Two small thrifts founded many decades ago to cater to Baltimore's immigrant population could merge as early as the end of November following approval Monday by a federal regulator.
The marriage of these two institutions — opened a combined 189 years — is just another sign of the difficulties of small financial institutions, banking analysts said. Not only do they struggle to keep up with increased regulation, but it's often harder for them to compete against the broad array of services and products that big banks offer and consumers demand.
"It's kind of like a little corner drugstore. How do they compete against CVS today? It's tough," said Stuart Greenberg, a banking consultant in Baltimore.
Kopernik is the larger of the two, with $42.8 million in assets at the end of September, compared with $24.6 million at Hull Federal. For the first nine months of this year, Kopernik earned $194,000, while Hull posted a $439,000 profit, according to reports filed with federal regulators.
Greenberg called the Kopernik and Hull deal a "survival merger."
"The real question is whether they will be here five years from today," he said. "I hope that they are. I like the nostalgia."
But Gary Amereihn, president of Kopernik, said it's too early to write them off.
"We've outlasted a lot of banks," Amereihn said. "Banks come and go all the time. We're still here. We intend to be."
Amereihn acknowledged that keeping up with regulation can be difficult, but combining management will help. Two managers from Hull will join Kopernik's staff of six, while Hull's CEO, Michael Baumann, will continue as a consultant, he said.
Baumann did not return a phone call for comment.
Hull bank opened in 1911 to serve German and Polish workers at the nearby dockyards. The thrift at 1248 Hull St. in Locust Point has changed little over the years and sticks with basic offerings — savings accounts and fixed-rate mortgages.
Baumann told The Baltimore Sun six years ago that the biggest change for the bank over the years was the addition of air conditioning in 1996. Hull, which got its first phone in 1989, still doesn't have a website.
For the past two years, Hull has been operating under a supervisory agreement with regulators that, among other things, requires the bank to maintain adequate capital levels.
Hull's troubles, like those of many other lenders, stemmed from loans that went bad during the economic downturn, Amereihn said.
"It's behind them," he said.
Still, the extra requirements of the supervisory agreement put a strain on Hull and influenced the decision to merge, Amereihn said.
Located at 2101 Eastern Ave., Kopernik offers more products than Hull, including checking accounts, certificates of deposit and auto loans. Founded in 1924, the bank was named after the famed Polish astronomer more commonly known by his Latin name, Copernicus. Amereihn said the thrift plans to modernize its website so customers can do transactions online.
Like many small banks, Kopernik offers higher rates on deposits to attract customers. The annual percentage yield for Kopernik's savings and Christmas Club accounts, for example, is 0.55 percent. That's five times more generous than the national average, according to Market Rates Insight.
"We have to do something to be different," Amereihn said. "We don't have all the bells and whistles that all the big banks have."