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Fairport Savings Bank opened its first office west of Rochester this week, a potential precursor to a full-service bank branch.
The office on Canal Landing Boulevard in Greece opened Monday to provide mortgage-related services, joining similar offices in Perinton, Canandaigua and Watertown as part of the bank’s growing mortgage origination business.
“We’ve looked at the west side for two reasons,” President and CEO Dana Gavenda said. “(One is) to utilize the dollars we’ve raised to make mortgages; two, over time we think we might want to be on the west side.”
The Greece office is in existing space in the Canal Ponds development. It employs five people, with additional support planned, Gavenda said.
“With how expensive a branch is to build, it’s hard to go over there and build a network and make a presence the way we’ve been able to do on this side of the city,” he said. “So we’re going to try to grow in a very measured way, doing loans first.”
Fairport Savings Bank ranks 13th in the Rochester market with local deposits of $168.3 million, data from the Federal Deposit Insurance Corp. show.
“Growth and distribution are integral components to a company of that size getting bigger,” said Robert Bolton, principal at Iron Bay Capital Inc. in Rochester and portfolio manager of the Iron Bay Fund L.P. portfolio of banks.
“It’s all about capital redeployment. The formula for thrifts and community banks is simple: Take in deposits and lend money.”
FSB has branches in Irondequoit, Penfield, Perinton and Webster and at its corporate headquarters in Fairport.
“The east side is the east side,” Gavenda said. “The loan growth is fantastic. The deposit opportunities are great. But Fairport Savings Bank isn’t particularly well-known.
“We really feel that the easiest way for us to move to the west side is to do a loan office first. You do your business development one on one with Realtors and borrowers, rather than trying to get everyone in a Greece or a Gates to try to understand where Fairport Savings Bank is and why they should do business with us on a retail basis.”
The Perinton branch is newest, having opened in October 2011. The Webster branch opened in September 2009, the Irondequoit branch in January 2007 and the Penfield branch in January 2003.
“I came to help build the retail presence,” said Gavenda, who joined the bank in December 2001. “By that we meant branches. Over time, we’ve been very successful in building our branch network.”
The Fairport office is the busiest branch with deposits of $77.7 million as of June 30, 2013, data from the FDIC shows. Deposits at the other branches are: Penfield, $30.7 million; Irondequoit, $21.5 million; Perinton, $20.1 million; and Webster, $18.3 million.
“While the mortgage growth or the loan growth is fine here, we’ve been so successful building branches here that we’ve acquired more deposits and have a greater opportunity to lend money than we can fully utilize on the east side,” Gavenda said.
The move west is not without risks, Bolton said.
“The problem they’re probably going to have is branding,” he said. “How comfortable are people from Greece and the west side going to be doing business at a bank called Fairport? How comfortable are people going to be in doing business with a bank where there’s only one branch (nearby)?
“They need to differentiate themselves in some way, or I’m not sure how successful they’re going to be in catering to the retail client.”
Fairport Mortgage Corp. was launched in early 2010 as a wholly owned subsidiary. Mortgages were not a priority until then.
“Somebody had to walk in the door and ask for a mortgage, and then we would do it for them,” Gavenda said.
The bank did not offer loans through the Federal Housing Administration, the Department of Veterans Affairs or the Department of Agriculture. It did hardly any business with adjustable-rate mortgages.
“We didn’t do any of the product lines that we do right now,” Gavenda said. “We’ve only been doing FHA and VA loans for the last two years. Prior to that, it was all conventional lending.”
Fairport Mortgage has nearly tripled employment in four years and more than tripled its originations. It has 12 processors and eight originators, up from four originators and three processors in 2010.
“The other part of that are the issues in the mortgage world over the last four or five years that have changed so dramatically,” Gavenda said. “They have given us a bigger opportunity to do lending.
“There aren’t as many mortgage brokers and bankers left. Consequently, we think there’s an opportunity for us to have an even stronger mortgage presence than we had in the past. We don’t go to brokers and bankers anymore to buy loans. We’ve built our own mortgage capacity.”
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