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Five Star Bank begins renovations

Five Star Bank has begun extensive renovations at its Warsaw branch and call center, the first branch to feature the bank’s reimagined design intended to align services with shifting customer needs and preferences.

The new design will balance the convenience of digital banking for day-to-day transactions with in-person expertise and solutions provided by Five Star’s bankers to help customers manage their complex needs, officials said this week.

Martin K. Birmingham
Martin K. Birmingham

“We take great pride in our long history of serving the Warsaw community and are especially pleased to launch our first newly reimagined branch design right here on Main Street,” said Five Star President and CEO Martin Birmingham. “When our newly remodeled branch debuts in late December, our customers can look forward to an enhanced banking experience that allows them to take advantage of the convenience of digital banking services while continuing to have a banker available for in-person banking. We will equip our branches to allow our customers to bank as they prefer.”

The branch, located at 55 N. Main St. in Warsaw, has been closed since March to prepare for renovations. Five Star Bank also maintains two other locations in Warsaw, a branch at 2330 N. Main St. and the corporate headquarters at 220 Liberty St.

Renovation highlights include:

• Enhancing the presence on Main Street with the addition of a new and welcoming main sidewalk entrance. The community can watch the progress on the building’s facade as windows are replaced and the new entry is constructed. The bank’s previous main entrance had been on the side of the building.
• The Main Street branch will offer an Interactive Teller Machine in its new vestibule, which allows customers to complete many of the basic transactions that previously required teller interaction, as well as to video-connect with bank representatives for assistance when preferred. This latest method of banking increases overall efficiency when visiting a branch while still allowing customers to maintain their personal relationships with Five Star Bank representatives.
• Certified personal bankers will be on-site to help customers who have more complex banking needs or simply prefer in-person banking. They will be located in private offices more conducive to providing financial education and advice.
• As a financial solution center, customers also will be able to access investment and insurance services with experienced banking professionals.
• The bank’s popular Community Room will reopen at a future date, providing professional space with the latest technology and presentation aides for use by area not-for-profit organizations. It has been closed due to the pandemic.

Rendering of Five Star Bank branch interior lobby at 55 N. Main St. in Warsaw.
Rendering of Five Star Bank branch interior lobby at 55 N. Main St. in Warsaw.

The renovated Warsaw branch is part of Five Star Bank’s Energy Efficient “Green” Initiative and will feature:

• Interior lighting is energy-efficient LED.
• Carpet is Cradle to Cradle certified meaning the manufacturer assesses its entire supply chain to provide an eco-conscious product.
• Porcelain tile is Green Square Certified and made with recycled materials.
• Acoustical panels are made with a minimum of 60 percent recycled content and are Declare Certified.
• Millwork laminate is GreenGuard Certified. The manufacturer formulates its own resins allowing the manufacturing process to be environmentally friendly. The manufacturer (Nevamar) is Forest Stewardship Council Certified and uses recycled and renewable resources to preserve forests and promote a healthier environment.
• Solid surface countertops are created with recycled materials, are GreenGuard certified, Red List free and have Health Product Declaration and Environmental Product Declarations.
• Acoustic ceiling tiles contain up to 56 percent recycled content and the ceiling grid contains up to 61 percent recycled content.
• Roller shade fabric is 100 percent recycled, PVC-free polyester and has a minimum of 89 percent of fibers made from 100 percent recycled post-industrial fiber and consumer plastic waste. The fabric is Cradle to Cradle Certified and uses 11 recycled bottles per yard of fabric made in the USA.

The project’s general contractor is Mulvey Construction Inc. and the architect is Scheid Architectural.

[email protected] / 585-653-4021
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Local banks well stocked to survive, back up customers

Banks might want to tweak Arby’s catch phrase.

Instead of “We have the meats,” they could be spreading their message of calm in the face of  COVID-19-related economic downturn by saying “We have the money.” 

While other companies were announcing layoffs and furloughs because of a sudden drop in economic activity, Tompkins Bank of Castile announced it is giving essential branch employees a 25 percent wage hike and providing a loan program for other costs they might be incurring due to the pandemic, such as loss of a spouse’s job. Buffalo-based M&T Bank this week also announced a 15 percent wage hike for its front-line employees for the duration of the health crisis. 

With branches closed to walk-in business, you’d think banks would be laying people off, too, but they’re not, saying they’re an essential business and need their staff—while taking precautions—to continue to provide customers access to capital. Even though they’re not seeing as many people in person, they’re dealing with a crush of phone calls as people try to sort out payments and seek deferrals, say local bankers. And they continue to allow in-person visits, but only by appointment.

Virtually all local banks and credit unions have given the ax to customer fees, including those for late loan payments or bounced checks; promised quick $5,000 personal loans; agreed to defer loan and mortgage payments for those in need; and issued individual guidance for their wealth management clientele.  

