Independent Banker - June 2018 - 39

growing competition on all sides, many small and
medium-sized community banks feel they must at
least consider the merger option to survive.
Douglas C. Manditch has seen this question
from both sides. Currently the chairman and
CEO of Empire National Bank, a $952 millionasset
commercial bank located in Village of
Islandia, N.Y., Manditch previously had founded
another commercially focused community
bank on Long Island that was acquired. This
experience has informed his perspective on
thoughts of merging his current institution.
" No, we have not talked at all about being
acquired, " Manditch says of Empire National
Bank, which celebrated its 10-year anniversary
in February 2018.
His previous bank, Long Island Commercial
Bank, opened in 1990 and was sold in late
2005 to New York Community Bancorp, Inc., a
larger thrift that was seeking to quickly add a
commercial banking arm to its operation. " They
acquired us [LI Commercial] and another bank
in New York City, " Manditch says.
Worthwhile investment
The deal worked out very well for the
shareholders of Long Island Commercial
Bank, which sold for 2.32 times its book value,
according to Manditch.
" Those people who had been in it for 15 years
got a 420 percent return on their investment,
and the ones who [bought stock] when the
bank went public in 1997 got a return of 300
percent, " he says. Most of the employees opted
to stay and were kept on because they provided
the commercial banking experience that the
acquiring thrift had lacked.
On the flip side, Manditch admits that the
bank's commercial customers suffered. " Frankly,
being purchased by a thrift, [that bank] did not
have the commercial culture and the product "
to support business customers as well as Long
Island Commercial Bank had, he says.
When a merger happens, aside from a cultural
and product shift, bankers point out that lending
practices, customer service and markets can
change radically. " Community banks will do
" I see a lot of banks
looking at mergers
to diversify their
product lines and
their geography, and
give them a broader
talent pool. But it has
to start with looking
at what they have
already created. "
-Louis J. Dunham,
Ardmore Banking Advisors, Inc.
things differently than bigger commercial banks
do, " Manditch adds. " We are more aware of the
communities we are based in and are usually
really defined by those communities. I see
customers displaced now all the time. "
As Romero Rainey and other bankers and
industry experts often point out, the exploding
cost of regulation is largely to blame for coaxing
community banks toward mergers-more
so than competitive forces or other market
realities. And, with the exception of a few
booming urban markets, like San Diego, New
York City and Las Vegas, compliance costs
have stymied the emergence of de novo banks,
independentbanker.org Q 37
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Independent Banker - June 2018

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