Traditional bank on the rebound

Westchester County Business Journal, Jan 26, 2009 by Golden, John

While expanding the bank's loan portfolio, "Our underwriting hasn't changed one iota," Ritacco said. "We are still conservative in our underwriting. We are still cautious."

With the company's 21st-century makeover and infrastructure improvements, bank deposits grew by $11.3 million in the 2008 fiscal year, to $128.8 million. Since 2005, its total assets have grown from $114.3 million to $203.9 million at the end of the 2008 fiscal year, a 78 percent increase. Net interest income grew from $4.3 million in 2005 to $5.5 million for 2008.

CMS Bancorp reported a net operating loss in 2008 of $857,000 or 46 cents a share, compared with a net loss in 2007 of $803,000 or 38 cents a share. The larger net loss was due to a roughly 28 percent increase in no-interest expenses that included higher salaries and benefits and occupancy costs.

Ritacco said the bank is looking to continue expanding its branches in Westchester communities while building shareholder and franchise value. In Westchester, said Ritacco, "Just in the last two years you've seen high-quality community banks get gobbled up by the larger-type institutions...There's a huge niche of customers that have lost the community bank option. We see that for us as a tremendous opportunity."

"We really are opportunistic in that we believe that traditional banking has to come back." After the excesses that led to the collapse of financial markets, "There has to be a balance. Banks have to find ways to make money but we have to make money in a traditional manner" based on deposits and lending. "You can clearly see that traditional banking is back for everyone."

Ritacco suggested there's a lesson to be learned from the financial losses and failed business model of Citibank and other big banks that required a federal bailout. "Perhaps the right thing to do is stick to your knitting and do what you do well," he said.