Where some community bankers might view the expansion of larger financial institutions as being bad for their own businesses, Signature Bank President and CEO Joseph DePaolo sees an opportunity.
And the bank”™s performance appears to back up his reasoning: Earlier this month, Forbes ranked Signature as the fifth-best bank in America, up from a ninth-place ranking in 2010.
In the New York city bank”™s most recent quarterly financial filing, it reported earnings of $38.35 million, a 40 percent increase compared to the third quarter of 2010. Signature”™s assets and deposits also were up over the past year.
DePaolo, who lives in New Rochelle, said Signature has capitalized on the expansion of the nation”™s biggest banks within the metropolitan New York market.
“In June of 1994, the top seven banks controlled 45 percent of deposits in the New York area. On June 30 of 2011, the top seven banks controlled 70 percent. When seven banks have such a large hold on the local market, that says to us we can capture some of that market,” DePaolo said.
Because smaller banks like Signature cannot compete with the advertising budgets of larger institutions, DePaolo said, the challenge is offering clients more individually tailored attention than the big banks are capable of ”“ particularly when those clients are struggling financially.
“Our approach is to stay in it longer. The bigger banks usually have what they call a cut-and-run. We, on the other hand, look at it and say, ”˜Well, this is a client. This is not a customer. This is a client and this is someone who”™s been with us for a while and who has entrusted their banking to us,”™” he said.
With private client offices in all five boroughs, Long Island, New Rochelle and White Plains, Signature Bank specializes in serving privately owned businesses, but with a twist.
Rather than having all of the bank”™s employees who work in a particular subject area ”“ for instance, real estate transactions or commercial lending ”“ in the same location, each office team has employees who specialize in a diverse range of subject areas and who know the business community, DePaolo said. That structure enables the bank to offer clients a single point of contact for all of their banking needs, he said.
DePaolo said the bank is always looking to expand into new locations ”“ including in Westchester ”“ but that it”™s a matter of finding the right teams of candidates with the right client portfolios and geographic knowledge bases to staff new offices.
“There”™s significant business to be had in Yonkers; we just haven”™t found the right team,” he said. “It”™s a personal thing for me, living in Westchester. It would be wonderful for me to have more expansion there just because I live there and it would be a pleasure for me to have that.”
Strategies for 2012
Expect caution: Signature Bank President and CEO Joseph DePaolo said both businesses and banks will continue to exercise every due caution as 2012 approaches.
“I”™ve been saying this for several years now: I look out the window, I still see clouds, I don”™t yet see the sun behind the clouds.”
Count on conservative lending: DePaolo said increased regulatory oversight means lending will again be conservative.
“It”™s a catch-22 because you simply can”™t lend into a situation where you know there is a real uncertainty as to whether or not you”™re going to get paid. You have shareholders but you also have regulators, and the regulators are coming down pretty hard on us ”“ not on Signature but on the banking industry.”
Avoid switching banks: While switching banks may be advisable for some businesses, DePaolo said it isn”™t a sure-fire solution. He said it”™s often difficult for a new bank with no prior knowledge of a business”™s finances to come in and find new solutions.
“The recommendation that I have is ”¦ try to work it out with your current bank.”
