European American's Boss Focuses on Market Niche

It took Edward Travaglianti 21 years to make it to the top at European American Bank, but few people were surprised when he was named president in late November.

Mr. Travaglianti, 43, had been unofficially running the $4.8 billion-asset bank since June. That is when the Dutch banking group ABN Amro took control and transferred $750 million in bad loans to the parent company.

Back to Basics

The presidency is "pretty much an official confirmation of what I'm already doing," Mr. Travaglianti said.

European American is based in Uniondale, N.Y., on Long Island. The Brooklyn-born banker took over as it was implementing a plan to return to its original role as a consumer and middle-market bank in New York City and the Long Island suburbs.

The goal, Mr. Travaglianti said, was to increase European American's $1.8 billion of loans to small and medium-size companies by about 30% and raise market share to 18% from 14%.

"The one thing we've learned is that if you stick close to your market and do your job right, you'll provide a fair return to your shareholders," he said.

Mr. Travaglianti has the background needed to take European American back to basics. He joined the bank, then known as Franklin National, as a trainee in 1970 after graduating from St. Francis College in Brooklyn.

After Franklin collapsed in 1974 and was taken over with federal assistance by a consortium of European banks, Mr. Travaglianti worked in middle-market lending for the renamed European American.

He was named senior vice president of the middle-market division in 1985 and executive vice president of consumer banking, with responsibility for European American's 86 branches, in 1987.

In 1989, his responsibilities were expanded to include corporate banking and real estate lending.

Strategy Flaw

He vividly recalls how Franklin, crippled by foreign exchange fraud, went under in 1974. Later, its successor ran into lending problems with Third World countries and then commercial real estate.

But he attaches less importance to the fraud that triggered Franklin's downfall than to a fundamental error in strategy that began in the early 1970s.

"What drove Franklin under was that the bank moved out of its niche and went into New York City to compete for deals in places where it shouldn't have been," Mr. Travaglianti said.

European American's return to its roots is closely tied to ABN Amro's strategy of keeping U.S. retail businesses, including that of Chicago-based LaSalle National Corp., close to their markets.

Building a Foundation

After a disastrous string of losses, European American this year had net earnings of $6 million through Oct. 31. Mr. Travaglianti expects full-year earnings to reach $8.5 million.

He is not discouraged by the current economic downturn.

"There are good, viable business opportunities out there, even if economic times are not robust," he said. "The world goes on, and what we do today helps build a foundation for the future."

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