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Long Island Financials strategy
of old-fashioned banking with automation is helping to drive shareholder value
Long Island Financial Corp.
One Suffolk Square
1601 Veterans Memorial Highway
President and CEO
Interview conducted by:
Walter Banks, Publisher
December, 30 2004
Douglas C. Manditch is President and Chief Executive Officer of Long Island Commercial
Bank and the banks parent Long Island Financial Corp., with its headquarters located in
Islandia, Long Island, New York, and is a founding director of the Bank.
Doug is a thirty-nine (39) year veteran of the banking industry. Prior to joining
Long Island Commercial Bank, in its formation stage in 1987, Doug held senior management
positions with National Bank of New York City, North Fork Bank and Trust Company and the
First National Bank of Long Island. He started his career in 1965 at Security
He also serves as a Trustee of The Long Island Museum
of American Art, History & Carriages at Stony Brook, and an Advisory Board Member of
Transitional Services of New York for Long Island, Inc., and is Vice Chairman of the Board
of Trustees of St. Charles Hospital. He also serves as Vice Chairman of the Honorary
Board of the Suffolk County Coalition Against Domestic Violence, an Honorary Member of The
Friends of Sagamore Hill, and serves on the Leadership Council of Long Island Masterworks,
Doug is past Chairman of the Advancement for
Commerce, Industry and Technology, is past Chairman of the New York Bankers Association,
Long Island Division and a past State Chairman for New York of the American Bankers
He has also served various other agencies and not for
profit organizations during his career.
Long Island Commercial Bank
opened in January 1990, and has a staff of approximately 110 employees with banking
offices in Islandia, Babylon, Hauppauge, Smithtown, Westbury, Jericho, Shirley,
Ronkonkoma, Melville, Central Islip, Deer Park and Bay Ridge, Brooklyn.
Long Island Financial Corp. (NASDAQ: LICB) (the company) and its subsidiary, Long Island
Commercial Bank (LICB) (the Bank) is an independent New York State chartered bank, founded
in 1990. is focused on serving small and medium-size businesses and consumers throughout
Long Island and Brooklyn. In addition to the banks Islandia headquarters, they also
offer eleven branch locations throughout the counties of Nassau, Suffolk and
Brooklyn, as well as Online Banking to serve customers needs. Long Island Commercial
Bank strives to make business and consumer banking a personal experience by offering a
broad selection of products, convenient services, and a responsive, knowledgeable staff.
Manditch, will you give us a brief history of the Long Island Financial Corp, and how long
have you been with the bank?
Mr. Manditch: In late January of 2005, we will be
celebrating our fifteenth anniversary. We were chartered by a group of businessmen from
both Nassau and Suffolk counties. Primarily Long Island is made-up of the two counties;
Suffolk County is in the east end of Long Island and Nassau is on the west end of Long
Island. Long Island also encompasses Queens and Brooklyn, which many people do not realize
and both are part of New York City but when Long Island is referenced, it is mostly Nassau
and Suffolk County. We established our headquarters in the middle of Long Island; right
off the Long Island Expressway. I was part of the founding group; I filed the applications
and it took a little over two years to get the bank opened and the banks name is
Long Island Commercial Bank. We are somewhat of a hybrid community bank in the sense that
there was not a local community interest in starting this bank. It was an Island-wide
interest in starting the bank; as you may know, Long Island is approximately 120 miles
long and has a population of about 2.8 million people. Most community banks start in
a central community, like a village or small town, so it was a little different for us. We
cater and concentrate to privately owned businesses and professionals. A number of years
ago, we started doing municipal business. We have twelve branches; eight in Suffolk
County, two in Nassau and one in Brooklyn, which we opened in 2003. In a few of our
branches we do some consumer business but for the most part, our branches are located in
industrial and commercial areas so we can concentrate on the business we want to do.
did you decide to open a branch in Brooklyn?
