Ithaca Times

Tompkins Trust Company celebrates 175 years in business

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Posted: Wednesday, March 2, 2011 12:00 am

In January 2010, blogger and political commentator Arianna Huffington launched a campaign called Move Your Money.

The idea behind the campaign was simple: in the wake of the financial meltdown, said Huffington, Americans had lost faith in the big banks on Wall Street, and so Huffington encouraged her readers to withdraw their money from institutions like Citibank and Bank of America and deposit it in local community banks.

"If enough people who have money in the bigger banks move it into smaller, more local, more traditional community banks," wrote Huffington, "then collectively we, the people, will have taken a big step toward re-rigging the financial system so it becomes again the productive, stable engine for growth it's meant to be."

Huffington's call didn't fall on deaf ears. The idea of the friendly local bank, where customers are valued and business is conducted on a face-to-face basis, carries a lot of appeal in the American imagination. It was memorably portrayed in the Frank Capra's classic film "It's a Wonderful Life," in which community banker George Bailey helps the people of Bedford Falls avoid the predatory practices of the greedy Mr. Potter. If anything can explain the disillusionment of Americans living through the worst economic downturn since the Great Depression, it's that the Mr. Potters of the world seem to have gained the upper hand. The subprime mortgage crisis, in which corporate lenders, hungry for short-term profits, issued faulty loans to applicants with a high risk of default, offered a dire example of what can happen when financial institutions go astray. In such a climate, it's not surprising that many Americans would be looking to move their money to more community-friendly institutions.

In an era when community banks across the nation have suffered from a wave of consolidations and closures, the Tompkins County Trust Company, which this year is celebrating its 175th anniversary, is the sort of bank that would make George Bailey proud. Chartered by a special act of the New York State Assembly in 1836 -Êthe same year that Davy Crockett died at the Alamo -Êthe Trust Company has shown a remarkable resilience over the years in weathering financial storms. It was a trend that was established early on with the bank's first president, Hermon Camp, who relieved the concerns of worried depositors by personally guaranteeing the bank's holdings during the economic panic of 1837.

In 1861 the bank was financially strong enough to loan the State of New York $25,000 during a downturn, and the bank showed similar strength during the Great Depression, when, in the midst of a nationwide wave of bank closures, Tompkins Trust closed for a single day before being pronounced sound and reopening. The success of the bank stems from a willingness to engage in prudent financial decisions that value long-term benefits over short-term gains, said Greg Hartz, the bank's current chief executive officer, and it's earned the bank a reputation for being a sturdy and dependable institution. Ê

"On a comparative basis, I think it's safe to say we would rank in the top quartile among peers," said Hartz, who has been with the Trust Company for eight years, four of them as CEO. "There have been numerous recessions since the bank's founding, and Tompkins Trust has survived them all. We have a reputation for being a very strong bank, very financially sound. In fact, we've been profitable right through the recession, with near record earnings even this year. Our culture is very team-oriented, very collaborative, and very customer-focused, and the combination of those factors has enabled us to maintain our independence and longevity over the years."

Making wise financial judgments in the midst of the subprime mortgage mess was difficult, said Hartz, but it's paid off in the long run for the bank, which has avoided the losses of larger institutions that took a gamble on the subprime housing market.

"The decision not to enter the subprime market was challenging," said Hartz. "As a publicly-traded company, we have a responsibility to our shareholders, and there was the question of whether we could increase our returns if we had some of this in our portfolio. But we elected not to do that, and it was a smart choice in the long term."

Avoiding the calamity in the housing market was in keeping with the Trust Company's community banking strategy, said Jim Byrnes, who served as the president and CEO of Tompkins Trust from 1989 to 2003.

"We're a prudent lender, we don't over borrow, we invest carefully, and as a result we didn't get caught up with the subprime stuff," said Byrnes. "Another thing that's helped is that Ithaca has been a great community to be headquartered in. Ithaca has a balanced economy, we weren't totally reliant on manufacturing and we have the support from Cornell and Ithaca College. Serving the local community is something the bank has always valued, and we've really adhered to the community banking strategy, focusing on the community and building solid relationships with customers. It's made our business more stable and helped us to grow over time."

Byrnes himself was at the helm of the Trust Company during much of this growth period, shepherding the bank into the 21st century with the creation of the Tompkins Financial Corporation, a three billion dollar holding company that serves as a corporate parent to three community banks, the Trust Company, the Bank of Castile, and Mahopac National Bank, which together operate 45 banking offices in local markets throughout New York State. Alongside these banks, Tompkins Financial Corporation also offers comprehensive wealth management services through Tompkins Financial Advisors and personal and business insurance products through Tompkins Insurance Agencies.ÊThe Tompkins Financial Corporation has strengthened the companies under its umbrella by giving them more resources and allowing them a broader range of operations, said Byrnes.

