After serving as mayor of New Haven for 19 years, John DeStefano Jr. took the position of executive vice president in 2014 at Start Community Bank, a New Haven-based community development bank He also serves on the bank’s board of directors. Start Bank was formed in 2004 in reaction to the demutualization of New Haven Savings Bank, in which it was converted into a public company. New Haven Savings Bank merged with two other banks to form NewAlliance Bank in 2004, then merged into First Niagara Bank before being acquired by Ohio-based KeyBank in 2016.
Q. How did you come to work at Start Bank?
A. I was an incorporating director at the bank and on the organizing committee, but probably more significantly back in 2003-04 I helped organize the effort to capitalize the bank as a result of opposition to the demutualization of New Haven Savings Bank. I was mayor through December 2013; the demutualization was proposed in 2003, occurred in ’04. The organizing committee commenced in ’04. The bank got filed with the banking commision around ’09, which was not a great time because of what the banking industry was like. The bank got its opening order in December 2011. I came here after I left the Mayor’s Office, as an employee. The bank had been in operation by then. I was part of the group that helped organize the bank and had a vision for a locally owned and managed community bank.
Q. How did the change at New Haven Savings Bank galvanize this effort?
A. I think there were concerns that if New Haven Savings Bank demutualized and created shareholders, ultimately the bank would be sold, which has happened twice. Instead of being a bank headquartered on Church and Elm [streets], it is now headquartered in Cleveland. That’s fine, and KeyBank’s a good bank, but we think that there are different lanes for different kinds of banks. Our mission is to be a small, community-owned bank, which is what we are.
Q. What is Start Bank’s niche? And has it evolved?
A. I think the large nationals have one role, I think the big regionals have another role and I think small community banks have another. I think our mission largely has to do with small-business lending, commercial real-estate lending. Half of it’s in New Haven, half of it’s in greater New Haven and we tend to be the kind of organization that knows our customers. We do not have shareholders or investors so we are fundamentally a mutual. If you look at our board of directors, they’re all local, and if you look at our staff we pretty much look like we did three or four or five years ago. We’re rooted in our community and our average loan size is smaller than the big banks but we have strong relationships in our community. That’s what we see ourselves building. So we’re not in competition with the big banks or the big regionals – our mission is to be close to the community of which we’re a part. Greater New Haven is our market.
Q. You have a single branch at 299 Whalley Ave. now — at one time you had a branch in Fair Haven. Was that a change in focus?
A. When we launched the bank – even with the bank’s name, “Start” – we saw ourselves as much more of a retail bank. What the market told us was that they wanted us to be a small-business and real-estate bank. So while we have probably the cheapest retail product available — for opening checking accounts and such — we’ve evolved into a small-business bank.
Q. What are some of the bank’s successes?
A. We’re one of the few banks to open in the United States since the 2008-09 financial crisis. We’ve gone from capitalizing at about $27 million to about $140 million in assets. We have been profitable for three years — we reached profitability in our sixth year of operation. We’re now in our eighth year, profitable for over 12 quarters. So we’re going to be here. We’ve sustained our model of locally owned, managed, governed. Our footprint is greater New Haven. And I think what we’ve done really well is not that our loan or risk standards are different but probably more than anyone who has a retail branch in New Haven we lend in low- and moderate-income neighborhoods, which I think more has to do with the fact that spend time understanding our customers. Smaller loans are important loans for us — that’s our bread and butter. It’s what we do. Achieving profitability, growing in size, being one of the few banks to get a charter and open since the financial crisis, having accomplished sustainability and evolving our mission to a place that’s really appropriate for this community has been a set of accomplishments for us.
Q. What are some challenges ahead?
A. I think the biggest challenge is staying faithful to the mission to serving the community as a locally owned, managed community bank. We don’t plan to ever become public. We don’t intend to sell the franchise; we intend to be here for the long term and we intend to grow safely and carefully. Which is to say, work hard at loans to make sure we hear what the customer has to tell us about what we’re doing. I would say staying in our mission lane is really important to us. That requires discipline and a singular focus on that mission.
Q. Who is a typical customer of the bank?
A. Two kinds: A commercial real-estate investor who’s purchasing a piece of property for either commercial rental or residential rental. The other is a business who is either purchasing a property to expand in, purchasing equipment to expand. And they all tend to be in greater New Haven. As far as demographics, if you look at our one- to four-family house loans, which tend to be investor properties, our lending tends to be 33 percent in low- to moderate-income neighborhoods, compared to 7 percent for other [bank] reporters in our market. While our volume is less, our concentration is more heavily in low-to-moderate neighborhoods.
Q. What are Start Bank’s long-term objectives?
A. I think that we remain locally owned, managed and governed. If over time we accomplish scale, we will continue to grow consistent and safely. If we do that, I think in time we will assume a bigger and bigger role in terms of being a locally based bank here in New Haven and provide the kinds of civic support that a local bank tends to do. There will always be roles for the big nationals and the big regionals, [but] that’s not our lane. Being locally rooted is. What that means to me is making sure we understand folks here and make the extra effort to understand them and work with them.
Q. As New Haven’s mayor from 1994 until 2014, what do you think of of New Haven now?
A. What’s different now is the trend that commenced after the Second World War of outflight of jobs and population has been reversed. I think New haven has emerged in Connecticut particularly as a new economy leader — I think it understands its competitive advantages in precision manufacturing, biosciences and lifestyle, as the home of a great research institution and a world-class facility at Yale New Haven Health. It’s working hard to align the job opportunities with those these institutions and related business present with the workforce that is born here, living here and going to school here. I think it’s self-evidently become a center of economic wealth and job creation. Among all the places in Connecticut, I think New Haven has over the last 20 years been able to define its economic future, provide some mobility to the folks who live here, economic and social mobility. It’s become a more optimistic place. That said, it needs to do more.
