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Empire National Bank Good Loans in Bad Times

By Linda Goodspeed

When Sayville Ford, Long Island’s largest Ford dealer and one of the top 100 Ford dealers in the country, needed a cash infusion in 2008 to get through the recession, it naturally turned to its long-time community banker, who handled Sayville’s other business interests.
“We always dealt with the big banks regarding the dealership,” says Melanie Spare-Oswalt, vice chairwoman and third generation in the dealership, founded in 1957 by her grandfather. “But they wouldn’t help us at all.”
Fortunately, for Sayville Ford and its 68 employees, Empire National Bank had just opened six months earlier.
“Empire listened to us,” Spare-Oswalt says. “They met our management team, reviewed our business plan. We closed on a loan in less than a month.” Last year, Sayville Ford was once again the highest-volume Ford dealer on the island.
Opening a bank in February 2008, near the bottom of the worst economic recession since the 1930s, might strike some as poor timing. Douglas C. Manditch, chairman, CEO and founder of Empire National Bank, says it was actually a good time to open a bank.
“We had no bad loans on our books,” Manditch says. “We were an experienced group of managers. We saw the market was overheated so we were cautious. Our guard was up.”
As other banks stopped lending, Empire was one of the few – as Sayville Ford can attest – that kept lending during the recession.
“Our loan portfolio was largely constructed in 2009,” Manditch says. “we put on about $140 million in loans that year.”
Today, Empire has $340 million in assets, 50 employees and branches in Shirley and Port Jefferson Station. Its headquarters in Islandia occupies 20,000 square feet in an old building rehabbed with a reflecting pool and waterfall in the atrium.
“We operate on a model of service, and personal attention,” Manditch says.
Empire’s market includes small and mid-size privately-owned businesses, not-for-profits and professionals, including lawyers, doctors and CPAs. Since 2009, Manditch says, the bank’s lending has slowed because of less demand and increased competition from other banks.
“In 2009, not many banks were lending,” he notes. “We had the pick of the litter.”
Empire’s loan portfolio reflects that caution. Nonaccruals - loans not accruing interest - account for about 1 percent of the bank’s total loan portfolio.
“We’ve had issues with customers with financial problems,” Manditch says. “We’re not exempt from that.”
“Anyone can offer loans in good times,” adds Thomas Buonaiuto, Empire’s president. “When you go through rough times, you need a bank who will not just give you money, you need an advisor who will give you feedback, work with you. We learn a company’s business, talk and listen. We do with small and mid-sized companies what the big banks do with corporate giants and international concerns, although they do not take the time to do the same with smaller companies.”
Empire is the second bank Manditch has started in a recession. In 1987, he helped found Long Island Commercial Bank, and served as president and CEO until its purchase in 2005. Buonaiuto was also part of that management team.
“Again, while most think 1987 was not a good time to open a bank, it was,” Manditch says. “We weren’t putting on any of the loans that were causing problems. It was a slow recovery then, probably five years. I would guess this recovery is going to take longer than that. Both were difficult times.”
A lifelong banker who started as a teller out of high school, Manditch is known for his conservative underwriting and outspoken criticism of the federal government’s Troubled Asset Relief Program (TARP) and other government bailouts and intervention.
“Capitalism provides for great rewards,” he said. “It has to provide for failure. If a company is not run properly, it should fail.”
What is the proper role of banks in this assessment? Manditch points to the example of Sayville Ford.
“There was an owner [who was] very fiscally conservative, very opposed to debt,” he said. “He had assets available to use. We felt it was important to the community to sustain that business. Some other banks wouldn’t do anything for him. We were able to work with him, and get him out of a hole and running a profitable business again.”
Manditch “has always been a conservative lender,” Buonaiuto says. “We always stress cash flow and debt service.”
Looking ahead, Manditch says the country’s economic future is bleak. “Any recovery will take a long time,” he said. But for Empire, the future is bright for a “well-run community bank.”
“We’re here for the long run,” he says. “We expect to be around, and continue to provide the service we’re known for.”
“Clearly, this is a very challenging time for all businesses,” Buonaiuto says. “Our story over the first three and a half years – our profitability, our underwriting track record, our reputation and following – is very positive. I think there will continue to be opportunities for us to grow. It will be more challenging to find those opportunities, But I’m confident we will.”■

Posted on Friday, October 14, 2011 (Archive on Thursday, January 12, 2012)
Posted by Scott  Contributed by Scott


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