Bank Profile | By Linda Goodspeed
Beating the Odds after 2008
Opening a bank three weeks after the collapse of Lehman Brothers sent the financial markets into a tailspin and the country into a deep recession hardly seems like good timing – but since Greater Hudson Bank opened for business on Oct. 8, 2008, the bank has racked up five straight years of profitability.
“Despite Lehman’s collapse, we went ahead with the deal,” said Edward T. Lutz, president and CEO. “We like the banking business, and thought a commercial bank in this market could be successful.”
Up until then, the bank’s predecessor had not been successful.
The Community Bank of Orange, founded in 2002, was floundering when Lutz and Kenneth J. Torsoe, a well-known developer in the Hudson Valley, and a small group of investors took over the bank. At the time, the Orange bank had $69 million in assets and two branches.
“They were just never able to get traction,” Lutz said.
Lutz and Torsoe’s group injected $23 million of their own funds into the Orange bank, changed its name, brought in a new management team and opened a third branch in Bardonia in Rockland County. Today, Greater Hudson Bank has five branches in three counties (Rockland, Orange and Westchester), total assets of $360 million, and five years of profits.
For the first quarter of 2014, the bank reported net income of $654,000, compared to $519,000 for the 2013 first quarter. Loans, net of unearned income, increased $14.7 million, or 6.6 percent, to $235.4 million, and deposits increased $18.4 million, or 6.9 percent, to $285.7 million.
The new team hit the ground running with more marketing and larger loans, including construction loans, “something other banks weren’t doing,” said Lutz. “Viable projects were being tossed out of other banks. We did due diligence, and with our larger lending limit, were able to take them on.”
Investing in the Community
The new team, led by board Chair Torsoe, also brought in considerable new business. Today, Lutz said 15 percent of the bank’s $235 million loan portfolio is construction loans.
The portfolio also includes about $100 million in commercial real estate loans, C&I loans, and a smattering of retail loans, home equity and residential mortgages.
The percentage of non-performing loans in the portfolio is “a little higher than we’d like,” Lutz said. “Maybe 12 or 13 loans in that bucket. But we’re satisfied we’ve got those assets appropriately reserved, and are working them out.”
The three New York City bedroom counties where Greater Hudson is located are well-banked, and have a diverse economy and scattered industry.
“We market ourselves as one of the few remaining community banks,” Lutz said. “People want more of a relationship than some other banks are able to provide.”
He said Greater Hudson is primarily a business bank, appealing to business advisors and owners and their families and employees. The bank also has a suite of retail products and technology offerings, including mobile, tablet and online services, and a remote deposit service for businesses.
Keeping the Current,
Looking for New
Lutz said the goal for this year is to grow the bank’s assets to $400 million through its existing network of locations. No new branches are planned in the short term.
“We’ve got the infrastructure, people and controls in place,” he said. “We’ve got to find ways to put good earning assets on top of that structure.”
To that end, in April Greater Hudson began sending out teams to call on existing and new customers in its three-county market.
“We’re sending out teams of two to three people to call on existing customers. We call that retainage,” Lutz said. “We’re also visiting new customers. We think that effort will bring new business to the bank and keep what we have. We’ve got a variety of deposit products and lending products to sell. We have technology, and can offer a lot to help a business person conduct their business, and in turn, help us generate revenue and keep the wheel turning.”
He said he’s excited about the future of banking: “It will remain competitive, but if you use your head and work hard, you can get a share of business.”
With more than 40 years of experience in the banking industry, including several years as a bank regulator, Lutz is able to provide Greater Hudson’s board valuable insight and guidance on governance and compliance issues.
“My background helps me understand what regulators are thinking or might be thinking,” he said. “It’s a common sense business. You need to stick to your knitting, build a good team of people, and spend a lot of time emphasizing internal controls and compliance.” ■