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Alliance uses small size as an advantage
CNY Business Journal (1996+), Apr 01, 2005 by Dickinson, Casey J
SYRACUSE - From the 18th floor of his downtown office, Alliance Financial Corp. Chairman and Chief Executive Officer Jack H. Webb can see for miles. His office provides a view of many of the biggest names in banking - competitors that haven't stopped relative upstart Alliance from growing and thriving in Central New York. Alliance's smaller size has allowed it to be more nimble and creative in pursuing avenues of growth than its larger rivals, Webb contends.
Alliance Financial Corp. (NASDAQ: ALNC) is the holding company for Alliance Bank, NA. The bank's territory extends from its Syracuse headquarters out through the adjacent counties that spawned the company in the late 1990s. Alliance is steadily increasing its presence in Central New York and looking for growth opportunities across Upstate. The bank has $900 million in assets.
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Last year, Alliance increased its deposits 11 percent, says Webb, more than twice the national average.
Alliance traces its banking lineage to 1851. The company's name refers to its origin as the combination of two longestablished banks. In 1998, Oneida Valley Bancshares, parent of Oneida Valley National Bank, and Cortland First Financial Corp., parent of First National Bank of Cortland, combined to create Alliance Financial. At the close of business on April 16, 1999, the two banks joined as one under the Alliance banner.
Alliance employs 310 and posted a net income of nearly $7.3 million in 2004 on more than $49 million in revenues.
Webb cites Alliance's recent acquisition of a portion of HSBC's trust business as an example of the perseverance that he believes sets Alliance apart from other banks. The deal, which closed in February, took more than seven months to consummate and involved multiple regulatory agencies as well as the approval of the New York State Supreme Court, which oversees many trust accounts.
"The trust acquisition is a big deal," says Webb, "but we had the courage, tenacity, and persistence to make it happen."
The HSBC deal added 1,830 trust accounts with $560 million worth of assets to Alliance's trust department. The bank now has more than 2,400 trust accounts with $800 million in assets under management.
Alliance has strengthened its branch network in Onondaga County over the past year as part of a building strategy. Alliance has recently added or announced plans to build branches in the Syracuse suburbs of Cicero, DeWitt, and Camillus. The bank also plans to add two more branches in Onondaga County this year, says Webb.
Alliance's commercial-lending business ranges in size from small-business loans to multi-million dollar transactions. Being a smaller bank, says Webb, allows Alliance to evaluate loans from a different perspective than larger competitors.
"Other banks have lists of what they can't do," says Webb, "We don't have those lists."
Change isn't a "can't do" for Alliance either. Last year, the bank relocated its Manlius branch from a village-center location to a newer location outside the village of Manlius. The change has resulted in a 50 percent increase in the Manlius branch's deposits, says Webb. The move within a market, Webb suggests, might not have been a priority for a larger bank.
Webb's executives have started several process-improvement projects at Alliance. One of the recently completed projects has helped the bank lower its mortgage-approval process from 60 days to 15 days.
"We've got the fastest in the market," says Webb. "You may not need to close on your house in two weeks, but we're ready when you are."
Alliance worked with Cazenovia-based Seven Pines Consulting to examine its mortgage-application process. The bank's staff and consultants analyzed each step of the mortgage process to see where it could make improvements. As the project progressed, Webb recalls, charts lined the entire length of the wall where team members met. Seven Pines applied its experience with lean manufacturing to the banking world, says Webb.
Residential mortgages are still a large part of Alliance's business, a legacy from its past. The bank still has room to grow its mortgage-loan portfolio within Onondaga County, says Webb. The mortgage business makes up about one-third of Alliance's loan portfolio, commercial loans comprise another third, while auto and consumer loans make up the balance. Alliance operates a commercial-leasing subsidiary as well.
Auto financing is a growth market for Alliance, says Webb. The bank provides financing services for more than 120 auto dealers across upstate New York. Lending agents at each dealership create loan packages based on Alliance's preferredlending criteria. Over the past five years, that business line has grown from approximately $25 million to $120 million in outstanding loans, says Webb. Since auto loans are often for a relatively short term, he adds, the figure reflects a continuing pattern of growth.
Alliance's name will be more prominent in the Syracuse market this Spring: The company has placed the Alliance Bank name on the Syracuse SkyChiefs baseball stadium. Opening day is April 7.
