Tioga State Bank: Passing the baton and navigating its own path

SPENCER — Tioga State Bank (TSB) traces its roots to 1864. General Ulysses S. Grant had just bottled up General Robert E. Lee’s Army of Virginia at Petersburg/Richmond when The First National Bank of Candor opened its doors.

Twenty years later, the Fisher family, residents of Spencer since the early 1800s, helped to start a competing institution — the Farmers and Merchants Bank. The two banks navigated through 96 years of wars and economic crises before merging in 1961 as Tioga State Bank. In 1984, the stockholders created TSB Services, Inc., a holding company that allowed for more financial flexibility.

The fifth generation of Fishers to guide the bank is Robert M. Fisher, who has now assumed the roles of president, CEO, and chairman, succeeding his father, Marvin, who just retired after 49 years of service. Robert Fisher, age 45, has spent the last 20 years (he started in September 1992) at TSB working in various departments. He began in bookkeeping, filing checks by hand, moved into lending, and later joined the management team. A graduate of Spencer High School (1985), Fisher attended Notre Dame, where he received a bachelor’s degree in business administration (1989), before joining the U.S. Air Force for a three-year stint as a navigator on a C-141.

As Fisher assumes his new role as chairman, which the company announced in September, he provides the following statistics on where TSB stands now:

“… The bank boasts approximately $400 million in assets and employs 92 … TSB has four offices in Tioga County and seven in Broome County, with headquarters located in Spencer … The move into Broome occurred in the early 1990s, a year before Binghamton Savings Bank [imploded]. Three of the properties are currently leased, the rest are owned by TSB … Tioga [also] set up an insurance agency that sells long-term-care policies and annuities.”

Tioga State Bank currently ranks fourth in deposit market share in the Binghamton metropolitan statistical area with $272.2 million in deposits and a 10.2 percent share of total market deposits, according to FDIC statistics as of June 30, 2012.

“Growth has come organically, except for the merger in 1960 with The Farmers and Merchants Bank and the acquisition of one branch in Waverly,” Fisher adds. “We’re always looking for opportunities, but it’s hard to raise additional capital, because it comes from retained earnings.”

Privately held TSB has 35 stockholders, five of whom are family members. The Fishers control the majority interest. Banking revenue is split evenly between the retail and commercial sides. Fisher says he is “… looking to do more commercial business.”

TSB’s management team consists of Fisher, Anne E. McKenna as CFO, George Bowen as senior lender, Lisa Welch as chief credit officer, Sharon L. Yaple as senior vice president of retail banking and business development, and Christopher P. Powers as senior vice president of human resources. TSB utilizes Hinman, Howard & Kittell for its legal work and the Syracuse office of Bonadio for its accounting.

Difficult flying

Navigating a C-141 over thousands of miles may turn out to be simpler than navigating a community bank through a fog of regulations. Fisher says that “… the banking regulators have created an alphabet soup [of regulations] that grows so rapidly they [the regulators] are now doubling up on the numbering system. Regulations are only added; they are never deleted,” he opines. Fisher is waiting for the regulatory floodgates to open wider once the new Consumer Finance Protection Board begins releasing its regulations.

The cost of complying is expensive, especially for community banks. Fisher recalls that when he started at the bank in 1992, “TSB had one employee who spent part time on compliance. Today, the bank employs two full time to monitor compliance and several members of the management team also devote considerable time to compliance.” Fisher cites just one example — the Bank Secrecy Act — which requires all banks to monitor customer activity to detect and prevent money laundering. “TSB made an initial investment of $50,000 in software and annually expends $15,000 for maintenance.” Asked whether the bank is reimbursed for the service it provides to the government, he just smiles.

Technology has been another large cost to the bank, in order to compete for customers through options such as ATMs and online banking. “TSB partners with a third-party vendor to offer the services found at a big bank … but technology has an upside: It has allowed the bank to grow its assets while maintaining a constant headcount for 10 years. This has allowed us to be more efficient in a low-interest-rate environment where our margins are squeezed,” notes Fisher.

Then there are the personnel challenges. “Finding qualified candidates and attracting and retaining them to Tioga and Broome counties is a concern,” notes Fisher, referring to the bank’s location and to the ongoing problem of “… locating qualified candidates.” To overcome the problem, Fisher says that “TSB offers its employees a variety of benefits, including an incentive plan tied to key performance indicators.” While the bank’s geography may not be an inherent magnet for drawing talent, TSB boasts success with several employees whose tenure ranges from 20 to 40 years.

In addition to steering through the regulatory environment, TSB wrestles with slow economic growth where the economic pie is not getting any bigger. Fisher is not “… optimistic that the region’s economy will change any time soon, since the state is reluctant to permit hydrofracking … Despite the economic climate, however, the bank has enjoyed an increase in its residential-mortgage lending over the past two years and hasn’t had a down-year in lending even through the recent recession … The record is even more impressive when you consider that we [TSB] have charged off less than $20,000 over the past three years,” says Fisher.

Despite a national, 30-year trend of mergers and acquisitions in the banking industry, which has reduced the number of banks from 12,000 to 7,000, “TSB continues to steer an independent path with a focus on bolstering already strong capital and earnings,” says Fisher.

Tioga State Bank’s slogan on its website is “Here for You … Yesterday, Today & Tomorrow!”

Fisher already has an eye on the sixth generation to guide the family business. His son Josh is currently an undergraduate at the University of Pittsburgh. He has worked at the bank during vacations and summers. Fisher’s daughter, Kate, is a senior in high school and also has worked at TSB. Nine-year old Allison is still in the wings.

Fisher resides in Owego with his wife Beth, whom he met at Notre Dame and married in 1991. He is a member of the Independent Community Bankers Association (ICBA) board of directors and current chair of ICBA’s lending committee. Fisher has also served with the New York Banking Association, New York Bankers Services Corporation, and the Independent Bankers Association of New York State.

Contact Poltenson at npoltenson@cnybj.com