N.E. bank lays new roots in Hub

The Connecticut-based bank plans to unveil a 15,000-square-foot branch today in the site of the former Boston Stock Exchange downtown on Franklin Street - its first inside Route 128. That is the first of a number of branches Webster said it will open or acquire in Greater Boston over the next several years. The company has also been adding ATMs in the area through a partnership with Walgreen’s pharmacy chain.

“This is the beginning of what will be a significant growth opportunity,’’ said James C. Smith, chief executive of Webster Financial Corp., the parent of Webster Bank.

“We think Boston is underserved.’’

Webster, founded by Smith’s father during the Great Depression, now has 181 branches in Southern New England and New York. Most of its two dozen in the state are in southern and southeastern Massachusetts, close to Rhode Island and Connecticut. Its closest branch to Boston is in Stoughton. Webster had about $1.4 billion in deposits in Massachusetts as of June, accounting for less than 1 percent of the deposits in the state, according to the Federal Deposit Insurance Corp.

Smith said the bank has tried unsuccessfully to acquire a bank in the Boston area for several years, before finally deciding to build a branch from scratch. The Boston office quietly opened on Nov. 16, but Webster plans to hold a ribbon-cutting ceremony today.

“We’ve been talking about [coming to Boston] for three years,’’ Smith said. “We’ve believed for a number of years that if you want to be New England’s bank, you need to be in the heartbeat of New England.’’

Webster said it is particularly interested in offering loans to small and mid-sized businesses in the Boston area. The bank, a top-ranked provider for Small Business Administration loans in Connecticut, has hired more than a dozen commercial lenders for the Boston office. At about four times the size of a traditional branch, the Boston office is designed to serve as a regional hub, with commercial lenders and other bankers focused on government finance, asset-based lending, cash management, small business, and trusts and investments, in addition to tellers and others typically found in a standard bank branch.

Daniel Forte, president of the Massachusetts Bankers Association, said a wave of mergers in the banking industry over the last two decades created room for additional banks in the Boston area. Forte estimated there are now roughly 190 banks in Massachusetts, down from 350 in 1985.

“There’s plenty of opportunity in the Boston market,’’ Forte said.

In addition to Webster, Forte noted that a number of other regional banks have begun opening branches in Boston in recent years, including TD Bank, Eastern Bank, and Salem Five Cents Savings Bank.

“You do see a bit of a paradigm shift with the re-entry of various community banks into Boston,’’ he said. In several cases, Forte said, the banks have opened branches in downtown Boston to focus on business lending.

Webster’s expansion comes at a time when many banks have slowed or stopped opening branches, in favor of less expensive ways to serve customers, such as new ATMs or online and mobile banking. Nationally, banks opened just 382 offices over the past year, down from an average of 2,300 in the five previous years, according to the FDIC. Analysts say many banks cannot afford to invest in new branches, because the economic downturn has hurt their profits.

Like some other banks, Webster Bank has been hurt by rising loan losses in the aftermath of the economic downturn and collapse of the housing market. The company lost $61.9 million for the first nine months of the year, including $19.2 million in the third quarter alone.

In the third quarter, it reported $361 million in nonperforming loans - loans that are in or close to default - or 3.19 percent of its assets, up from 3.02 percent in the second quarter.

Though most local banks remain profitable and have reported a smaller percentage of bad loans, Webster said it was hurt hard by lending in other parts of the country where the economy and housing market fared worse than New England. A company spokesman said Webster isn’t easily comparable to community banks because they are generally much smaller or do not make as many commercial loans.

A year ago, Webster Bank also accepted $400 million from the US government’s Troubled Asset Relief Program, one of the largest infusions into a New England bank. The bank says it in discussions with the government to repay the money.

Todd Wallack can be reached at twallack@globe.com.