Canandaigua is an old Native American word meaning “chosen spot.”
In 1887, Frank H. Hamlin and other local businessmen chose Canandaigua to start a community bank. Today, that bank, Canandaigua National Bank and Trust, has grown to nearly $2.2 billion in assets and 23 branches, and the Canandaigua area where the bank operates remains among the chosen.
“This area is thriving,” said President and CEO Frank H. Hamlin III, great, great grandson of the founder and the fifth generation of Hamlins to run the bank.
Canandaigua is in the heart of the beautiful Finger Lakes region of upstate New York, about 30 minutes from Rochester, an educational hub with a regional population of well over 1 million. Despite the loss of Kodak, and the downsizing of Bausch & Lomb and Xerox, intellectual capital remained. Vice President Joseph Biden has called Rochester the “Photonics Capital” of the world. (“Photonics” is the study of light and its applications.) More recently, the area was awarded a half-billion-dollar economic development grant for infrastructure and other projects over the next five years.
“That is a huge boon for us,” Hamlin said. “We have the education, human capital, intellectual capital and the money capital. We are completely and perfectly positioned with respect to growth.”
He also noted that upstate New York has not experienced the wide swings of boom and bust of some other regions of the country.
“It’s a stable environment in which to live and work and operate,” he said.
And Canandaigua National Bank (CNB) is nothing if not stable. In nearly 130 years of operation, the bank has had just five presidents – all with the last name of Hamlin.
Despite strong competition, CNB’s loan portfolio grew nearly 7 percent in 2015, exceeding the bank’s own projections by $30 million. The nearly $1.8 billion portfolio is split evenly between commercial and consumer loans. Consumer loans are mostly residential mortgages, home equity loans and indirect loans, including auto loans. On the commercial side, the bank is very active in supporting small and midsize businesses.
“Small business owners are the backbone of our region and our portfolio,” said Karen C. Serinis, executive vice president of retail banking and consumer lending. “We support them with education, advice and banking. The mission of our organization is very basic: Make this area the best area in which to live. We take that very seriously.”
To that end, CNB also reinvests its $1.8 billion in deposits locally.
“We decided very purposely to take all deposits and reinvest them right here,” Hamlin said. “That is a substantial difference between us and what other banks and credit unions do. Others take community money and send it outside the community. It’s an important distinction for us.”
Another distinction is CNB’s diversified revenue stream. More than one third (35 percent) of the bank’s revenues come from noninterest sources, including deposit servicing fees, asset management fees, investment advisory services, and proceeds from the sale of mortgages to the secondary market, as well as loan servicing fees. This is in stark contrast to CNB’s peers, which on average earn only around 15 percent of their income from noninterest sources. It is a long-term strategy that has positioned CNB well, particularly given the low interest rate environment of the last decade.
“It’s been a conscious strategy in that a lot of that income comes from our trust and investment function, which was started back in 1919,” Hamlin said. “The benefit for us is that we are completely insulated from economic factors, rapid changes in interest rates, stock market vacillations. It doesn’t boom or bust. Steady Eddie. A consistent way we can ensure we can keep the lights on.”
Serinis said the strategy also underscores CNB’s “full service” bank declaration, which includes two wealth management companies, including one in Florida, and a mortgage subsidiary.
Hamlin and Serinis said the future holds more of the same for CNB: Staying nimble, responding to changes in the local and national economy, and “keeping an eye on the ball.” Regulatory compliance and cybersecurity are other top priorities and challenges. Despite the bank’s strong balance sheet, Hamlin said CNB is not an acquisition target.
“Nobody can afford to buy us,” he said. “In order to buy us out, somebody would have to pay a huge premium to justify continued returns to our shareholders.”
A criminal defense lawyer before joining the family business in 2004, Hamlin said community banking is a “people” business.
“The community banking model is one of the most rewarding and energizing fields to be involved in in terms of the positive effects and large scale benefits it has on a region,” he said.
As for a potential sixth generation of Hamlin leadership, the current fifth generation president said he will “never ever put any kind of expectations on what they do with their lives – just like my father.”
And that rule applies to his daughter, age 12, as well.■