More growth potential seen for Partners Trust

CNY Business Journal (1996+), Sep 03, 2004 by Dickinson, Casey J

SYRACUSE - Fresh from closing its acquisition of Binghamton-based BSB Bancorp, Inc., Partners Trust Financial Group, Inc. [NASDAQ: PRTR] has its sights set on growing its Syracuse business.

Utica-based Partners Trust - which took over nine Syracuse-area BSB branches in the acquisition to add to its one mortgage office here - will expand its presence in the Syracuse market through new branch construction and more acquisitions, says John Zawadzki, president and chief executive officer of Partners Trust. Specifically, the bank plans to increase its Syracuse-branch network from 10 offices up to 15 in the near future. The first new office, says Zawadzki, is planned for some time in the next year.

Partners Trust will also relocate its DeWitt mortgage office, Onondaga County's third-largest originator of residential mortgages, from the Lyndon Comers area to another location in the eastern suburbs.

Zawadzki is confident of his plans to increase the bank's Syracuse market share. "We've got a five-percent market share in Syracuse and no place to go but up," he says.

Partners Trust starts from a position of strength in the Mohawk Valley and the Southern Tier. The bank has a 24-percent market share of Binghamton-area deposits and 21 percent of the Mohawk Valley market.

Partners Trust has set its sights on serving the center of New York from the Pennsylvania border north, says Zawadzki. The BSB acquisition allowed the company to expand from its Mohawk Valley base to the Southern Tier. Like other banks in the region, Partners Trust plans to fill in its Central New York footprint and expand farther across the state.

"We could go west to Rochester," says Zawadzki, "we can go east to Albany."

Former BSB Bank and SBU Bank (formerly Savings Bank of Utica) branches across upstate New York received a new

look over the summer as Partners Trust Financial Group re-branded its 35 offices under the Partners Trust Bank name. The bank obtained the final regulatory approvals to complete the acquisition in July. Partners Trust didn't close any branches when combining the two banks because there was no overlap between the territories, says Zawadzki.

The new, combined bank has $3.8 billion in assets, up from the $900 million in assets the Savings Bank of Utica (SBU) had when it first began a growth strategy four years ago.

Under the Partners Trust banner, the former SBU Bank also will be seeking more commercial business and looking for future-expansion opportunities.

"Our focus is now on building small and mid-market commercial business," says Zawadzki.

The Partners Trust expansion plan began four years ago, Zawadzki explains, when the SBU board decided that the bank had the capacity to grow. Upon the retirement of former CEO William Schrauth, the board hired Zawadzki as CEO and began taking steps to change the bank's structure. In 2002, the Savings Bank of Utica converted from a mutual-savings bank to a federally chartered stocksavings bank. The new structure utilized a two-tier holding-company form. SBU named its holding company "Partners Trust," the name it is now using to re-brand itself After the conversion, the bank was known as SBU Bank.

In August of 2002, Partners Trust acquired Herkimer County Trust for $64 million in cash, giving it a trust department and capability to take municipal deposits.

On Dec. 24, 2003, Partners Trust announced it would buy BSB Bank in a $347million cash/stock deal. Though BSB was a larger bank, it had well-publicized, assetquality problems dating back to the 1990s, says Zawadzki. A new management team, led by BSB CEO Howard Sharp, had been steadily working to improve BSB finances. Sharp is now an executive vice president at Partners Trust.