New York will soon be down to its last Dime.
With branches of the 144-year-old Dime Savings Bank of New York scheduled to be converted into those of Washington Mutual Bank in the next few months, Dime Savings Bank of Williamsburg will have the venerable brand name all to itself.
Dime of Williamsburg, the Brooklyn-based subsidiary of $2.8 billion-asset Dime Community Bancshares Inc., is not planning a marketing blitz to capitalize on the disappearance of its longtime rival, says chief financial officer Kenneth J. Mahon at least not immediately.
We may try to take advantage of it in some way, but well wait until after the [other Dimes] signs come down, Mr. Mahon said.
Instead, the 138-year-old Dime of Williamsburg, which has 19 branches, plans to distinguish itself by sticking to its model of gathering deposits through money market accounts and lending primarily to apartment-building owners.
The two Dimes went head to head in only a handful of New York communities, but the common name made them natural rivals. In fact, in 1996 Dime of New York, which $275.2 billion-asset Washington Mutual Inc. of Seattle bought in January, sued to make its Brooklyn namesake change its name.
Dime of Williamsburg still faces fierce competition in one of the nations most crowded banking markets. In addition to Wamu its competitors include $12.5 billion-asset Commerce Bancorp Inc. of Cherry Hill, N.J., a deposit-gathering powerhouse that entered New York last summer. They also include such metro-area mainstays as $17.2 billion-asset North Fork Bancorp. of Melville, N.Y., and $9.4 billion-asset Roslyn Bancorp Inc. of Jericho. 
Vernon W. Hill, Commerces chairman and chief executive officer, said its New York City branches are growing six times as fast as its older, suburban branches.
Wamu is marketing heavily in New York it has a billboard in Times Square and advertisements on buses and taxicabs, said Scott Valentin, who covers Dime of Williamsburg and several other New York-area banks for Friedman, Billings, Ramsey & Co. in Arlington, Va.
Most of its rivals are using offers of free checking to lure customers, but Dime of Williamsburg has built its deposit-gathering strategy around money market accounts, which all banks offer but few emphasize.
Vincent F. Palagiano, its chairman and CEO, said the effort began two years ago after a fairly lively debate among officers and directors. Though checking accounts are typically less costly to a bank, Dime of Williamsburg says it is stressing money market accounts because they are attractive to a large slice of its customer base, new immigrants seeking flexible, low-risk savings products.
Most of the neighborhoods we do business in are experiencing tremendous turnover, with thousands of new people moving in, Mr. Palagiano said. We know what they want, and we give it to them.
The campaign appears to be working. Between June 30, 2000, and this March 31 the banks money market deposits rose 237%, to $492.1 million. Meanwhile demand deposits at Commerce which offers totally free checking to its New York customers and has a deposit-focused business plan that has earned it almost universal praise grew 73%, to $11.3 billion.
Dime of Williamsburgs success at raising money market deposits has helped it accommodate strong demand in its primary line of business: lending to the owners of apartment houses. Mr. Palagiano calls his bank a boutique lender and notes that it makes more than 80% of its loans to apartment-building owners.
Multifamily loan originations topped $140 million in the first quarter, an increase of 45% over the first quarter last year, he said. The banks first-quarter earnings rose 55%, to $10.2 million, or 60 cents a share. Nonperforming loans at the end of the quarter totaled $1.2 million, or 0.5% of the $2.1 billion portfolio.
Mr. Mahon predicted that the bank would make 61 cents a share this quarter.
Mr. Valentin said the focus on money market accounts has helped the Brooklyn bank differentiate itself from bigger, better-known rivals.
Dime would lose if it tried to compete against banks like Wamu, North Fork, and Commerce by offering free checking, Mr. Valentin said.
Banks tend to hype free checking over money market accounts for two reasons, Mr. Valentin said. Firstly, banks pay no interest on a significant portion of checking deposits, so they are the cheapest source of funds. Secondly, bankers believe customers are less likely to move a checking account than they are a certificate of deposit or other savings instrument.
However, he called Dime of Williamsburgs business plan a good one and pointed out that money market accounts are cheaper and much less volatile than CDs. Dime currently offers money market rates ranging from 1.35% to 1.98%, depending on the balance.
The truth is, [money market deposits] tend to be pretty sticky, he said.
Dime of Williamsburg, which says it cannot afford to advertise on New York radio or television or in any of the citys major daily newspapers, markets primarily through direct mail. It sends a mailing touting its money market accounts to a community, then painstakingly follow up on responses, Mr. Palagiano said.
The real story is not in the initial mailing, he said. Its in the meticulous follow-up of tracking down all the customers that respond to it.
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