DeWITT — The addition of 16 HSBC branches across Western, Central, and Northern New York will help Community Bank System, Inc. (NYSE: CBU) grow in markets where it already has a strong foothold, the company’s CFO says. DeWitt–based Community Bank completed its acquisition of the locations in July. All the branches are in markets where […]
DeWITT — The addition of 16 HSBC branches across Western, Central, and Northern New York will help Community Bank System, Inc. (NYSE: CBU) grow in markets where it already has a strong foothold, the company’s CFO says.
DeWitt–based Community Bank completed its acquisition of the locations in July. All the branches are in markets where the bank is already a player or where it has a nearby presence, CFO Scott Kingsley says.
Community Bank leaders say they know their approach works in those markets and the acquisition will help the bank grow its business in those communities.
“We’re big believers in the power of density,” Kingsley says.
The new branch offices are in Adams, Alexandria Bay, Avon, Fulton, Geneseo, Gowanda, Lowville, Newark, Oswego, Palmyra, Plattsburgh, Springville, Watertown, Watkins Glen, and Westfield. The branches brought Community Bank $697 million in deposits and $107 million in loans.
All of the offices were part of the recently completed acquisition of 195 HSBC locations in upstate New York, Westchester County, and Connecticut by First Niagara Bank of Buffalo.
First Niagara made deals with Community Bank, KeyBank, and Five Star Bank (based in Warsaw, NY — east of Buffalo) to sell off some of the HSBC branches involved as well as some of its own offices. The bank made the divestitures to comply with anti-trust rules.
First Niagara leaders also said some of the branches were in markets, including the North Country, where they were not interested in competing.
In addition to the HSBC locations, Community Bank will acquire three First Niagara locations in Geneva and Canandaigua in September as part of the same deal. Community Bank leaders decided to separate the two groups of branches because the acquisition involves conversions from two different technical systems, Kingsley says.
It made sense to space them out, he notes.
After adding the HSBC locations, Community Bank has $7.5 billion in assets and 190 branches in upstate New York and northeastern Pennsylvania. The banking company also operates subsidiaries in employee benefits, insurance, investment management and advising, and wealth management.
Community Bank has a strong track record of retaining the customers it picks up in acquisitions, Kingsley says. A year after Community Bank’s 2011 purchase of Wilber National Bank of Oneonta and its 22 branches, the deposit base at those locations was actually higher, he adds.
And in Community Bank’s 2008 acquisition of 18 branches in Northern New York from Citizens Financial Group, Inc., the bank retained 99 percent of the deposit base.
The HSBC deal includes somewhat higher risk for customer defections, Kingsley says. The acquisition involved a number of moving parts and the multiple deals sparked confusion among some customers over whether they would end up at First Niagara, KeyBank, Five Star, or Community Bank.
The deal added 120 employees to Community Bank, which now employs more than 1,800 people. Community Bank was able to retain nearly all of the HSBC employees involved, Kingsley says.
The bank may look to consolidate some of the branches in the deal with existing locations, but Community leaders generally prefer to make those decisions after they have a chance to gauge customer traffic and response at the new branches, Kingsley says.
Even if some locations close down the line, Kingsley says Community Bank would probably have a spot for all affected employees.
Community Bank has been able to expand in the current banking and economic environment even as other banks have pulled back by paring their branch networks or trimming expenses.
“We haven’t been slowed down by that,” Kingsley says.
Community’s performance has been stable and earnings have increased in one of the more challenging periods for the banking industry in recent years, he adds. In addition, bank leaders talk with potential acquisition targets even before a definite opportunity to buy them arises.
It’s not a conversation to be had with just anyone, Kingsley says, but if Community’s executives see a potential match, they explore it proactively.
The strategy has positioned the banking company well for expansion, he contends.