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Legacy Bancorp is a strong, well managed community bank positioned for
growth in western Massachusetts and beyond
Legacy Bancorp, Inc.
99 North Street
Pittsfield, MA 01202
J. Williar Dunlaevy
Chairman and CEO
Chief Financial Officer
Interview conducted by:
Lynn Fosse, Senior Editor
Published March 29, 2007
J. Williar Dunlaevy
Chairman and CEO
Mr. Dunlaevy has served as Chairman and CEO of Legacy Bancorp and Legacy Banks, as well as
the predecessor institution, City Savings Bank, since 1996. Joining the Bank in 1969, he
held a variety of positions of increasing responsibility throughout his career prior to
becoming Chief Executive Officer. Mr. Dunlaevy has championed a growth strategy for the
Bank, guiding it through two acquisitions and its mutual-to-stock conversion in October
A community leader, Mr. Dunlaevy has been active with a variety of organizations including
Berkshire Business Roundtable, Berkshire Health Systems, The Colonial Theatre Restoration
Campaign, Pittsfield Boys & Girls Club, Pittsfield Municipal Airport
Expansion Task Force, and Berkshire Economic Development Corporation. Additionally, he was
appointed by Massachusetts Governor A. Paul Cellucci to serve on the Berkshire Community
College Board of Trustees, which he chaired. Mr. Dunlaevy is or has been a director of the
following industry organizations: Depositors Insurance Fund, Massachusetts Bankers
Association, and Savings Bank Life Insurance Company of Massachusetts (SBLI).
A Graduate of Bowdoin College (AB), the University of Massachusetts (MBA), Graduate School
of Banking (Brown University), and The College for Financial Planning (CFP), Mr. Dunlaevy
resides in Lenox, Massachusetts.
Stephen M. Conley
Chief Financial Officer
Mr. Conley has served as Chief Financial Officer, Senior Vice President and Treasurer
of Legacy Bancorp and Legacy Banks, as well as its predecessor institution, City Savings
Bank, since 1996. He has served in the Finance area since beginning his career with the
Bank in 1975 as Controller. A key member of the executive leadership team at Legacy Banks,
he helped guide the company through its mutual-to-stock conversion in October 2005.
Active within the community, Mr. Conley serves
several important non-profit organizations such as the Berkshire United Way, the Rotary
Club, Girls Incorporated and the Dalton Community Recreation Association.
A graduate of Bentley College of Accounting &
Finance, the University of Massachusetts (MBA), and the National School of Banking, he
resides in Dalton, Massachusetts.
Berkshire County based Legacy Bancorp, Inc.,
is a stock holding company, headquartered at 99 North Street, Pittsfield, Massachusetts.
It operates Legacy Banks as a wholly owned subsidiary. Legacy Banks is a community bank
that provides a full line of financial services to individuals and businesses mainly in Berkshire
County and surrounding areas, including retail banking, commercial banking, consumer
finance, and investment management services. The mission of Legacy Bancorp, Inc., is to
anticipate, understand and assist our customers in achieving their financial goals and
dreams. Legacy Banks has offices located throughout Berkshire County, a network of ATMs,
an extended-hours customer service call center, and a website, LegacyBanks.com, that
provides account access and financial products 24 hours a day. The common stock of Legacy
Bancorp, Inc., is listed on the NASDAQ and trades under the ticker symbol
CEOCFO: Mr. Dunlaevy, will you tell us
about your background with the Legacy Bancorp?
Mr. Dunlaevy: I have been with the
bank for about 37 years, coming up through the finance side and I have been CEO since
What was your vision when you took over as CEO and where are you today?
Mr. Dunlaevy: My vision was that we
would be one of the great community banks and we are still on the path to doing that. We
recognized that there needed to be a change in growth in a lot of respects for us to do
You do have a number of banks that are under Legacy Bancorp that have merged with Legacy,
will you tell us about the territory that you cover and the type of customer that you
Mr. Dunlaevy: The territory that we
cover is Berkshire County, which is the western most part of Massachusetts. It goes from
the Vermont border to the Connecticut border north to south. Our entire western border is New
York and we are relatively close to the New York capital district.
What is the economy like in the area you serve today?
Mr. Dunlaevy: It is a very beautiful
area; a tourist destination. Berkshire County is the home of Boston Symphony in the summer
and several theatres and dance companies. It is becoming increasingly a second and or
retirement home market. Many years ago, it had a major manufacturing presence with The
General Electric Company (NYSE: GE) and some of the major paper companies. However, that
has wound down a lot and much of that has been replaced with the service industry. The
population is modestly declining in Berkshire County although there are definitely pockets
Do you focus more on the consumer or more on the business area; will you give us a sense
of the breakdown?
Mr. Dunlaevy: We focus on both
consumer and business customers. There is a lot of small business in the Berkshires and we
serve that. We are probably ? in terms of consumer bank verses commercial bank. We are
comfortable serving both of those markets. When you get into an area like we are, a small
business is very much like the retail or consumer business.
Redefining the relevance of community banking is part of your vision; how do you continue
on that path?
