about the relationship, not if you can see the branch down the street.

We do think there are significant commercial opportunities in New Haven, for sure.

The bank plans to sell its current Wilton location. What are the bank’s plans for a presence in that community?

We will have a Wilton presence regardless. These are small towns — in New Canaan, you practically cross the street and you are in Wilton. We will have a Wilton presence, whether it is at that particular address or not, I can’t really say because there is a real estate transaction that is being negotiated, and it is unclear what the future owners want.

It’s unclear if they want the whole building or a carve out. But we are selling that space. Maybe we will have another space in Wilton, we just don’t know yet.

Can you elaborate on the bank’s expense reduction efforts in the past couple of years?

That expense reduction was closing some spaces, consolidating some spaces. It was about rationalizing space and becoming more efficient.

We brought people [who had been spread out at multiple locations] into our new headquarters, at 258 Elm Street in New Canaan. It was far more efficient for people to work together. (Bank officials announced in 2020 that more than 50 employees were relocating to the New Canaan corporate headquarters.)

We also had a very small early retirement program.

How have your staffing levels evolved?

Now, we have approximately 140 employees. One tries to manage expenses. We have to justify positions before we hire people. There are certain areas we are going to need to keep investing in. We need technology people especially, whether it is the operations side or the people who work in cybersecurity, who work on our online banking, or who work with our core technology.

There is always going to be a reason to spend more money on technology. That is not shrinking.

Many Connecticut banks have been closing brick-and-mortar branches as more customers switch to online banking. Is that happening for you as well?

If you look at older bank branches in general, there is a lot of space that just doesn’t get used anymore. Gone are the days where you would have 25 people lined up at lunchtime. So many transactions are able to be done online.

To the degree that you can have a smaller footprint, and be more efficient, that certainly is the trend in banking. The pandemic accelerated people’s adoption of technology.

A large bank like Wells Fargo or People’s United Bank, they look at their density map and say: How many of these do we actually need?

We don’t have that many. I’ve got 10 branches. Do we renew a lease here or there? We are not making wholesale changes at this stage of our growth.

Has the bank been offering new digital tools?

Yes. Around the spring of 2021, we upgraded our online banking system.

It is a very sophisticated banking system provided by a [financial technology software] company called Q2. This online banking system is used by banks in multiples of our size, and our customers are thrilled with it.

We are completely upgrading and converting what is referred to as our core technology system, which is the database that houses all the information for the bank.

There is always a new [digital] feature — whether it is paying a bill from your phone, or [our mobile banking app]. That is banking right now.

My kids, I can’t imagine them walking into a bank. They don’t even use cash. They send each other Venmo. Society has changed, along with the tools. It is a function of generation as well. You have to have the tools that people use.

The financial technology evolution is so rapid. The trick is staying current and delivering the ones that will deliver our customers the best experience.

We recently launched the new online banking platform that provides a more unified banking experience for our consumer and business customers.

We offer contactless debit cards, a quick, simple and secure way to use your card. We also offer a consumer-friendly budgeting tool on our app called Personal Finance Manager.

For our business customers, we offer Positive Pay, a fraud prevention tool to help protect them against check and [unauthorized payment or withdrawal] fraud.

Who are your typical commercial banking customers?

It has evolved over the last several years. If you go back three-plus years ago, we primarily did our commercial banking activities with real estate investors, owners and operators of commercial real estate.

We were probably known for our commercial real estate lending ability, but we really needed to diversify that business line.

The board of directors and I really challenged ourselves several years ago to change the direction of the bank. We are good at commercial real estate lending, but it’s a pretty competitive business.

People call you when they need to buy a building. Someone calls five banks and the best price wins.

As we diversified our business line, we started targeting more commercial and industrial loans, or C&I loans. Those companies can be anywhere from $50 million to $250 million-plus in sales, maybe larger. Those are credit lines, working capital lines, credit facilities.

We can write a loan maybe up to $30 million, but our sweet spot is probably in the $8 million to $15 million range.

Do you see other opportunities for growth, such as with cannabis or marijuana-related businesses?

The bioscience industry around New Haven seems like the hotbed for opportunity.

As for cannabis businesses, there are some banks in Connecticut that are already getting involved, and we will explore the regulatory hoops to make sure we don’t run afoul of anything.

That would be on our list of a business we would explore.

What has been the impact of the pandemic on the bank?

We all came back to the office last spring. We were one of the few banks in the state that had a vaccine mandate, and we got to about 98 percent compliance. New employees are required to be vaccinated. We took it very seriously.

Where do you see the bank in 10 years?

In financial technology, 10 years is a long time. In 10 years there will be things that I have never even thought of before. We behave as if we have had iPhones forever, so God knows what 10 years from now looks like.

We have really focused on diversifying our business, on growing our relationship business as opposed to price-competitive business. We grew our loan portfolio by over 20 percent last year, which is a pretty big number. We will do more than 10 percent loan growth this year.

Our assets were at $2.46 billion at the end of 2021, and that number should be 10 percent more by the end of the year. We are closing in on $3 billion.

We feel like in the next several years, we have great organic growth opportunities in front of us, where we can grow earnings by double digits annually.