Three local banks are spotlighted in Ambassador Financial Group’s “Flying Under the Radar” report of small New York banks.
NorthEast Community Bancorp in White Plains, Orange County Bancorp. in Middletown and PCSB Financial Corp. in Yorktown Heights made the cut. Ambassador Financial Group focused on 25 publicly traded banks, with assets between $800 million and $9.9 billion, which “are large enough to be efficient and small enough to deliver personalized services.”
Some under-the-radar banks can be considered among the best-run banks in the U.S., the report states. Yet, industry analysts usually do not follow them because of their size and low trading volume.
Community banks in and around New York City must adapt, the report said, with five megabanks, such as JPMorgan Chase, controlling two-thirds of the deposits, and stiff competition from global banks. NorthEast Community Bancorp has four full-service branches in New York and three in Massachusetts. It had $814.8 million in assets as of Dec. 31, and $652.2 million in deposits.
Nearly half of its loans, 48 percent, were for construction and development, compared with a 3 percent average for the 25 banks in the report. Forty percent of its loans went to commercial and multifamily real estate.
Orange County Bancorp operates 13 Orange Bank & Trust Co. branches in Dutchess, Orange, Rockland and Westchester counties. It had assets of $997.4 million and deposits of $845.4 million.
Fifty-eight percent of its loans were for commercial and multifamily real estate, compared with a 41 percent median for the group. Commercial and industrial loans accounted for 22 percent of its portfolio.
PCSB has 17 branches in Dutchess, Putnam, Rockland and Westchester counties. It had $1.4 billion in assets and $1.1 billion in deposits.
Ninety-two percent of its loans were for real estate, including 61 percent for commercial and multifamily and 31 percent for residential. That’s well above the group’s 70 percent median.
Community banks face several challenges.
They get most of their revenue from the spread between interest rates. If the yield curve flattens, or loan growth weakens, revenues could be undercut.
Rising interest rates could hurt banks with large mortgage portfolios and make it more difficult to attract and retain core deposits.
There is little room for mistakes.
“We have long believed that community banks become great not by making good investments/loans,” Ambassador said, “but rather by avoiding bad ones.”
Ambassador, based in Allentown, Pennsylvania, is a broker-dealer for financial institutions and a banking management consultant.