Beacon Federal shares jump in Nasdaq debut

CNY Business Journal (1996+), Oct 5, 2007 by Tampone, Kevin

DeWITT - Shares of Beacon Federal Bancorp, Inc. rose 16 percent to $11.60 in their first day of public trading Oct. 2.

Shares began trading at $10. Beacon Federal Bancorp (NASDAQ: BFED) is the newly organized holding company for the DeWitt-based bank, Beacon Federal.

"We're very pleased," Ross Prossner, the bank's CEO, says of Beacon Federal's first day of trading.

Now was the right time to go public because the bank's total assets and loans have been increasing rapidly - about 20 percent annually - in recent years, Prossner says. That growth rate meant the bank needed more cash.

"It's always been part of our strategic plan to continue to grow the bank," Prossner says. "We got to the point where if we were going to continue to grow, we were going to need additional capital."

The bank sold 7.39 million shares to raise a total of $73.9 million prior to the start of public trading. Beacon began offering shares to its 35,000 depositors in August, says Joe Dwyer, marketing director for the bank.

Prossner declined to comment on the bank's exact plans for its new cash. Beacon's filings with the federal Securities and Exchange Commission (SEC), however, highlight some key components of its business strategy.

They include:

* Growing and diversifying the bank's loan portfolio by focusing on residential mortgage loans, home-equity loans, commercial real-estate loans, and commercial business loans

* Maintaining high-asset quality

* Increasing non-interest income

* Pursuing acquisitions

* Controlling expenses

* Emphasizing lower-cost deposits

The SEC filings also provided a glimpse of the bank's financial picture.

Net income during the second quarter of this year was down 15.1 percent to $691,000 from $814,000 a year ago, the filings state.

Beacon Federal earned $2.3 million in profit during 2006, down 48.7 percent from $4.5 million in 2005 and $4.1 million in 2004, according to the bank's filings. Net income in 2003 was $4.4 million and $2.4 million in 2002.

Profit was down mainly because of recent, industry-wide challenges in the financial sector, Prossner says. Unfavorable interest rates have been squeezing earnings at banks throughout Central New York and the rest of the country.

"The majority of banks out there are faced with the same compression of margins," Prossner says. "It's a function of the industry that has caused us to show the change in earnings."

Since 1996, Beacon's total assets have grown from $133 million to $649.1 million today. Total net loans stand at $557.2 million and total deposits are $519.6 million.

Beacon Federal began life in 1953 as the Carrier Employees Federal Credit Union, serving employees of Carrier Corp. in Central New York. During the 1980s, the institution grew through acquisitions of a number of smaller credit unions operating at Carrier facilities throughout the country, including in Collierville, Tenn.; Tyler, Texas; and McMinnville, Tenn., according to the bank.

Through the mid-1990s, Beacon added more than 150 employer groups to its membership. It also acquired additional credit unions in Texas, Massachusetts, and Syracuse.

In 1999, the credit union converted to a federal mutual savings association charter and has continued its expansion since then. It merged with two additional credit unions in Tennessee in 2000 and 2001, one in Syracuse in 2003, and most recently with Marcy Federal Credit Union early this year.

In addition to its corporate offices and a branch location in DeWitt, Beacon Federal has locations in Marcy; Rome; Smartt, Tenn.; Tyler, Texas; Chelmsford, Mass.; and Smyrna, Tenn. The bank has 120 employees.