CNB's Frank H. Hamlin III
CNB’s Frank H. Hamlin III

“If it’s a fee we’re waiving it. If it’s a deferment, we’re granting it,” said Frank H. Hamlin III, president and CEO of Canandaigua National Bank & Trust Co. “We’re deferring principal and interest on mortgage loans…to allow people to focus on what’s important.”

 With fewer payments, and less interest coming in, how does a bank survive? The quick answer is reserves. 

After the economic crisis of 2008 in which the federal government had to bail out banks (most local banks didn’t take the bailout), banking regulators started requiring even greater amounts of money held in reserve than ever before. 

The same goes for federal credit unions. 

“We have different charter, but we also maintain reserves,” said Faheem Masood, president of ESL Federal Credit Union. “We are extremely well capitalized, one of the best capitalized credit unions in the country.”

ESL's Faheem Masood
ESL’s Faheem Masood

Besides the floor on reserves that the federal government requires, raised since 2008, ESL has always been conservative about its reserves, he said. As a result, “We are well, well, well above the reserves required by the regulators.”

So the banks and credit unions have the ability to take a hit caused by people failing to pay back loans on time or defaulting altogether. 

“It makes sense that the entire community is going to have to grunt through this and we will too. That’s our role in this community,” Hamlin said. “Our income will go down and that’s OK.”

Financial institutions generally were in a better situation before this health crisis hit than before the lending crisis of 2008, said Martin K. Birmingham, president and CEO of Five Star Bank. 

Five Star's Martin K. Birmingham
Five Star’s Martin K. Birmingham

“Relative to 2008, the banks are all much stronger than they were,” Birmingham said. In fact, as they entered 2020, the outlook was really quite good, with reasonable growth. “We made plans for March that are no longer relevant.”

That was true for financial institutions generally, Hamlin said. “ For the most part, all banks are well positioned… to go ahead and blunt some of the effects of this.” Similar to Five Star, the bank has more reserves than required, owing to an adjustment they didn’t make when the corporate tax rate declined. “My team had our eyebrows raised on that. We didn’t restructure around the new tax requirement because we figured the new tax would be taken away.” 

Unlike 2008, when a crash followed a mortgage crisis of Wall Street’s own making, this crisis is one that squarely hits Main Street, Birmingham noted. Efforts to avoid spreading the COVID-19 virus are causing businesses to close, lay off employees and potentially go out of business. 

“It’s clear that our federal government is going to follow through with a program that is aimed to address the impacts,” Birmingham said. “We’re starting to receive guidance and communication from our regulators in terms of actions we can take to support and continue to support consumers and businesses.”

Indeed, the Federal Reserve has reduced interest rates on loans, and told banks they have the cash to back them if they need more liquidity.  

Hamlin said, “The Federal Reserve and federal agencies that oversee us have pretty much been backing these plays.” They’ve said banks should offer deferments and the Fed will “do whatever is necessary for us to calm people down. We can bring down the noise level on that.” As for the accounting and the regulations, Hamlin said, “We’ll figure out the regulations. We’ll figure out that in the background.”

Masood added,”The Federal Reserve has been very aggressive in putting together actions that have worked in 2008, adding liquidity into the market to make sure the markets freely operate.”  

To reassure customers, Hamlin made a video letting them know that the bank is there to help. It’s available on CNB’s website and has been airing on local television stations. 

Birmingham said he hopes federal regulators will also allow more reporting flexibility for banks so they won’t get dinged at the regulatory level for allowing more customers than usual to be delinquent on their payments. If those changes aren’t made, ”that would mean the bank would take the loan and would have to increase its risk profile and therefore allocate more capital to it and potentially change its earnings or ability to earn interest revenue off of that loan.”

All three local bankers stressed it’s important for consumers to contact them if they are in financial distress.  

“In the coming month as we cycle through payment dates, that will become more apparent,” said Masood. “We’re trying to encourage customers to let us know that and we’ll be taking action to defer payments.”  

 The bankers also noted the important role financial institutions play in local economies by keeping capital flowing even as the financial system stutters and slows. And while all sounded confident about this negative cycle being followed by a positive one just as has happened countless times before, they also said the depths of the financial crisis are still unknown. None wanted to make firm economic predictions, given the still-developing nature of the crisis.

“We’re as a society and as a country really in uncharted territory in terms of what can happen,” Birmingham said. “We are really in unprecedented territory. Not since World War II  have we had such a dramatic need for collaboration.” Nevertheless, he said he could envision a turnaround by the end of the year, assuming the health crisis doesn’t last too long. 

Masood offered, “Even in the worst of circumstances, I think through a number of cycles, we have shown our economy is pretty resilient to bounce back.”