Mr. Manditch: In community banking, the thing is
people. We had an opportunity to attract the service of the President of a local bank that
was sold. He is a mainstay in the community and has been a friend of mine for many
years. Attracting someone like him lends immediate credibility when a bank opens in
a new area. From a community point-of-view, we thought it was a great
opportunity to be able to enter a community with that strength and that has been a plus
you look at expansion, do you focus on building branches?
Mr. Manditch: Unfortunately, all of our branches have
been de novo. We have not had an opportunity to buy another institution. Although we
continue to look, it is difficult today because the banks that are still around, that we
could buy, dont really want to sell. We are off the scope path of the mega banks
that you read about. Even North Fork Bank is now a $50 to $55 billion bank with 350
branches when you include the recent Green Point merger. We are not a target of that
group. It has been a de novo strategy and we have it down pretty well. Most of our
branches are in office buildings in commercial and industrial areas. We have two branches
that we have built over the last two years. One was a relocation of our most easterly
branch is Shirley, which we opened about six years ago. It has done very well for us and
they needed bigger quarters and we were finally able to find property. We have
a new branch in Deer Park in an industrial area."
goes into deciding where you are going to start a new branch; is your research done
internally or by an outside agency?
Mr. Manditch: We do it internally. I have been in this
business for 39 years on Long Island and I know the Island pretty well. I have other staff
people that know the Island. We look for an area where we want to be and we see if can
find a couple of locations from which to choose. It is tough to find people in Long
Island. Long Islands economy has been strong and unemployment is somewhere under
four percent. It is great except it is sometimes hard finding the people you need to
continually expand. We gather information and once we are convinced about an area, then we
attempt to find a property and for the most part, we look to lease.
much competition is there on Long Island?
Mr. Manditch: Tons of it! We have CitiBank, Bank of
America, Chase and Washington Mutual. There are a few of us that are in the $500 to $600
million range, such as us, Bank of Smithtown, BridgeHampton National Bank, and three banks
that are probably about a billion.
separates you and encourages customers to use your bank over another bank?
Mr. Manditch: Primarily it is service that separates us
from the other banks. We have the luxury of doing pretty much what we want to do for a
customer. We have products that we can streamline to a customers needs; we can do
what we want for a customer. We have been very progressive with automation. We have just
about any product that the money-centered banks or super regional banks have. We provide
personal service at the highest level; a person always answers the phone during the
many days a week are you open?
Mr. Manditch: We are open five days a week in most of
our branches. Some of our branches that have consumer business are open six days. For the
most part our branches dont warrant weekend business because they are in commercial
and industrial areas. We have three branches that are open of Saturdays. When you call us
a person will answer and that is different from a lot of places. That is something we feel
dedicated to. We provide a sense of urgency for making decisions for our customers. Many
times, we become our own competition because we are able to turn around loan decisions
quickly, sometimes that works against us in that customers will go back and negotiate the
terms that we provided, with their own bank. The competition is huge. We have seen some
mergers recently but the banks havent gone away, just the names have changed on the
CEOCFOinterviews: Do you
generate most of your income through loans? Mr. Manditch:
We have a significant security portfolio but most of our income is through
CEOCFOinterviews: So you
feel that if somebody walks through your door, you can get them a loan quickly?
Mr. Manditch: We think we can service our customers any
way they need whether it be loans or deposit products or whatever it is.
Dont most of the other banks say the same thing?
Mr. Manditch: Many banks do but I think that the best
thing to do is show customers that we can do it. When we do advertising, we dont
talk about service so much, because as you have indicated, anyone can say it, but it is
the customers experience that really counts.
else does providing good service help in bring new customers in?
Mr. Manditch: We receive referrals from our customers
because of the service that they experience at our bank. It is old-fashioned banking with
automation. We certainly value our customers and realize that without our customers, our
shareholder value will not increase. Obviously that is the whole purpose of this, to drive
your future growth come through expansion or internal growth?
