After suffering the consequences of an ill-conceived expansion and poor lending, FNB Rochester Corp. is looking to grow again this time on its home turf.
After announcing its third branch sale in just over a year, $320 million-asset FNB, holding company of First National Bank of Rochester, wants to expand its paltry 2% market share in that city.
FNB plans to use the branch sale proceeds to open new offices in four or five Rochester-area municipalities where it is unrepresented, but president and chief executive R. Carlos Carballada declined to specify where or when.
"We would look at anything that might be available." he said, adding that FNB is in touch with its competitors to see if they're looking to divest any branches. "We'd like to get that done as quickly as we can."
The decision to grow also follows the bank's June release from a 1992 consent order with the Federal Reserve Bank, which came after FNB brought its leverage capital ratio into compliance at 6%. Another order with the Office of the Comptroller of the Currency was lifted March 7.
The change in market focus began after new executives joined the bank in June 1992 to"see if we could work to get the bank back on course again" by cleaning up its bad loans and changing its market focus, Mr. Carballada said.
"Classically, that's what hap*pens when a management team is brought in to clean up," said Kenneth F. Puglisi, managing director of Sandler O'Neill & Partners in New York.
FNB's problems are related to a physical expansion west to Buffalo and east to Syracuse. Those moves left FNB too extended in several markets, Mr. Carballada said.
"In order to be a retailer in a large urban area, you need to have a fairly large distribution system," he said. But FNB only had two offices in Syracuse, a city of more than 164,000 people, and would have needed about eight or nine more to be a major player, he estimated.
So officials decided to refocus their retail efforts on Rochester and target only the small business and professional niches in the Buffalo and Syracuse markets.
The retrenching started with the Oct. 1, 1993, sale of the bank's Fair Haven branch, the proceeds of which brought the bank's leverage capital ratio above 6%. The bank now has a leverage ratio of 6.47%.
That was followed by the sale of FNB's Atlanta National Bank subsidiary to Bath National Corp. on April, 1, taking the company out of the Southern Tier New York region. where executives saw no room for growth. Mr. Carballada said.
Finally, on Aug. 1, the bank sold a branch in Syracuse to Center Banks Inc.
In both Syracuse and Buffalo, FNB is keeping a commercial loan origination office.
FNB also had a peak of $16.6 million in nonperforming assets, or 6% of all assets, in September 1992. The bank has since brought that down to $8.6 million, or 2.7% of total assets, at June 30, 1994.