The little bank that can
By JIM GORON
It’s not the size, it’s the service.
That philosophy has allowed the relatively tiny Rondout
Savings Bank in Kingston to remain in business for
141 years and allows the new CEO confidently to predict
that in an era of mergers and megabanks, Rondout
Savings will continue to thrive as a community savings
bank as well as succeed in the business and commercial
banking arena it embraced in 2001.
The bank is successful because it concentrates on providing
personal service banking options for families and local
businesses. “We saw that was a market we thought we
could do well in, and indeed we have,” said James Davenport,
president and CEO of Rondout Savings Bank since January.
“It’s a niche that has worked well for Rondout Savings
Bank.”
Rondout Savings is looking to make loans, even in the
problematic economic circumstances developing today.
“We want to get the word out: We don’t have to scramble
for deposits; we’ve got plenty of deposits and we’ve
got money to lend,” he said.
The bank reported $191.7 million in assets at year’s
end 2007, and liabilities of $166.6 million. Net worth
was reported as $25 million. The bank has 70 employees
and four locations in and around Kingston.
Bauer Financial Services, an independent bank rating
company, gives Rondout five stars, its highest ranking.
“We have a rock-solid fortress financial sheet,” said
Davenport. “We socked a lot of capital away since 1868
and that is a big strength that will serve us well
as we come through the economic times we are in now.”
He said the bank has a “very high capital ratio of
13 percent, nearly double what is required,” by federal
regulators. He said the industry average is a 10-percent
ratio, but that for “peer institutions” of the same
size as Rondout Savings that average is about 8 percent.
The bank “very much so” dodged the subprime mortgage
problem, he said. “We have no subprime loans. The asset
quality of the bank is outstanding. We’ve always been
a conservative institution.
“Given our asset size, our liquidity and capital, the
type of core business we seek can very easily be served
by an institution of our size,” said Davenport. “We
are not trying to attract corporate entities.”
The bank started in 1868 after the Civil War in the
then-thriving Hudson River port community of Rondout,
near the then-village of Kingston. The bank was founded
with about $60,000 in capital.
Rondout's port was strategically located for moving
coal, bluestone and Rosendale cement to the cities
on East, helping ensure the bank's success. In 1890,
it had assets of a little less than $1 million. In
1928, with assets at $5 million, the bank moved to
its first freestanding building at 26 Broadway. In
1967, with $22 million in assets, it moved to its current
headquarters building less than a mile from its original
home and has continued growing its balance sheet.
To stay profitable in the future as banking continues
evolving, Rondout Savings Bank will seek to upgrade
and modernize its approaches, he said, investing in
technology to improve the company Web site and online
banking options and cash management services for businesses.
“Those are the areas that we want to make sure we really
have a state-of-the-art product and services out there,
but offered by a community bank.”
Davenport is confident the Hudson Valley, while not
recession proof, is in good position to weather an
economic downturn, although he offers a caveat the
size of a Big Apple. “Certainly, I’m concerned right
now about New York City’s ability to weather the current
storm and we’re watching that closely here. Will it
be a short and shallow downturns or a severe deep and
prolonged down town down in New York City because of
all the financial jobs? No one can really say they
know. We are monitoring that closely because of how
it impacts us here.”
Davenport said that balancing uncertainty with risk
management is the job of banks. He said, “Careful expansion,
thoughtful expansion, with more of a focus how can
we make things better, but not necessarily bigger,”
is the model he said bank officials are following.
He cites the decision to purchase the building housing
its town of Ulster branch, and to expand and modernize
that building into a more full-service outpost. “We’re
not adding another branch in Ulster, just making it
better, investing in technology and training our people.
“That’s our philosophy: Let’s make the place better
so if bigger happens, and I think it will, it will
happen naturally because we have improved service levels
beyond the current high levels we’ve achieved.”
And in the Hudson Valley, with more small businesses
than big corporations, he said, that is a recipe for
banking success. “We firmly believe that for family
businesses, and small- to medium-sized businesses,
local banks can serve that market better than corporate
banks,” said Davenport.
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