Community Bank System Inc. in Dewitt, N.Y., reports 20% average annual revenue growth this decade in its benefits consulting business and attributes its success in the highly competitive field to focusing on a niche market typically underserved by the big providers.
Sanford A. Belden, the $4.4 billion-asset company's president and chief executive officer, said that its benefits subsidiary, Benefit Plans Administrative Services Inc. in Utica, N.Y., does not try to compete with the likes of Fidelity Investments, Hewitt Associates, or Mellon Financial Corp.
"We are focused on a different niche of customers," said Mr. Belden, citing small businesses and multiemployer groups. He declined to specify a targeted size for potential customers.
Benefit Plans brings core services - administration, compliance testing, plan consulting, and asset custody - under one roof. Mr. Belden said this ensures consistency and cost-effectiveness while giving customers the latest features and technology.
The unit specializes in administering plans with thinly traded employer securities, multiple entry dates, institutional funds, and special service needs. This specialization has allowed Benefit Plans to establish daily valuation servicing relationships, he said.
Benefit Plans has expanded its business by marketing through its own offices and working with mutual fund wholesalers.
It markets its services to mutual fund companies, registered investment advisers, and brokers. Major fund companies like Federated Investors and Vanguard Group refer their advisers and brokers to Benefit Plans to administer complex plans that the larger administration companies choose not to support, Mr. Belden said.
He also credited its technology platform for winning new customers. "Our tech platform is well-suited for the niche we are pursuing," he said. He declined to say how much Community Bank System has invested in Benefit Plans' platform.
The organization combines the technical expertise of customized plan design and compliance services with the technological expertise of transaction processing and reporting, he said.
The unit also offers education and financial planning to participants. "Many clients are interested in our online access to accounts and our planning vehicles," Mr. Belden said.
Benefit Plans has customers in 27 states and Puerto Rico. It administers 401(k), 457, 403(b), profit-sharing, and nonqualified plans, among other products. In partnership with Harbridge Consulting Group, Benefit Plans also supplies record keeping services to participant-directed cash balance plans. It has 55,000 plan participants, Mr. Belden said.
The unit views its main competitors as companies that serve smaller groups of employees, he said, such as accounting firms that offer benefit services.
Community Bank has owned Benefit Plans since 1996, said Mr. Belden, and has offered employee benefits services since the early '90s. This year it bought First Heritage Bank in Wilkes-Barre, Pa., for $74 million of stock.
Buying the $275 million-asset Heritage Bank increased Community Bank's deposit market share in northeastern Pennsylvania from 7% to 9% and added three branches there.
The deal was the New York company's third purchase in less than a year and its third ever in Pennsylvania. Last November it completed an $80 million deal for $279 million-asset Grange National Banc Corp. in Tunkhannock, Pa.
Community Bank has about 130 customer facilities in Upstate New York and in northeastern Pennsylvania.
