Q&A: Rick leads Vermont National to bigger and bigger things

Vermont Business Magazine, Mar 01, 1997 by Andrews, Richard

John D "Rick" Hashagen Jr (pronounced hass-HAY-gen) is a busy man. As President and Chief Executive Officer of Vermont Financial Services Corporation. which owns Vermont National Bank and United Bank in Greenfield, MA, he is overseeing the acquisition of Eastern Bancorp, which owns Vermont Federal Bank, in an $89 million deal. The combination of the two entities will produce a $2.1 billion bank holding company with nearly 1,000 employees, and result in the largest single bank in Vermont with $1.8 billion in assets. It's also the state's oldest bank, born in 1821. The new institution will have offices and operations in all of Vermont except Grand Isle County and the Northeast Kingdom, and in Massachusetts and southeastern New Hampshire.

The merger poses the challenge of integrating Vermont National's corporate culture as a commercial bank with the more retail-oriented Vermont Federal. Hashagen is enthusiastic about the prospect of combining the best of each to create a bank with broad functional strength through all departments and, essentially, statewide geographical reach in Vermont. He expects growth to be enhanced by participation in vibrant portions of the New Hampshire and Massachusetts economies, and hopes for healthy appreciation in the value of the bank's stock, as investors realize the advantages of the bank's diversification.

Hashagen, a graduate of Dartmouth College and Dartmouth's Amos Tuck School of Business Administration, has been at Vermont National Bank for 30 years. His long familiarity with the bank's customers is, he says, typical of community banking. He expects the stable relationships formed by long-time employees at both Vermont National and Vermont Federal will give the merged bank the combined advantages of the strength that comes with size and the service that is possible only with intimate knowledge of the community.

The helm is a satisfying place for Hashagen, whose favorite avocation is sailing with friends or family. Richard Andrews interviewed him for Vermont Business Magazine in February in his office at Vermont National Bank's headquarters in Brattleboro.

VBM: Is Hashagen a Scandanavian name?

HASHAGEN: Dutch. Most people think it's German, but it's Dutch.

VBM: Well, the big news in the Vermont banking world is Vermont National's acquisition of Vermont Federal Bank, Why are you acquiring it?

HASHAGEN: To respond to two realities of today's banking. One is slow growth in our markets in New England. So our internal growth rate, other things being equal, is going to be relatively slow--certainly slower than it was back in the 1980s.

The other is competition. We're getting competition from Sears Roebuck, AT&T, Ford Motor Credit.

The combination, in our strategic planning, pushes us toward augmenting our growth. And you augment growth by acquisitions. The acquisitions can either be banks, or other lines of business.

VBM: Have you thought about other lines of business?

HASHAGEN: This year we actually bought a trust department. Green Mountain Bank in Rutland was being sold by Arrow Financial in Glens Falls, and they put the branches and the trust department up for bid separately. Albank won the branches, but we won the trust department. We've also bought a couple of credit card portfolios from smaller banks. We bought one from CFX in Keene, and then we bought the Arrow Financial credit card portfolio in the Rutland area. In 1991 we bought the trust department in Vermont of Bank of Boston, which was the old Bank of Vermont.

And in 1994 we bought United Bank in Greenfield, Massachusetts. So we're augmenting a relatively slow internal growth rate with both kinds of acquisitions.

VBM: Was it a challenge to finance those acquisitions?

HASHAGEN: No. In the Massachusetts one, we issued shares of our stock. For Vermont Fed, or Eastern Bancorp, which is their holding company, we're using some of our excess capital--approximately $20 million of capital that we have now, plus we're issuing about a million-eight of our own shares.

Unlike a typical business, we don't have to go to the bank and borrow money. We can use our own internally generated capital, or some of our shares.

VBM: Did you also do that for the lines of business you bought?

HASHAGEN: Those were relatively small. Those were cash acquisitions, and we had cash in our pocket.

VBM: How's the acquisition of Vermont Federal going?

HASHAGEN: There's a couple of different tracks. One's the regulatory track. We have filed with the Securities and Exchange Commission, and we have filed the papers to get the additional shares we're issuing registered.

The other piece is approval of the Federal Reserve Bank of the merger of the two holding companies. That application's been filed, and we should hear in 30 to 60 days on that.

Our best bet now is that we will be closing sometime in June.

VBM: When do you seek shareholder approval?

HASHAGEN: Once the SEC approves the registration statement. That's also the proxy statement, so that will go out to the shareholders. I would guess the shareholder meeting for the merger would be late April.