Long Island Bancorp is revamping its consumer lending unit to develop more business in subprime lending and other niches, say sources close to the company.
The Melville, N.Y.-based thrift split the unit between two executives this summer, giving retail banking chief Bob Volk the unsecured and student lending divisions and leaving the residential and home equity lending divisions together under Dena Kwaschyn, director of mortgage operations. Pam Agnone continues to be in charge of the home equity unit, the company said.
Now Ms. Agnone's division is dabbling in the subprime market, Long Island Bancorp representatives said at the Consumer Bankers Association home equity conference here earlier this week.
Ms. Agnone, who was also at the conference, said that the company was not holding any subprime loans in its portfolio. She declined to say how much subprime lending Long Island Savings, a division of Long Island Bancorp, is doing, or why the thrift had entered the market.
The thrift's spokeswoman said she knew no details about its subprime lending activities.
Analysts who cover Long Island Bancorp said that they were unaware it was lending to customers with less-than-perfect credit, but that this would fit into a previously announced strategy.
Long Island Savings' chief executive, Joe Conefry, told investors months ago that the thrift was going to focus on new niches, noted Tom Hain of Lehman Brothers. At that time, the thrift said it had a "very loyal customer base" that it hadn't leveraged, Mr. Hain said.
Despite the risks in subprime lending, Mr. Hain said he isn't worried that Long Island Bancorp will get in over its head.
"Knowing that management, they're not going to jump into anything that they can't handle," he said. "They're very conservative." Investors expect bigger returns this year from the thrift, was recently bought several southern mortgage originators, he said.
Other analysts said the company is too conservative, and expressed doubts that a push in subprime lending would do much good.
"They really need someone to go in there and shake things up," said one New York-based analyst, who asked not to be named. "Unless they make a big acquisition or do something dramatic, it's not going to make much of a difference."
