With businesses tightening up on their cash flow and consumers cutting back on spending, 2008 is going to be “a very difficult year,” said Marjorie Rovereto, president and CEO at Ulster Savings Bank, based in Kingston.
Rovereto said the escalating price of heating fuel and overall increase in the cost of living, rather than loss of employment, had caused an uptick in “slower pays” among mortgage customers. Other factors driving the trend of delayed payments are the burden of a second mortgage and an increase in the minimum payments required by the credit card companies, a shift that occurred last year. “That was a major change,” said Rovereto. “It affected a lot of people.”
She said Ulster Savings Bank never issued subprime mortgages, having decided when they appeared on the market that “it doesn”™t mesh if you”™re a quality lender. We have a reputation, and when we saw those types of loans, we didn”™t want them. We don”™t want to own property.”
Rovereto attributed the current subprime fiasco to the government”™s desire to achieve a higher home ownership rate and greed among both loan issuers and investors to make a quick buck. But it was obvious to her from the beginning “the products designed were not going to help you achieve the American dream.”
The slowdown is also resulting in fewer deposits into the bank”™s saving accounts. Rovereto said it was likely the bank wouldn”™t be able to match the charitable donations it gave to hundreds of organizations last year, which totaled $610,000. The contributions included scholarships and donations to area hospitals and schools, much of it in $500 to $2,500 grants. Ulster Savings Charitable Foundation gave away just under $200,000 of the total amount. “It”™s going to be a tough year all around,” she said.
Despite the tough times, Ulster Savings Bank continues to expand and evolve its business model. Rovereto, who started out at the bank 25 years ago in the lending office and was named president and CEO in 2006, described the institution as “a small community bank with a big bank profile.”
“We do a lot of things small banks don”™t do,” such as mortgage banking, which the bank got into in the 1980s, funding the initiative through deposits and borrowing. Today its mortgage business extends from Greene County to Connecticut, with mortgage lending offices in Orange, Dutchess and Westchester counties, as well as Riverhead in Suffolk County.
Â
In the past eight years, Ulster Savings Bank also branched out to other services, including property titles, tax preparation, payroll and insurance. Its insurance subsidiary, Ryan Insurance, has a full menu of products, ranging from property and casualty to workers comp to directors”™ and officers”™ liability. These ancillary services are a key component of the bank”™s strategy to increase its business through the linking of relationships, Rovereto said.
Though “insurance is not a tremendous revenue driver, it has cross-overs with other businesses, so that many clients are now offering health benefits to their employees,” she said. “A lot of the pieces when added together have a tremendous value. It”™s a nice synergy.”
Rovereto said another advantage is that Ulster Savings Bank is not owned by stockholders, enabling it to focus on the long term. It has total deposits of $490 million, a lending portfolio amounting to $500 million and a $1.2 billion mortgage portfolio, which produces an income stream.
Ulster Savings just opened a new location in Gardiner, to “take the pressure” off its New Paltz location and establish a presence in southern Ulster County. The bank spent $1.5 million renovating a large historic home as its new location, preserving the Federal style windows, doorway and exterior detailing. Roverto said in the first two weeks, business was going very well, with the branch gaining “as many new accounts as we anticipated.” In the spring, it plans to open another location in Woodstock, where many of its Kingston mortgage customers reside.
While Ulster Savings no longer offers mortgages requiring very low down payments ”“ it had a program with Countrywide, which changed its requirements ”“ and construction loans for builders are down, Rovereto said the residential market in the Hudson Valley hasn”™t fallen off at all. “We still have New York City buyers,” she said. “A lot are in the entertainment industry.” Depending on the customer, the bank can offer loans with very low down payments. “We”™re very flexible by not being a stock bank,” she said. “We understand the environment here. We started our commercial lending eight years ago and it”™s still growing.”
One draw is free checking for both individual and businesses, although Rovereto said the bank can”™t offer the rebates offered by some of its big competitors. Full on-line banking services are also provided. Â
Roverto said the next big development on the horizon is wireless services, such as automated e-mails to customers”™ cell phone about deposits, payments and cut-off dates. The costs of implementation were “tremendous,” and consumers have concerns about security and privacy. But she said as the generation brought up on YouTube and text messaging enters the work force, mobile banking services will become indispensable
