Provident Savings is 155 years old, the oldest savings bank in New Jersey. Its origins are in the small-business and individual need for savings categories.

A bunch of businessmen got together and put the institution together in 1839. Jersey City, the company's headquarters, was a harbor for immigrants at that time and a melting pot for many years.

This presented the bank with growth opportunities that continue to this day. But current management faces a unique challenge as its core market erodes.

Provident never closed through the Depression. "No one ever lost a penny on us" says president and chief executive Paul M. Pantozzi proudly. "We continue to stay conservative, yet competitive, in this high-profile market" he says.

The company embarked upon an expansion in the mid-70's, building branches outside of Jersey City, which has lost its stature as a leading rail and port city. Provident now has 32 branches, ranging from $20 million to-150 million in assets per branch.

Provident has a strong core franchise and 40% market share in its home turf. Unfortunately, that market is not growing, and the population composition has changed. Nonetheless, Provident is committed to continue serving that market.

It is trying to capture a greater market share within its slow growth markets through better service and cross selling. "We are not a plain vanilla institution," he says. "We have alternative investments and a broad line of loans, including commercial lending, income lending and a full array of consumer loans. We spread our risk through diversification of .the product line and try to defend against economic strains by having this broad product offering."

Many thrifts consider transitioning into a community bank, yet find it difficult to build a commercial base and a transaction account core. Provident has been successful in making that leap.

"How did you enter the commercial loan market from a thrift point of departure?" I asked.

"We had to go after the lower end of the market, and it took a while," Mr. Pantozzi replied. "We have just been breaking into commercial lending in the last three to four years." As for many other community banks, the best source of new business for Provident was market consolidation, said Mr. Pantozzi. "Many of our customers came to us because the bank they did business with has grown to such a size they are unable to deal with their account' executives due to constant turn over and poor service. Our niche is small business, up to $10 million in sales within the branch coverage area, and it is working," he said.

Last year, Provident yielded 1.24% in assets, a respectable number for any depository institution. It expects to do even better this year, since mortgage activity has continued to grow contrary to market trends.

The company has targeted first-time homebuyers. A special advertising campaign during the second quarter has generated significant business volume for Provident and brought new relationships to the bank.

"Can you still make money on mortgages with shrinking margins and commoditization?" I asked.

"Mortgages are profitable for us. We add significant value to our customers, people like our rate, and we get points," Mr. Pantozzi replied. "We are in the market consistently, using 15 mortgage originators in the field plus 12 in-branch laptop originators. We use the mortgage product to build a relationship, and through fee income and cross-selling generate profitability."

Provident has continued to prosper due to its close links to the community. The community linkage is ensured through branch staffing that reflects the local market characteristics. For example, the North Hudson market in Hudson County is the second-largest Cuban population in the country outside Miami. All the people in the branches are bilingual, and a new low- to moderate4ncome program was introduced.

Mr. Pantozzi is convinced that what has worked for the company in the past will continue to work in the future. In addition, he contemplates continued diversified growth by every possible means, including branching as well as acquisitions in many sectors. Acquisitions, however, will have to self-funded. The company is committed to staying mutual.

Provident is an example of conservative mutual savings institution which has successfully integrated into its community and performed consistently throughout the industry crises. Only time will tell if community-oriented mutuals will continue to survive and prosper in the future. Meanwhile, Provident and Mr. Pantozzi intend to stay the course.

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