Wilber National and its CEO chart steady growth
By LYNN WOODS

Doug Gulotty

The situation is gloomy at some large financial institutions, which are writing off their mortgage-related holdings and experiencing a credit crunch. But the picture is brighter at Wilber National Bank, a regional institution based in Oneonta that is expanding.

As a portfolio bank, “We consider how loans fit into our books for the next five to 30 years, and just as importantly, how the loan fits the customer’s anticipated needs.” said Douglas Gulotty, Wilber’s president and CEO. With a 66 percent loan-to-deposit ratio, “we’ve been very prudent.” By contrast, most banks have a 75 percent to 80 percent loan-to-deposit ratio. “We never make a loan without verifying the current and projected capacity of the customer, retail or commercial, to pay it back within terms.”

Gulotty and other bank staff, including Paul Hakim, who heads the Kingston branch, hosted a well-attended mixer at Kingston’s Wiltwyck Golf Club last month. Gulotty later spoke by phone from his Oneonta office.

The bank’s bread and butter are small- and medium-sized businesses. Three years ago it expanded into the Hudson Valley, opening a location in Kingston. Business is good because Wilber focuses its expertise on the markets it knows best, according to Gulotty.

“Our model is completely opposite that of most banks,” he said. “They try to find 900 to 2,500 households to service, but we try to find 100 customers with whom we are a good fit.” Wilber targets businesses seeking loans from $300,000 to $3 million. Many of its customers are small manufacturers, specialty contractors in defense and civilian lines, hospitality and tourism-related companies, and small business of every ilk. “We have large investments in commercial and residential real estate.”

The $800 million bank has a market capitalization of $100 million and $65 million in equity. It has 21 branches, stretching from Binghamton to Kingston to Cooperstown to Cobleskill. Since entering the Kingston market three years ago, the bank has so far written about $20 million in loans in the area.

Two years ago, it opened a loan production office (LPO) in Syracuse, followed by Clifton Park last spring. The LPOs develop a market, locating loan customers before offering retail services offered by traditional branches. The Kingston LPO became a full-fledged branch in 2006 and now offers a full menu of services, although “I’d be surprised if we do a dozen deposits per day. It is quality of service, not quantity.” said Gulotty.

He noted the bank had been analyzing Ulster County since the area hit rock-bottom in the early 1990s and finally opened a location in 2004, when there were unmistakable signs of a turnaround. “Within a three-mile radius we have hundreds of small businesses to develop. There’s a huge number of businesses that meet our criteria for a relationship, and we’re heavily working the chamber of commerce list to let them know about us.” Wilber is planning to expand elsewhere in the Hudson Valley soon, Gulotty said.

“You can almost feel the economic growth coming up from New York City and down from Albany” ­ a resurgence that is moderate, meeting another criterion of the bank. “The growth rate, in terms of the value of homes, is about 7 percent. It’s not so big to be scary, and not so small it’s not enough,” said Gulotty.

The bank president said that small business is a more effective creator of jobs than large corporations. “The fact is, small business generates almost all the jobs. Large business consolidates economic power and efficiently uses capital, but it doesn’t create jobs. It takes a great idea and moves it forward, but the great ideas that create jobs are companies with less than 20 people.”

Gulotty predicted that the next few quarters would be difficult. “We’re going to feel more pressure than we’ve felt since the 1950s and early 1960s,” when banks’ profits dropped to a 0.75 percent return on their assets. “Banks live on the yield curve, but it will be tough because the markets won’t give you the spread,” he said. Because of the flat interest rate curve, “there’s no meaningful advantage to taking depositors’ money for six months and investing it over the next five years. You need to take credit risk to make a profit, and that means making loans to your community.” The solution requires the bank to “stick with your niche, manage through it and make a one percent return. You have to be patient and disciplined. That’s what our bank does.

“Some of the folks got a little bit too comfortable with complex instruments. Those who stuck with plain vanilla and stayed with smaller margins will be the ones who do well.”

On the business side, “people who overspent either as tenants or investors are going to pay a price,” he said. But Gulotty predicted the pain wouldn’t be too great in Kingston. “If you have the right type of property, you’ll see activity, even though certain classes of commercial property aren’t leased up.” Gulotty noted the area’s clean-tech initiative ­ specifically, the formation of The Solar Energy Consortium, which is creating partnerships between industry and research groups ­ is a good one. “With any business, to create value you do it by differentiation and green tech is hot right now.”

Gulotty said he’s no stranger to difficult times, given that central New York has long been economically depressed. A steady customer in that market has been the senior depositor. “We have a travel and service club that provides services for anyone over age 50 with more than $25,000 in deposits. They generate 60 percent of our deposits” ­ money that has been used to fund the expansion into new lending.

The old-fashioned values of Wilber National Bank are echoed by Gulotty’s climb to the top. An economics and political science major at SUNY Oneonta, he started as a teller and worked his way up, doing virtually every job. He was named CEO two years ago. Currently, the bank employs 288, and Gulotty said he anticipated about 30 more in the next few months, with a target of 350 by the end of next year. About 40 percent of the staff has been at the bank for more than 15 years, he said. “This stability in staff allows us to live up to our motto, ‘Bank on our good name.’”

 

 

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