Amalgamated Wants More Island Business

Written by Andre Cappon.

Speaking enthusiastically of Roosevelt Island, Samantha Berg, Amalgamated Bank’s Executive Vice President in charge of Community Banking says, “We are excited with all the developments on the Island, the Mitchell Lama conversions, the new buildings, Cornell… we see plenty of opportunities. The population of the Island has grown by more than 20% over the past 10 years and is expected to double over the next several.”

Having a healthy local bank is important to Roosevelt Island for many reasons, not the least being the many residents who rarely leave the Island and the overall retail climate. But the history of financial institutions here has been a difficult one.

Banking on Roosevelt Island

There has been a fair degree of bank turnover. Initially, we had Manufacturers Hanover Trust, which was merged into Chase. In 2000, Chase concluded the branch was too small and uneconomic and left. New York National Bank took its place and then it left. In 2009, Amalgamated came to the Island. For a few years, we also had Montauk Credit Union, now gone because it failed to attract enough deposits to justify a location.

Challenges

This history suggests that there are some chronic problems or root causes.

Demographics: The Island started as a middle-income, Mitchell Lama community in the 1970s and, although there has been gentrification, we still have a significant population of limited means and a large and growing number of retirees with low incomes.

Powerful competition in Manhattan: Most working residents commute to jobs in Manhattan, spend most of their day there, and are naturally inclined to use banks near their workplace. This gives them access to a dense network of branches and ATMs throughout the city.

Lack of commercial clients: The Island has relatively few small businesses – only a few stores and restaurants. The larger ones, such as Gristedes or Starbucks, are part of giant firms with established off-Island banking relationships.

In this challenging context, Amalgamated has achieved a modest success on Roosevelt Island, and is showing a serious determination to make things work here.

The branch currently has around $30 million in deposits – small compared to a typical retail banking branch, likely to have $150-250 million in deposits.

According to Berg, the bank’s market share on the Island is around 10%. The bank does not disclose the number of customers, but it can be estimated to be 1,000 to 1,400 (10% of the almost-14,000 population).

Amalgamated deserves better. It’s a unique banking institution, rooted in the history of the union movement of the 1920s and dedicated to serving the working person and his/her family.

A Value Proposition

With assets of $3.7 billion, deposits of $2.5 billion, a 17-branch network and 395 employees, Amalgamated is a small bank. It is satisfied to make a small profit – a return on equity of around 3% (vs. 10-12% for large investor-owned banks).

As an institution, its value proposition is impressive:

• Basic, simple, affordable banking services – no fee/no minimum balance accounts and reasonable interest rates.

• A conservative posture and a strong capital base for its size.

• Nationwide access to the 40,000-strong Allpoint ATM network, well-represented in New York, in locations such as CVS drugstores.

• Complete online and mobile banking apps on smartphones and tablets.

• A high level of service: customers can talk to a live customer service person based in New York (rather than India or the Philippines!).

On Roosevelt Island, the Amalgamated branch has to overcome a number of challenges. Its location is not ideal, its “face” unobtrusive, despite its recent makeover. It’s easy to pass by without even noticing the bank. Naturally occurring foot traffic is light, restricted to residents of Westview, at 625 Main Street, walking down-Island, or others walking south, home from the post office or Gristedes or school drop-off. The competition already has exclusive-deal ATMs in high-traffic places, such as Gristede’s and Duane Reade.

Led by its friendly and experienced manager, Al Salas, who has been in charge since 2009, the branch has tried hard to overcome these challenges. It offers Saturday morning hours. It has recently increased its profile in the community by participating in local events and making contributions to local causes. The bank has made contributions to RIRA – CPR classes, the Historical Society (RIHS), the Disabled Association (RIDA), RIOC’s Halloween Parade, the Holiday Tree Lighting, PS/IS 217, and Four Freedoms Park Conservancy. It also has contributions scheduled for the Roosevelt Island Visual Art Association (RIVAA), the Main Street Theatre, and others.

Both Berg and Salas cite several positive factors about the Island:

• Unique waterfront real estate in an increasingly crowded New York City

• Convenient location between Manhattan and Queens

• Improving transportation options, including planned ferry service

• Population growth – the Island, which now has almost 14,000 inhabitants is expected to reach 15,000+ soon. With an eventual 2,500 additional from Cornell and the other new buildings coming in the Riverwalk complex, we should be knocking on the door of 19,000 within a few years.

• Further gentrification – buildings exiting from Mitchell Lama and new buildings being built are attracting a wealthier, younger crowd with growing financial needs. For example, mortgages to finance apartment conversions. In the last year, according to Berg, the bank wrote around 100 mortgages for a total of $15 million.

• Cornell – expected to create a lot of new, well-paid jobs. Many Cornell employees may choose to live on the Island and will attract new businesses.

To capitalize on these opportunities, the branch will need to strengthen its reach on the Island.

Some ideas come to mind – some are already being explored by Amalgamated:

• Additional ATMs – perhaps in the subway station or Tramway Plaza, or even the lobbies of key buildings.

• Evening hours, at least 1-2 days a week.

• Promoting Amalgamated Bank systematically to newcomers on the Island (since people only tend to change bank relationships when they change residence or employment). Amalgamated could reach out to the rental offices and/or real estate brokers active on the Island and convince them to present the bank to newcomers.

• Tax preparation services on its premises, during the tax season and offering deposit products to people who expect tax refunds.

• Anticipating Cornell actively – offering Cornell employees and affiliates an attractive deal and a mini-branch on premises.

• A focused campaign designed to convince Island residents to switch to Amalgamated, by stressing the high level of service, and perhaps offering some incentives.

Future

Bottom line, more can be done. For Amalgamated, in its efforts to grow its Island business, it’s a matter of balancing costs and benefits, but with a few correct strategic and marketing moves, the branch could more than double in size – by achieving a slightly higher market share of a growing, wealthier population. An eventual increase to 15% of 19,000 Islanders would mean 2,850 customers.

From the community’s standpoint, Amalgamated provides an essential service and deserves Islanders’ support.

Berg expresses unconditional enthusiasm for the Island. “Roosevelt Island is uniquely situated. Surprisingly convenient, it is an Island that relishes community. Roosevelt Island residents seem both proud of the history, but also excited about the future of the Island as it experiences unprecedented growth.”

“Given the bank’s progressive mission, I believe that we are well positioned to serve the diverse and active community on the Island.”

Tags: Retail Island Life Andre Cappon

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