Both Five Star and ESL have been around for generations, but Canandaigua National is the granddaddy of local banks. 

“We’ve been in existence 135 years,” Hamlin said. “We’ve been through wars, the S&L crisis, every stock bust you can imagine. The fact is, there will be commerce. There are people who are buying things and people selling things.” 

Even the plunging stock market, which has reduced the value of investment portfolios, now offers opportunities for those in a position to buy, his officers added. 

Banks may actually grow during this time because of the calm stance they’re taking, offered Vincent K. Yacuzzo, chief financial officer at CNB. 

“Long-term our organization will come out stronger,” Yacuzzo said. “We’re connected to the local community unlike some other larger institutions. By tripling down on communications, we’re strengthening relationships.”

Hamlin dismissed economic predictions in favor of focusing on the here and now of the crisis. 

“Why don’t we calm down and let’s focus one step at a time: Make sure everyone gets fed and cared for,” he said. “If we all agree to do that, everything else will fall into place.”

[email protected]/ (585) 363-7275.

ESL’s Masood named to Federal Reserve’s advisory council

Faheem Masood
Faheem Masood

Faheem Masood, president and CEO of ESL Federal Credit Union, has been named to the Federal Reserve Board’s Community Depository Institution Advisory Council.

The national council provides input to the Federal Reserve Board on the economy, lending conditions and other issues and meets with the board twice a year in Washington, DC.

Appointees to the council come from local advisory councils at the Federal Reserve’s twelve banks. Each local council provides a single member to the national council. Masood is a member of the Federal Reserve Bank of New York’s advisory council. Another local banker, Martin K. Birmingham, president and CEO of Five Star Bank, also sits on that nine-member local council.

ESL celebrates its 100th anniversary as a financial institution this year. The credit union based in Rochester has 369,000 members and a network including 22 branches.

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Five Star and Lyons National both post record statements

Five Star Bank now occupies the tower at 100 Chestnut Street after moving its administrative center from the suburbs to downtown Rochester in 2016. (Photo courtesy of Five Star Bank)
Five Star Bank now occupies the tower at 100 Chestnut Street after moving its administrative center from the suburbs to downtown
Rochester in 2016. (Photo courtesy of Five Star Bank)

Two locally owned bank corporations–Five Star Bank and Lyons National Bank–experienced record-breaking income in the final quarter of 2019.

The two represent the seventh and eighth largest banks in the Rochester Metropolitan area by local deposits, though both have deposits out of the area, too, and they rank second and third for locally owned banks.

Five Star has more than 50 branches in Western and Central New York. While it’s headquartered in Warsaw, Wyoming County, it has major offices in Rochester. Lyons National Bank has 15 branches and has its main office Lyons, Wayne County.

Five Star’s parent company, Financial Institutions Inc., reported net income of $13.1 million in the fourth quarter of 2019, compared with $7.5 million in the same quarter of 2018. Income per share was 79 cents, compared with 45 cents a year ago.

Net income for the year was $48.9 million, an increase of 9.4 million over 2018, resulting in earnings per share of $2.96, an increase of 57 cents.

“We’re very proud of the results. It’s really the result of the hard work of our team,” said Five Star President and CEO Martin K. Birmingham.  The financial institution’s strategies included avoiding some tax expenses by using tax credits,  and reducing the part of its loan portfolio that was in indirect consumer loans, such as lending through car dealerships. “We’re trying to emphasize relationship lending” instead of small, one-off car loans, he said.

Tax credits came from investing in historic reuse projects such as the Perry Knitting Mill in Wyoming County, and the recently opened Fort Hill Center for the Performing Arts, at Canandaigua’s Fort Hill Apartments.

Five Star’s expenses also rose by $900,000 in the final quarter and $2 million for the year. Birmingham noted a major cause of more expenses was consultant costs supporting the bank’s initiatives for standardization and a digital platform.

The parent company of Lyons National Bank, meanwhile, reported an annual dividend of $1.24 per share, a 3 percent increase over 2018.  Net earnings for 2019 were $11.005 million in 2019 versus $10 million in 2018.

Lyons saw increases in deposits (8.8 percent,) loans (6.5 percent,) and assets (7.6 percent). It also gained income through a loss: life insurance paid out after the death of the bank’s chief risk officer, Phillip McCann, who died in September.

Robert A. Schick, chief executive officer and board chairman, said, “With the obvious exception of the loss of our beloved colleague, any way you look at our growth and performance, our employees had the company running on all cylinders in 2019. They are an amazing team.”

Lyons also announced it had gained approval to open its 16th branch and expects to open that office in Farmington, Ontario County, in the second quarter of 2020.

[email protected]/(585) 363-7275