Webster Bank maximizes the benefits of a big merger

Harold Webster Smith launched Webster Bank in 1935 with $25,000 borrowed from family and friends. In the 90 years since, the bank has grown from a single branch in Waterbury, Connecticut into a regional powerhouse serving businesses and consumers from New York City to Boston. But the biggest milestone in Webster Bank’s long history came in 2022, when it acquired Sterling Bancorp for $10 billion.

With the purchase of Sterling Bancorp, Webster virtually doubled in size, becoming one of the largest commercial banks in the Northeast. But bank leadership understood that bigger isn’t always better. Heading into the acquisition, they took steps to ensure that the two financial institutions would come together in a way that would highlight their strengths. They also understood the significant impact the merger would have on the bank’s real estate footprint.

Webster Bank needed a partner that could not only advise them prior to the close, but help them execute their vision and re-brand once the merger was complete. They found that partner in JLL.

Many regional banks perform commercial real estate (CRE) functions internally. But Michael O’Connor, Executive Managing Director for Corporate Services at Webster Bank, understood the complexity of the task and supported the business case for outsourcing the CRE functions to JLL. O’Connor worked closely with Drew Saunders, Executive Managing Director at JLL, to develop a plan for an outsourced model for Webster. That program has allowed the bank to grow and change to better capitalize on business opportunities. The merger with Sterling built upon Webster’s decade-long partnership expanding the suite of services outsourced to JLL.

As real estate experts, JLL provided the bank with a perspective that other advisors could not. For example, JLL’s Location Analytics team found that the banks’ branch locations didn’t overlap significantly, and advised Webster that all 200 of the branches should remain open to avoid disrupting customers in the communities they served.

JLL teams worked closely with Webster to accomplish goals that weren’t directly related to real estate, including a successful corporate re-brand. Within a week after the merger closed, the combined company went through a multi-million-dollar re-branding effort that transformed the look and feel of portfolio properties. Together, JLL and Webster devised and executed a well-orchestrated plan that allowed them to rebrand all of the Sterling bank branches to Webster simultaneously over the course of a weekend. The re-brand coincided with the relocation of the bank’s headquarters from Waterbury to Stamford, Connecticut.

In addition to a new look and a new home, one of Webster’s goals was to empower their employees with more choice and workplace flexibility by supporting hybrid work styles and flexible seating arrangements. JLL’s Workplace Experience Solutions and Change Management teams laid the groundwork for the bank to be able to adapt to workplace changes quickly, helping Webster compete for talent. Modern professionals value flexibility and choice in how they work, as well as technology solutions to help them make a seamless, stress-free transition from working remotely to being in the office. To deliver that need, JLL helped Webster room booking software.

While helping Webster make the most of its acquisition of Sterling, JLL also provided the bank with solutions designed to increase profit and scale with the business. This included through reduced occupancy costs and portfolio optimization strategies. When evaluating the office portfolios, JLL was able to identify areas for cost savings so Webster Bank could benefit as soon as possible, including the successful sale of some of their office properties. There was significant overlap in the two banks’ corporate real estate holdings. Thanks to JLL’s institutional knowledge of the New York and Connecticut markets, Webster was able to reduce their overall corporate footprint by half.

JLL had helped the mid-cap bank achieve $1M in total savings and nearly $300,000 in cost avoidance. Cost savings also included the consolidation of IPS services, execution of 18 deals that provided nearly $800,000 in total savings over respective lease terms, and occupancy planning/portfolio optimization that aligned occupancy reports to larger strategic plans.

Through their combined efforts, JLL helped Webster exceed their portfolio savings goals, reaching 160% of their target. As the bank has continued to grow, occupancy costs have decreased as a percentage of net assets. This result has motivated Webster’s leadership to elevate the CRE function within the organization and operate it as a strategic arm of the business beyond facilities maintenance.

“JLL is more than a real estate company. I think of them as a tech company”

- Mike O’Connor, Webster Bank

Finally, JLL was able to help Webster incorporate all 75 former Sterling branches, avoiding disruption to the customers and communities they serve. All 75 properties were brought onto JLL’s Corrigo system to allow Webster to better manage their facilities. The Corrigo system was transformative for Webster, as they had previously used lifecycle management for replacement activities. Corrigo provides Webster with real-time data and allows the bank to make decisions about where investments are needed. Webster can plan those expenditures on a three-year basis. The partners also worked together to bring on all MES techs and facility managers under JLL so that none of those jobs were lost due to the merger.

Do you need help making sure your organization expands the right way? Contact us for expert advice on everything from optimizing overlapping portfolios to leveling up your facilities maintenance.