Local banking leaders

New York State’s banking industry increased its deposit base by a measly 7.5 billion dollars in the year ending June 30, 2018 — just four-tenths of one per cent, figures released last week by the Federal Deposit Insurance Corporation (FDIC) disclosed. Ulster County’s deposits grew 1.4 percent from $3.166 billion to $3.228 billion during the same one-year period, a slightly but not dramatically better performance than the deposit growth in the state as a whole.

In the competition for local deposits this year, four very different Ulster County banks stood out for their success. Ulster Savings Bank, whose $643.6 million in deposits make it the leading bank by that metric in Ulster County, added a robust $45 million in deposits in the past year. Key Bank, which absorbed First Niagara a couple of years ago, added $26 million to its Ulster deposit base. Rapidly growing Bank of Greene County, which last week opened a new Woodstock branch, added $21 million to its Ulster County deposits in the past year. And banking gargantuan J.P. Morgan Chase increased deposits at its two Ulster County offices by $16 million.

Without these banks, deposits in Ulster County would have decreased in 2017-2018.

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About 80 percent of Ulster Savings Bank’s deposits are in the bank’s nine offices in Ulster County. That’s where the deposit growth has been the most robust. Branches where deposit growth in 2017-2018 has been strong include its Schwenk Drive headquarters in Kingston and its offices in New Paltz, Phoenicia and Woodstock. After winding down its Greene County branch in Windham, the bank is focusing now on the tri-county Ulster-Orange-Dutchess market. It continues a modest brick-and-mortar banking presence in Newburgh.

After several years of deposit stagnation, Key Bank may be become more aggressive in seeking mid-Hudson growth. Its huge presence in the economies of upstate metro areas like Buffalo, Albany, Rochester and Syracuse have only grown after its merger with upstate competitor First Niagara. The Cleveland-headquartered Key Bank also has 62 branches in the nine-county lower and middle Hudson Valley area, with about a not inconsiderable sixth of Key’s statewide deposits of $32.7 billion. Key’s Modena, Stone Ridge and Kingston Wall Street branches showed the fastest deposit growth in 2017-2018, with Kerhonkson, Stone Ridge and Phoenicia also doing well. 

A decade ago, the Bank of Greene County was a $325-million-in-deposits ten-branch financial institution doing most of its business in its home county and having a presence in neighboring Albany and Columbia counties. In the next five years it added three offices, and its deposits increased to $562 million. By 2017-2018 it had added two more offices, including one in the Town of Ulster. The bank has held almost half the deposits of all the banks in Greene County, and total deposits in the four counties where it has branches had crossed the billion-dollar mark — for the first time eclipsing Ulster Savings among the local banks as having the most deposits. (Credit unions, of which the region has several significant ones, are excluded from FDIC data bases.) Last Saturday, the Bank of Greene County held an open house at its new Woodstock branch in the Mill Hill Road space formerly occupied by Bank of America. The new manager is Mandie Viscusi.

For a number of years, J.P. Morgan Chase has had two branches in Ulster County, one in Kingston Plaza and the other on Plattekill Avenue and Main Street in New Paltz. Deposits at the one in Kingston Plaza increased from $72.6 million last year to $83.8 million this year, and deposits at the one in New Paltz went up from $68.8 million last year to $73.4 million this year, according to the FDIC. Statewide, J.P. Morgan Chase has $563.6 billion in deposits — or 171 times the total deposits of all the banks in Ulster County.

With two national banks and two community banks the top competitors in the race for Ulster County deposits, one would have to judge this year’s struggle for market dominance between the two types of institutions a standoff. Deposits, of course, are not the sole criterion of market success. New deposits earned at the cost of substantially narrower margins or greater risks should be regarded with a skeptical eye. 

“It doesn’t really matter what size banks are,” reads a five-year-old article in Forbes I think of as sensible. “The debate about whether small banks are better than large ones is, frankly, a red herring. What matters is systemic stability and customer service, and both of these can be put at risk by bad behavior from banks of any size. But if ensuring systemic stability means not only strict regulation and supervision of individual banks, but also public support for the system as a whole, should we not recognize that banking is in reality a public service which is essential to our economy?” 

If it continues, the recent success of the Bank of Greene County and Ulster Savings Bank in Ulster County may help show how community banks that have built their businesses on personal relationships can continue to extend that style toward continued service in an ever more rapidly changing business world.

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