RankingBanking 26 Digital - Flipbook - Page 19
17
Northeast
The Northeastern part of the country is home
to not only the global banking center of the U.S.,
but arguably that of the world. Megabanks JPMorgan Chase & Co. and Citigroup are headquartered in New York City, while the country’s two
10%
26%
12%
Percent of U.S.
banks headquartered in the
Northeast
Percent of banks in
RankingBanking
Percent of banks
in top 25
other largest institutions, Bank of America Corp.
in Charlotte, North Carolina, and Wells Fargo
in San Francisco, have a presence there. Outside
of the U.S., and that has squeezed profitability
of the Big Apple, there are other bustling metro
in recent years. Many of these institutions are
centers, including Philadelphia, northern New
still grappling with fixed-rate real estate loans
Jersey and Boston, that help drive the economy in
originated when rates were significantly lower
the region.
than today. “A lot of these banks are competing
Residents of the Northeast have higher median
intensely for loans and deposits,” Crowley adds.
household incomes than the U.S. in general. That
CRE loans are also generally seen as less risky
leads to almost endless opportunities for banks
than other lending categories, such as commercial
based there.
and industrial credits, and that contributes to the
“I don’t know of a banking product that is not
lower yields in the region. “You have this dynamic
offered in a very robust way in the Northeast,”
where banks in the Northeast are trading growth
says Andrew Sagliocca, vice chairman and CEO of
for stability,” Crowley adds.
Esquire Financial Holdings in Jericho, New York.
The $2.5 billion Esquire is one of the three
Still, the region is highly competitive, given the
Northeastern banks that made the 25 top per-
breadth of mega and large international banks
formers list on Bank Director’s RankingBanking.
that do business there. This increased pressure can
To be successful in the region, smaller banks
drive down loan yields and hurt net interest mar-
need to find a niche and excel at that, Sagliocca
gins, says Justin Crowley, a senior research analyst
advises. Esquire focuses on two national business
at Piper Sandler & Co. Research from the Federal
lines — providing banking products to plaintiff
Home Loan Bank of Boston that examined banks
law firms and operating as a merchant acquiring
in six New England states — which are included
bank. That helped Esquire land at the No. 3 spot
in RankingBanking’s Northeastern region —
this year.
found that these institutions posted worse results
Trying to be everything to everyone is a difficult
in several key categories compared with the rest
strategy to execute, given that the megabanks
of the country, including lower loan yields, higher
operating in the region have more resources,
cost of interest-bearing liabilities and a smaller
better technology and larger operations to do that.
return on average assets.
“I think you need to identify a market or a niche
Lending opportunities in the Northeast also
tend to be more heavily concentrated in commercial real estate and multifamily than other parts
or a vertical you want to focus on in the banking
market and do that well,” he adds.
