R5 Regional Banks Weathering The Economic Storm

Despite consumer complaints across the country that banks are the new tight-fisted Shylocks in an economic drama of Shakespearean proportions, the community banks of Westchester and the region have contended that they’re continuing to keep their purse strings loose, albeit under new and stricter guidelines. Getting the money may be tougher, they concede, but the money is there. In some cases what seems to have stopped flowing isn’t the cash so much as the consumer’s confidence to ask for it. In short, the thirst and desire to take on risk has, to some extent, been quenched.

“Businesses are certainly more cautious in this economy,” said Christopher O’Callaghan, chairman of The Business Council of Westchester and a senior director with Cushman and Wakefield, a privately held commercial real estate services firm that includes tenant and landlord representation throughout the world. “If they don’t have to make a move, it seems many are content to hunker down and wait out the storm.”

Area commercial office brokerage firms all reported varying increases in commercial office vacancy rates in 2008 and all are expecting those numbers to go higher in 2009. The prospects of office space going dark in their properties will cause some building owners to offer more attractive rents and other concessions. But while some businesses may have the luxury to wait for rental fees to drop there are other small and medium-sized businesses that need to move forward in order to stay viable. Reaching for credit in order to keep up with the competition or just to know credit is there if the marketplace gets worse is a big part of today’s financial scene.

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The county is still seeing new ventures dot the financial landscape, such as The Westchester Bank, set to open its main branch in Yonkers before the end of February.

Basing much of its popularity on its accessible technology and 24-hour online customer service, the newly minted institution is focusing on smaller and mid-sized businesses, the clients that have been cold-shouldered by bigger banks that are uninterested in the customer seeking loans in the $100,000 to $1.5-million range.

“A lot of well-established businesses have been preparing for the worst and so community banks must reach out individually,” said John Tolomer, president and CEO of The Westchester Bank. “The emphasis is on loyalty, trust and outreach. Businesses shaken by this climate want to find someone who will give them the confidence to continue to grow. The successful banks are those who are back to basics. Larger banks are faltering under the subprime load. We (The Westchester Bank) have access to capital, we don’t have exposure to subprime debt and we expect a strong ’09. We have already far exceeded our most aggressive projections,” Tolomer noted. “I was born and bred in Westchester and I can see how the personal touch resonates right now and we are fully engaged in helping businesses with their goals.”

For those currently seeking expansion or the simple pursuit of a new idea many local lenders are willing to supervise, advise and be the overall Dutch uncle in order to build trust back into banking relationships. That motivation is paying off.

Ed Steadham, vice president of public affairs for The Webster Bank confirmed that his bank has $100 million in its SBA portfolio and $1 billion in credit across the region for small business loans.

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“We’ve been cited for our SBA lender status and was named top lender in Connecticut last year,” Steadham noted. “We target the borrowers who want to acquire real estate and fixed assets with only 10 percent down and last year we doubled our loan business.”

The only regional bank in our area that did not shut its doors during the Great Depression was Provident Bank, a lender who is continuing its expansion into Westchester despite the conventional wisdom that has many growth businesses diving into financial foxholes. A stalwart in the industry, Provident has been weathering financial storms for 121 years. Founded in 1888 in Spring Valley and currently headquartered in Montebello, NY, its mission has always been to serve and support its local communities and its history proves its mettle in rough times. »

Bolstered by its longevity in the industry the full service, customer-oriented Provident is adding another Westchester footprint to its recently opened Tarrytown branch, scheduling a White Plains opening for mid-February and, with a full staff recently hired, Steve Dormer, executive vice president of commercial lending and strategic planning, noted that his bank is encouraging its customers to take on some growth themselves.

“Research shows that people are still looking for that trusted advisor, someone they can work with on an individual level, give them realistic perspectives in this economic market. That’s exactly what we’ve been offering throughout our history,” he explained. “We understand that each client comes to us with unique needs and unique financial circumstances. Character still counts and we have always chosen to pay attention to that.”

From the commercial side, Dormer added, those hurting the most appear to be the large box retailers and strip mall businesses. The bank remains optimistic as it currently seeks a third Westchester branch, possibly in a city or village within the southern tier of the county. Eastchester, Mount Vernon and Yonkers have all been mentioned as strong contenders.

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Provident isn’t the only community bank that feels bullish in a hibernating bear market. Hudson Valley Bank president and CEO James Landy paused to reflect recently on his bank’s strengths, willingness to lend and a more than 30 percent increase in its portfolio.

“Going into the first quarter (of ’09) we continue to see strength in our numbers,” Landy noted. “We saw a $400-million net increase in our 2008 portfolio. We focus on the elements that are the foundation of a community bank such as small businesses, entrepreneurs, and professionals. Our institution doesn’t get involved with the wholesale or consumer markets. We’ve been in business for 37 years promoting personal banking relationships with our clients and customizing those relationships. With strong loan growth and a personal approach to each client, we’ve seen our customer base grow instead of diminish.”

Now with the dawn of a new day in Washington and a major bailout geared to restoring consumer confidence in the wings, Tolomer agreed that personal banking and the right programs are the way to help people feel better fast and take the bandages off their ailing finances.

“Clearly this Administration is dedicated to building confidence and stability,” he said. “When people feel that is happening, they should act to build their businesses. It is our desire to make credit readily available to them.”

While no crystal ball is currently showing the way, Tolomer said he thinks the third quarter of this year should show some tangible evidence of a sense of growing consumer confidence.

Perhaps these big bailouts should come with a list of rules and regulations that include a hint from community and local lenders as well as the communities they serve. Customizing personal relationships helps foster the needed trust and supervision that clients are seeking. But that personalization may also mean keeping a watchful eye on how business is going, circumventing trouble before the temptation to overextend results in financial foundering, and supporting new and loyal clients with a constant flow of capital to keep employees working and shopkeepers’ doorbells ringing.

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