Mr. Dunlaevy: I think we need to
continue to invest in technology. We need to continue to be able to offer our customers
out of the delivery systems what they need and expect. That requires a certain level of
scale, which is why we thought it was so important to grow the bank. It will become
increasingly important to do that so that we can continue to invest in the systems that
would be important to our customers.
Tell us insurance and investment services, and what you would like to add to the mix?
Mr. Dunlaevy: We have an investment
management or trust division that probably has about $150 million under management and it
is a key fee income producer for us. In addition, this area is going to become
increasingly important as baby boomers get into their retirement and estate planning
phases. We think that it will be a key contributor for us financially and a key way that
we can contribute to our customers successes. Insurance is part of that and we have been
in the insurance business since 1910. We were one of the original SBLIs (Savings Bank Life
Insurance) issuing banks in Massachusetts. We do not own any insurance agencies in the
context of going out and buying commercial agencies. However, we do have an agency
subsidiary and our focus there is mostly life insurance and life insurance products.
Is the long history of Legacy Bank meaningful in todays market?
Mr. Dunlaevy: I think it is meaningful
to the extent that we can make it meaningful. We have been leaders in the community and we
continue to be, but we absolutely have to be relevant to our customers today, we need to
offer the products and the services that are going to be important to them and we need to
anticipate those. Our history can be important as long as we continue to do those things.
Is somebody going to come in and bank with us because we have been here for 170 years? No,
but if we are competitive and we continue to have the great service that we do, then that
does make a difference.
What does a customer find at Legacy Bank that they may not find elsewhere?
Mr. Conley: When a customer comes into
our bank they are going to find a friendly bank and probably a person that they have known
in the community or have seen and associated with the bank employee through a community
event. They know the person, a neighbor and a friend they can trust. That is very valuable
to us. Our customers can also rely on the expertise of the bank staff that are well
trained and have substantial experience. They not only get a good product but good
Do you see new branches or acquisitions in the future?
Mr. Dunlaevy: We definitely do and we
are always going to be very thoughtful on opening new branches. We will be opening a
couple this year (2007); one is a replacement in North Adams and the other is an
additional office on the north side Great Barrington. We definitely are looking for
opportunities to acquire offices and more banks.
How do you get new customers?
Mr. Dunlaevy: We get new customers
mostly by referrals and word-of-mouth; our existing customers are our best source of new
customers. We do put an emphasis on sales and sales training in the bank. It is not like
we have to sell so many cars this week, but it is an emphasis on being able to talk with
customers, have a dialogue and understand their needs and recommend he right products and
Are many of your customers taking advantage of the variety of services or do you need to
do some work in that area?
Mr. Dunlaevy: I think we always need
to do work in that area since the more services you provide a customer, the more
profitable the relationship is going to be and the stronger it is going to be. We have
what we call a Life Path product, which is built around having multiple services and
rewarding the customer for multiple relationships. We have been very successful with that
product. We have about 5 services per Life Path customer, which is about twice what our
overall average would be.
How have you fared under the current interest rate environment and how do you prepare or
compensate for these kinds of events?
Mr. Conley: Like most of the banks, we
see the margin pressure continue as the yield curve has remained inverted for the last six
months. We are trying to deal with that in two ways. One is to grow and we are putting an
emphasis on growing through loans and commercial loans. At the end of December (2006) we
also took the action to restructure our bond portfolio, which had some low yielding
investments in it which were sold at a loss and the proceeds were reinvested in bonds with
much higher rates to improve our interest income in 2007 and growing forward to give us
help toward our interest margin.
Why should investors consider Legacy Bancorp?
Mr. Dunlaevy: Investors should
consider Legacy Bancorp because we are a very strong community bank and well managed. We
are not going to be just a survivor, but one of the institutions that grows and prospers.
The big problem with many community banks is that they just want to hang around and
survive, but we are a bank that wants to grow and be one of the great community banks
What defines a great community bank for you?
Mr. Dunlaevy: Great customer
experiences, good financial performance, a track record of growth, the ability to generate
dividends and returns for stock holders.
Mr. Conley: We have a very good diversified
arrangement of products for our customers and we can satisfy their financial needs
electronically right here at the branch. Therefore, we have all avenues to help the
In closing, is there anything about Legacy Bank that might not jump off the page at first
Mr. Conley: The company is Legacy
Bancorp and the bank is Legacy Banks. What people might not realize is that we are nestled
up here in the western part of Massachusetts. We are about 120 miles from Boston, and
about 120 miles from New York City. For those who want to come up here as tourists, it is
only a car ride away and could be a day-trip or a weekend trip. We have a lot to offer in
the Berkshires for tourism. We are also a growing company with a vision of growth. We have
Berkshire County well covered and we are starting to expand west into New York Sate with
a loan-production office in Albany. We have a pretty good customer base over the New York
border and we will continue to see some good growth potential in our overall
Another thing I think is interesting for investors is that we have a national
commercial real estate lending program that is a strong part of our loan portfolio and
good asset diversification and certainly a unique thing for a community bank. It is built
on a life insurance company, real estate lending platform. We work with mortgage
correspondents throughout the country and we have about twelve or fifteen correspondents.
They bring us the loans, but we underwrite them ourselves. It is a rigorous process and an
excellent portfolio and this is our sixth year with that particular program.
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