By Kay Metcalfe
The main branch of Patriot Federal Bank, located in Canajoharie.
For every bank there is always the risk of acquisition.
Community banks can thrive and grow, but the risk of a larger bank acquiring it is always there, said Gordon Coleman, president and CEO of Patriot Federal Bank in Canajoharie in Montgomery County.
Patriot Federal Bank opened its doors as a de novo in December 2005, after the initial public offering (IPO) of stock was launched the previous summer. By November 2005, the bank had sold $8.6 million worth of stock in Fulton, Montgomery and Schoharie counties and by opening day, the bank was worth $14.5 million.
Five years ago in Fulton and Montgomery counties, there were five independent banks serving the local communities, according to Coleman. When the IPO for Patriot Federal Bank was done there were no community banks – they had all been acquired by larger regulatory banks. The interest in buying stock of the new community bank was high, and Coleman believes the gap in the market facilitated the sales.
“The mantra we preached to people to buy our stock was that it’s a good thing to have a locally owned bank [in the area],” said Coleman. “We were received by the public very well.”
Prior to spearheading the Patriot Federal Bank project, Coleman was president of two other banks. The first was acquired by the second. “I was president of Landmark Community Bank here in Canajoharie, which was acquired by TrustCo in July of 2000,” he said. After a year with TrustCo, he spent six months working with New York Business Development Corp. (NYBDC), an agency established by the state of New York to facilitate the growth and establishment of commercial enterprises throughout the state. NYBDC typically partners with financial institutions throughout the state to make loans to businesses.
“I worked there for approximately six months, meeting with various banks and IDAs [industrial development agencies], as well as with other governmental agencies to facilitate the growth of all types of commercial agricultural business in New York state. My past banking experience made me an ‘expert’ in commercial agricultural lending,” he noted.
After his six-month commitment to NYBDC, a group of businessmen approached Coleman with an opportunity to lead a project to open a local bank.
The team had the opportunity to buy a branch of TrustCo Bank in Canajoharie. This would soon become the location of the main branch of Patriot Federal Bank. In addition to the headquarters, on April 9, a branch of the bank was opened in Johnstown in Fulton County. Today the bank is worth $28.3 million, double the asset size since its opening 18 months ago, according to Coleman.
Upon the doors opening in 2005, the bank had zero loans. Today, Patriot Federal Bank has over $19 million in residential, commercial and consumer loans, and $6.3 million of capital. “It’s been a tremendous experience to go through,” said Coleman. The bank opened a second branch office in Johnstown in April.
The bank is proud to say that 95 percent of shareholders live, work and raise their families in the communities it serves, according to Evan Horne, customer service representative for the bank.
“We are a true community bank in that we live, and invest our resources, locally,” Horne said. “The sense of community was tested in June of last year when our main office, then our only office, was all but destroyed in a flood.”
The big storm of 2006 dropped approximately nine inches of rain in the area and caused the Mohawk River to burst its banks. As a result, the bank found itself sitting in two feet of muddy water. “It happened on Thursday and by Monday, we had the teller system back up and running,” said Coleman.
The bank had to throw out all the furniture and carpeting because of water damage, and there were water marks four feet up the walls. The 10 employees at the time and local residents pulled together to aid in the recovery process, said Coleman.
“The destruction was extensive. For the next few months, the staff struggled to operate the bank through the reconstruction,” said Horne. “We operated off of cardboard boxes, swept piles of sheet rock and debris off our equipment and tried to help our customers who were suffering the same blights in their homes and businesses.”
The bank sustained $150,000 worth of damages, but through insurance and emergency funds provided by the state, they were compensated for everything.
“We got an unplanned makeover that took about five to six weeks,” said Coleman.
Amazingly enough, the month following the flood, Patriot Federal Bank experienced a surge in loans and deposits, according to Coleman.
The month of June saw a $1 million surge despite all the havoc caused by the flooding.
The bank employs 15 full-time employees between the two branches. Chief Financial Officer Vincent J. Fazio has 25 years experience and Chief Operations Officer Kathleen J. Wolfe has 10. To complement the experienced staff, the bank is very technologically savvy, Coleman said.
“We opened our doors knowing that we couldn’t have technology that’s only good for right now. We were able to look down the road, incorporating Internet banking and real-time teller operations into the bank,” he said.
Coleman is optimistic for the future of the bank. He envisions continued growth, while being aware that the threat of acquisition is always there. “Our intent is to grow the bank, and I see tremendous opportunity for us to do so down the road,” he said.
Kay Metcalfe is a staff writer for Banker & Tradesman, a Boston-based newspaper serving the financial industry in New England for 135 years.
Copyright 2007 The Warren Group