The performance of New York State's community banks remained stubbornly lackluster in 1993, and no one is predicting a rebound this year.
The return on assets for the state's 137 community banks was a mere 0.83% last year, well below the industry average of 1.21% and below New York state's entire industry performance of 0.90% ROA, according to data compiled by Sheshunoff Information Services.
New York banks are still scrubbing problem loans from their books, and competition is stiffer than ever, community bankers and analysts say.
"We've lost deals that we've traditionally been able to book," said Thomas F. Goldrick, chief executive of the State Bank of Long Island. "Competition has become keener."
Convention This Week
The dynamic of New York bank competition will be played out this week as bankers from the state's diverse industry convene for the New York State Bankers Association's annual meeting in Saratoga.
Community bankers do have some cheering to do, however. Their performance has inched up since hitting a low ROA of .41% in 1991. Their non-performing loans have shrunk as well from that year, but only to a still-high 3.46% of total loans.
Mr. Goldrick said in periods of slow loan demand, the large money center and regional banks "come down" to the community banks' level and go after the more steady small- and mid-sized business lending.
The metropolitan areas, where Mr. Goldrick operates, have been especially tough markets in which to make money. In fact, community banks in and around New York City continue to perform poorly, dragging down the performance of small banks in the state as a whole.
As a result, a wide disparity in the performance of small banks has developed in different areas.
Banking a Sideline
The only small bank in New York City that was among the most profitable isn't really a commercial bank, and a commercial bank-chartered investment advisory company.
Fiduciary Trust Co. International, a $341 million bank in Manhattan, earned a 3.02% ROA in 1993, the best of any community bank in the state.
Boker Doyle, president, said the bank performed well on the strength of its investment advisory services for wealthy individuals and institutions.
"Lending is really just an adjunct for us," Mr. Doyle said.
Other than Fiduciary Trust, virtually all of the state's top 30 best-performing community banks were in western and upstate New York. The runner up, tiny Bank of Holland, based in western New York, had a 2.92% ROA. It was followed by Putnam County National Bank of Carmel, which had a 1.96% ROA, and the Citizens National Bank of Malone, which had a 1.91% ROA.
Arnold Danielson, A Maryland bank consultant who closely follows banks in the Northeast, said, "You're really talking about two different worlds. Banks in upstate New York ... are blessed with some of the highest margins of any banks in the country."
On the other hand, Mr. Danielson said, community banks around New York City have failed to recover fully from the Northeast real estate debacle of the late 1980s and early 1990s.
"Not only do they have to deal with high overhead, but in the long haul they just haven't recovered from their real estate problems," he said.
