Ivy Leaguer leaves key post at NBT Bancorp of Norwich

CNY Business Journal (1994-95), Apr 17, 1995 by Grossman, Naomi

NORWICH--When Joseph J. Butare came to Norwich in 1990 to become president, chief executive officer, and chairman of the board of the bank headquartered here, many shareholders of the small town's leading financial institution were excited.

"He was a Harvard graduate," says John G. Anangnost, the former director of the loan division at NBT Bancorp, Inc. (NBT), "and the first trained CEO to come to the bank. I had really high hopes for him."

But this past January, when a new president and CEO was named, many of those same shareholders breathed sighs of relief, despite the fact that Butare is now living off an $823,000 golden parachute, paid for by their bank.

What happened during Butare's four-year tenure depends upon those to whom you speak. Butare, now 53, declined to be interviewed for this article. The story reveals just how complicated the banking business can be, especially when small towns, big ideas, and strong personalities color the picture.

In the nearly 140 years since NBT was established, its leaders have lived in the Norwich community. They were involved in the chamber of commerce, belonged to the local country club, attended local churches, and participated in the various fund-raising activities run by the local hospital--the major social events of Norwich.

But Butare never resided in Norwich. The former New York City and Boston banker had homes in Albany and Arizona, and he commuted to Chenango County during his tenure at the bank.

To understand the emphasis on this involvement, it is important to understand Norwich itself. Getting to the town of 12,000 entails a drive through miles of farmland, where it is easy to get lost on long, dusty roads that run perpendicular to the highway. The town center is basically four blocks long, with NBT at one end and a Howard Johnson's at the other. Sandwiched between are the hardware store, the dress shop, and the Bluebird Diner where bankers and store clerks sit elbow to elbow as they eat danish and drink coffee at the formica counter. People greet each other by name as they pass on the street.

Butare's place of residence was not the only way he differed from his predecessors. He also seemed to have a slightly different perception of NBT's place in the banking world.

For example, in the Binghamton Press and Sun Bulletin, Butare is reported to have told shareholders at last April's annual meeting, "We are a Central New York bank, and Norwich is part of our heritage." Contrary to Butare's conclusion, Anangnost, who worked at NBT for over 39 years, points out that the four branches that had been acquired under Butare's predecessor were bought for cash, so there was no exchange of stock. Similarly, the three branches that Butare acquired in Clinton County also involved no exchange of stock. Thus, the stockholder base of NBT has always remained in Norwich.

"He [Butare] was saying that the problem was with the perception of the bank by the people in Norwich," says Anangnost. "But the fact that NBT is headquartered in Norwich is not by chance--this is where most of the stockholders of the bank live. It is a Norwich bank, not a Central New York bank."

It is almost ironic, then, that it was the bank's interest in growth that led the board of directors to hire Butare in the first place.

"The board was anxious to grow the size of the bank," says Daryl R. Forsythe, Butare's successor.

In this century, NBT, which was founded in Norwich, has not had to adjust to many new leaders. Otis Thompson, who joined the bank as a mailboy in 1910, worked his way up to the presidency and remained in that position for 30 years. His successor, Everett Gilmour, was president and CEO for a total of nine years and chairman of the board for 17 years.

Some people believe that NBT's problems began right then, because no plans were ever made for a successor to Gilmour. When Donald Stone came on board in 1985, things began to change. Whereas Thompson and Gilmour were local people, Stone was brought in from Massena to take over. Stone's background in mergers and acquisitions, as well as his experience in small-town banking, impressed the board. Stone's aggressive approach was evident in his purchase of four Irving Banks. But after only five years in the job, Stone's contract was not renewed. The parting was not amicable. Stone filed an age-discrimination lawsuit against the bank which is still in litigation.

Butare seemed to be the perfect candidate to resume the growth trend. He earned a bachelor's degree from Harvard College and attended an advanced management program at the Harvard Business School. Shortly after graduating he went to work for Chase Manhattan Bank in New York City, and then to State Street Bank in Boston. By the time he was 35 years old he had been appointed the president and CEO of Mechanics Bank in Worcester, Mass. and was also the regional senior vice president of its parent company, MultiBank Financial Corporation. For five years he was the president and CEO of Guarantee Bank and Trust Company, also in Worcester, until it was bought by the Bank of New England. After that, for the two years prior to joining NBT, he worked as a self-employed consultant, including a brief assignment at New Hampshire Savings Bank.