Mr. Manditch: Our future growth will come from
expansion. We have a plan to have twenty branches by the end of 2008. It is an aggressive
plan and we are looking to restart branching again in the latter part of next year. It has
been a challenging time for us. We opened a number of branches in 2001-2003 and of course,
we have had compliance requirements that took up a lot of time this year. We have had to
comply with FDICIA and also with Sarbanes-Oxley, which has been a huge and costly
undertaking, so we did not expand this year. We are back on-tract to get to that
twenty-branch level. On Long Island you need to have brick and mortar. Most of our
branches are from just a little under 2000 feet to maybe 2,500 feet. We have learned to
open branches rather economically over the years. Branch expansion is needed
to gain market share due to the vast size of Long Island."
you tell us about the current financial condition of the company?
Mr. Manditch: The Company is in sound shape. The third
quarter of this year was a record-setting quarter for us; we made $1.2 million dollars;
seventy-three cents a share. That may be challenged a little bit by higher interest rates
at this point, but I do believe that the strength of the company is just starting to
blossom. We have spent a lot of money reinvesting in the company by opening branches and
in automated services. I believe that as we let the branches mature a little bit and as we
add new branches, we should be in a powerful position going forward.
are you positioned with your management team?
Mr. Manditch: We have a strong senior management. My
CFO has been with me for about twelve years; he is a CPA and is very strong. Our
controller is also a CPA and he has been with us for nine years. My chief lending officer
has been with us for fourteen years and he is a thirty-five year veteran of lending on the
Island. I have a strong branch administration staff and our sales staff is very good. We
are positioned very well.
you managed through the main office?
Mr. Manditch: We are pretty much managed through the
main office. There is some empowerment in the branches but the key is in how we have
structured the bank. We like to keep the branch managers free to go out and cultivate new
business and not tie them down with a lot of detail. We have set the bank up so that we
have business development officers that work in tandem with branch managers and get
involved with gathering more of the details, and then they bring the information into the
bank and we have others that do the underwriting. On the deposit side, it is different;
the branches can handle all requirements. We have operation support for cash management
services, lock box, rent security, escrows and all of that. For the most part, the
branches are there to care for the customers and provide the best service that we
someone was looking at your company and said, the area you are in looks like it is
going to be growing; would that be accurate?
Mr. Manditch: Yes, Long Island is constantly growing.
Ninety percent of the employment on Long Island is through small business and small
business in that case is classified as businesses with less than twenty employees. There
is something like ninety thousand small businesses on Long Island. There are some bigger
companies on Long Island such as Symbol Technologies and Computer Associates. Healthcare
is very big on Long Island. For the most part, most people are employed by small business
and it is very vibrant at this point.
customers tend to carry their loans to term?
Mr. Manditch: We do a lot of commercial real estate
mortgage lending. Our Commercial lending products are primarily lines of credit.
Some customers go to term, others renegotiate, or refinance, as their needs
you looking to attract investors?
Mr. Manditch: I am always looking to attract investors
to our company and trying to get the name of Long Island Commercial Bank and Long Island
Financial Corp. out in the investor market. It is not a brand that is recognizable so it
is important to have these kinds of conversations so that we can be published in different
areas. We are always looking to have awareness made of the company and to attract new
shareholders. I think that keeps the stock vibrant. We are not hugely traded, obviously,
and it is great to have new interest in the company."
closing, if potential investors were looking at your company, what would you say to them?
Mr. Manditch: I think that someone that wants to invest
in our company is someone that is a longer-term holder. It is somebody that is willing to
hold on for a number of years and see the investment appreciate over that time based on
earnings and delivering shareholder value. We do pay a dividend at this point; it is 48
cents a share annually. We pay it quarterly. Our board likes to pay a dividend, although
we have not set a specific percentage of dividend payout. The board is cognizant of a
dividend and of appreciation so it is a mix that we hope satisfies our shareholders. We
have a dividend reinvestment program if an investor wants to do that with its dividends.
So we look for an investor that is a longer-term equity holder.
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