First National Bank of Long Island opens in Point Lookout

In idyllic Point Lookout there's an IGA, a post office and a fewsmall seasonal businesses, but not much else, save for 1,500residents. Not even a bank, until mid-February.

First National Bank of Long Island came to the seaside hamletoffering competitive rates, personalized service and communityoutreach to attract consumer deposits. But opening a consumer-focused branch of a business-heavy bank in unproven territory duringa low-interest-rate environment is a gamble.

While the move is a departure from First National's reliance onbusiness customers, bank CEO Michael Vittorio said he expectsbusiness deposits to follow the consumer ones and said he hadsuccess with the tactic at his branch in Bayville. That branchopened in 2009, filling a space vacated by Bank of America, and nowboasts over $30 million in deposits.

Like Bayville, Point Lookout is a wealthy community, an importantcriterion for First National. Vittorio noted that many affluentattorneys and doctors make their homes in Point Lookout; FirstNational has built its business on making loans to typically low-risk professionals.

David Danielson, president of bank consulting firm DanielsonAssociates in Bethesda, Md., said a bank the size of FirstNational's (which had $1.7 billion in assets at Dec. 31, 2010) couldopen a branch that operates at a loss simply to enlarge itsfootprint. Vittorio, however, said his bank would never take thatroute, adding that there are micro-markets on Long Island that areuntapped.

In 2010, First National opened branches in Sea Cliff, Cold SpringHarbor, East Meadow and Bellmore. After Point Lookout, Vittorio isslated to open a branch in Massapequa in June, and another two in2012, bringing the total count to 37.

Danielson and a bank CEO said the Point Lookout venture could berisky. Danielson said even though the storefront branch may beinexpensive to operate, Vittorio will have to offer rates higherthan his competitors to attract clients away from their existingbranches. An easier way to play to consumers and their deposits issimply by increasing rates without going through the expense ofopening up a branch, he explained.

"In the current low-rate environment, opening up a branch that'sgoing to offer competitive rates is a difficult proposition,"Danielson said. "We're basically in a low-rate environment wherebranching doesn't make sense."

Danielson added that the fact there has never been a bank branchin Point Lookout could mean that there is no need for one. In a well-developed market like Long Island, existing banks have scoped outevery possible nook and cranny in which to do business.

Vittorio, however, said his Long Island-based staff andmanagement know the market better than any of his money-centercompetitors. Point Lookout residents have to travel to Long Beach orOceanside to bank, he said.

"It's something we were able to discern and leverage upon,"Vittorio said.

Vittorio's bank is currently offering a 3 percent annualpercentage yield on a five-year certificate of deposit, the higheston the market. It far surpasses his competitors, according to arundown of CD rates on Bankrate.com. According to the site, thehighest five-year CD is 2.4 percent and is offered by Internet-onlyinstitution Ally Bank. Locally, Jericho-based State Bank of LongIsland has the next highest, coming in at 2.25 percent.

Even with the rate, it takes more than a convenient branchlocation to move consumers from their current bank to a brand-newone, said Doug Manditch, CEO of Islandia-based Empire National Bank.Manditch said Internet banking is a strong factor, as well.

Vittorio acknowledged the importance of Internet banking, whichhis bank offers, but said consumers still want a brick-and-mortarstructure nearby.

"There's the synagogue, church, library, post office and bank,"Vittorio said. "People want one in their community."

Vittorio is also pinning the success of the branch on accountsfrom businesses owned by the wealthy residents. He found that at hisbranch in Bayville, where there are very few businesses, villageresidents still brought their business accounts to the bank. Histake on it is that people like to do business banking close to wherethey live.

"Most of our customers come from big banks, which we feel have asterile approach," Vittorio said. "With our personal service we willcontinue to take advantage of that and continue to grow marketshare."