Empire State Bank plans branch in Staten Island
Town of Newburgh — Empire State Bank opened three years ago in Newburgh, then quickly added a branch in New Paltz.
In October, the bank will open its third branch"¦ on Staten Island. Yes, that Staten Island, the one that's a solid 85 miles from Newburgh. It's a drive that includes a stretch of the New Jersey Turnpike and a trip across the Goethals Bridge.
So what would inspire a fledgling, two-branch community bank — one that has yet to turn a quarterly profit — to stretch that far?
It's the chance to make some money.
"There's a void for a small, business-oriented, relationship kind of institution like us (in the area)," said Phil Guarnieri, president of Empire State Bank. "The only real small community bank, and it happens to be an excellent one, is Victory State Bank."
Chief Executive Officer Tony Costa said the expansion gives the bank an opportunity to restructure its deposit base. Many banks' profits have been hurt in recent years by the inverted yield curve; they're paying relatively high interest rates on certificates of deposit, while earning low rates on mortgages.
The new branch will be located on New Dorp Lane, a section of Staten Island bustling with mom-and-pop retailers and an ideal venue for a small, business-focused bank. Small businesses tend to open checking accounts, not CDs.
Another factor working in Empire State's favor is Guarnieri's pedigree. He lives on Staten Island and built his career in Bay Ridge, Brooklyn, just across the Verrazano-Narrows Bridge. Guarnieri's ties helped woo Staten Island investors when the bank raised its start-up capital. He's the main reason Empire State has had a loan office there since the bank opened for business.
Whoever said, "You can't go home again," didn't have bankers in mind. Community Bank of Orange, for instance, opened in Warwick when former Warwick Savings Bank exec Ron Gentile was at the helm. Glenn Sullivan, formerly of Ellenville National Bank, took Catskill Hudson Bank into Ellenville.
No wonder, then, that Empire State started out in Newburgh and New Paltz — both markets where Costa has deep roots.
Guarnieri will spend some time drumming up business in the new branch, but will continue to focus on his duties at the bank's Newburgh headquarters.
Costa said the bank will eventually backfill the gap between Newburgh and New Dorp with additional branches.
The bank's other satellite loan office, on Long Island, will remain that and nothing more, he said.
Of course, if the bank hires a vice president from Massapequa, all bets are off.
Empire State Bank continues to lose money, but is approaching the break-even point. The bank's holding company, ES Bancshares Inc., posted a net loss of $132,000, or 8 cents per diluted share, for the second quarter of the year. That's less than half the loss of $298,000, or 17 cents per share, the bank reported for the second quarter of 2006. "We're closing in on getting to the positive side of the ledger," said CEO Tony Costa. ES Bancshares is listed on the pink sheets under the symbol ESBS. The stock has traded recently in the $8.50 to $9 range.