Following back-to-back record years, Kinderhook Bank will continue its march northward into the Albany, N.Y., market with two new branch openings this year.
“We need a little more critical mass in the Albany region,” said Jeff Stone, senior vice president of retail banking and business development. “We’ve been a Columbia County-based bank. The last five to seven years, the Albany market is where the commercial growth has been.”
The branch expansions into Albany and Latham will bring Kinderhook’s network to eight, and counter an industry trend toward fewer bricks and mortar.
“The role of the branch is changing,” acknowledged Stone, a 40-year banking veteran. “Customers want to do business when, where, how they want. They want to use technology, and they want to talk to someone if they need to. The average person doesn’t come into a branch a lot, but will make a decision to bank with you based on bricks and mortar. We need to manage that need for branch presence and technology, and deliver great service.”
Kinderhook has been successfully managing that delicate balancing act for 161 years.
The National Union Bank of Kinderhook, an independent community bank, was founded in 1853. Its sister company, Kleeber Insurance agency, was founded in 1851. But do not be fooled by the bank’s age. After poking along for well over a century, Kinderhook has been on a growth spurt in recent years.
For 2013, Kinderhook Bank Corp., the bank’s parent company, reported record net income of $2.537 million, compared with net income of $2.360 million in 2012, the previous record, an increase of 7.5 percent. At Dec. 31, 2013, the company’s total assets had increased to more than $331 million, up $16 million, or 5 percent, from the same period in 2012. Just 40 years ago, the company’s total assets barely reached $10 million.
Kinderhook’s success is rooted in its stable management (10 presidents in 161 years), conservative philosophy and the region’s strong economy.
Thanks to a diverse base of government, higher education, medical institutions, and booming high tech and nanotech industries, the Capital Region has grown steadily and consistently, without wild swings either up or down. But the region’s strong economy has also led to a competitive banking and credit union environment.
Kinderhook has carved out a niche in commercial lending, particularly commercial real estate.
Net loans increased in 2013 by more than 13 percent to $232 million. This follows an 8 percent loan growth in 2012. By the end of the first quarter, 2014, the bank’s loan portfolio was approaching $240 million, said Lee Carman, senior vice president of lending.
Seventy-five percent of the bank’s loan portfolio is commercial, with a large chunk commercial real estate, primarily multi-family housing.
As an SBA lender, Kinderhook is able to originate loans much larger than typical like-sized banks, and has become an upstate leader in this business line, ranked in the top three SBA lenders in the Capital Region over the last several years.
“We have significant strength in SBA lending due to staffing,” Carman said. “We’ve got some very good people and capability and knowledge there.”
Kinderhook also provides U.S. Department of Agriculture-backed commercial loans.
“We’ve been able to direct people who weren’t able to get financing elsewhere and help them to the finish line,” Carman said.
The bank has been considerably less aggressive on the residential mortgage side, doing mainly portfolio loans.
“That’s by design,” Stone said. “Commercial real estate in the Capital Region has been very stable for many years. Credit quality is very strong, and has held up well.”
Carman said less than 1 percent of the bank’s total loan portfolio of nearly $240 million is nonperforming.
The bank’s two new branch facilities in Albany and Latham, along with its branches in East Greenbush and Delmar, feature the latest in branch design and technology.
Traditional teller lines are eliminated with the use of teller pods, cash recycler machines and full functioning ATMs that can accept checks and bulk cash deposits. The branches also feature free coffee and WiFi, comfortable chairs, computer terminals, iPads and coin counters.
“Ee want people to come in and feel welcome, not move them in and out,” Stone said. “We’re trying to create a different branch experience.”
In addition to the two new branch locations this year, Kinderhook will also introduce a mobile banking app for its customers. As Stone said, “It’s all about balancing bricks and mortar and technology.”
Kinderhook has about 70 employees, none of them administrative assistants.
“We’re very flat,” Stone said. “Everybody does everything. Even the CEO answers his own phone, does his own spreadsheet.”
Robert A. Sherwood, the bank’s 10th and current president, and CEO since 1995, turned over the day-to-day operations of Kinderhook Bank in October 2013 to new CEO John Balli. Sherwood will continue to serve on the board. ■