"The holding corporation gives us more range to do business with our customers," said Byrnes. "Twenty-five years ago, you would have had to go somewhere else for insurance and investment, but now we offer those services. It also gives us the flexibility to do acquisitions, which we have continued to do. All our loans are in the home areas of the local banks, and because we have the three banks, we have a bigger region to do business in."

The backing of Tompkins Financial Corporation has also helped the company stay abreast of important changes in technology and attract a higher pool of talented employees. Staying innovative is important for community banks, which don't have the level of resources that are available to larger financial institutions, said Greg Hartz. A few years ago the Trust Company launched a remote deposit service, which allows companies to scan checks and transmit deposits without coming into the bank. The service has proved popular, said Hartz, and it's an example of the sort of technology the Trust Company has to implement if it wants to stay competitive.

"With the three community bank structure we can take advantage of shared services like remote deposit," said Hartz. "We have enough size that we can stay innovative, which is invaluable for the future of the business."

Nevertheless, as the corporation grows, it's important to maintain the community bank strategy, said Stephen Romaine, who today serves as the CEO of the Tompkins Financial Corporation.

"People sometimes ask me what a community bank is, and I tell them, if you're running into your customers in the line at the grocery store, you've got a community bank," said Romaine. "The community banking industry is separate from the big megabanks. For the most part, we rarely cross paths. I have to be accountable for every choice that we make in the community every single day, and that might not necessarily be true of the larger financial institutions."

Tompkins Financial might fly under the radar of the bigger banks, but that doesn't mean that it hasn't attracted attention outside of the central New York region. In fact, the company was recently profiled in an article on the popular financial blog Seeking Alpha, in which contributor Steven Kiel sang the praises of the company.

"Tompkins Financial is one of those rare financial stocks that has maintained and increased its dividend through the financial crisis," wrote Kiel. "Not only that, but it's also grown earnings for 36 straight years. Let that sink in for a minute before we go on. Only one company has done it longer, Wal-Mart."

It may come as a surprise for Tompkins County residents to learn that a publicly-traded company in their midst is second only to Wal-Mart in the growth of its dividend over the last thirty years, but the statistic is true, confirmed Jim Byrnes. There are two main factors that have contributed to this success, he explained.

"First, we've always had a board of directors that was committed to not sell out and to grow the company and keep it locally managed and focused on community banking," said Byrnes. "The second is that we've been financially successful enough that we weren't compelled to go seek buyers for the company. We've been successful enough that our stock performance was satisfactory, and even better than satisfactory, so we've never had the pressure of selling out. It's got to be in your game plan to not be sold, and the performance of your company has to be good enough so that you're not forced by the stockholders to seek an alternate route."

This longstanding commitment to bedrock principles has given the Trust Company a visible presence in the community; so visible, in fact, that it's common for the Trust Company to serve multiple generations of customers within a single family.

"When we do a mortgage, it's in this area that we know," said Sue Lason, who works as marketing communication officer for the bank. "We have 919 customers who have been with us for over 25 years. One person's relationship with us dates back to 1921! People say to us all the time, 'Hey, my grandfather did business with your bank.'"

A major employer in Tompkins County, the Trust Company is also unique in having its administrative offices -Êwhat's known as the "back office" -Êlocated in the same community as the retail side of the bank, said Ursula Russ, vice president of sales and marketing. In an era of banking consolidations, it's been customary for banks to outsource their administrative services elsewhere, but the Trust Company has resisted this trend and kept them in town. The result is that the Trust Company employs more people than any other bank in the area.

"It's extremely unusual to have your back office support located in the same place as the retail portion of the bank," said Russ. "If a customer has a problem, we can literally walk across the street to the Rothschild building and get the issue resolved on a face-to-face basis."

The bank's commitment to the local community isn't just limited to employment, but includes a vibrant social and philanthropic mission. Employees are encouraged to volunteer and get in local causes, and Trust Company officers can be found on the boards of organizations throughout Tompkins County. The support of organizations like the United Way and the Kitchen Theater is the Trust Company's way of giving back to the local community, said Russ.

"We take our commitment to the community very seriously," said Russ. "We give away at least $250,000 every year. What's good for the community translates into being good for the bank." Ê

The Trust Company's actual birthday is in May, but the bank will be celebrating its 175th anniversary all year, by participating in activities such as the Chili Cookoff and Winterfest in February, the June Block Party on the Commons and the Apple Harvest Festival in September.

And what does the future hold for the Trust Company? According to CEO Greg Harts the bank will continue to focus on customer care and expand its services to reflect the growing complexity of people's lives.

"Change is constant," said Hartz. "People's financial lives are so much more complex than they used to be, and there will be new needs and new demands. Our goal is to continue to focus on identifying what our customers need, so that we can make good decisions for the future of the company."

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