JAMES R. COYLE - STATEN ISLAND BANCORP - (SIB)
CEO Interview - published 02/26/01

DOCUMENT # LAT624

JAMES R. COYLE is currently President and Chief Operating officer of Staten Island Bancorp, Inc., and its wholly owned subsidiary, SI Bank & Trust. In his 30 years with the bank, Mr. Coyle has previously held various positions, including Executive Vice President and Chief Financial Officer, Executive Vice President of the Banking Division, and Vice President and Auditor. Mr. Coyle holds an MBA from St. John’s University and a BA degree from Villanova University. His community affiliations include President of the Staten Island Historical Society, Regional Board Member of St. Vincent’s Catholic Medical Center of New York, Board Member and Treasurer of the Seton Foundation for Learning, and Board Member of Staten Island Heart Institute.

Sector: Banking

TWST: Could you give us a brief overview of Staten Island Bancorp, Inc.?

Mr. Coyle: Staten Island Bancorp, Inc., is the holding corporation for SI Bank & Trust (formerly Staten Island Savings Bank.) We changed the name in September 2000 to SI Bank & Trust so that the new name is more reflective of our commercial orientation and has less of a geographic identity as we expand into new markets. SI Bank & Trust is a community bank that was formed over 136 years ago. We have outstanding core market penetration in Staten Island as demonstrated by our dominant 30% share of the total deposit base. We also maintain a relationship with more than 50% of both the consumer households and local businesses. In 1995 we purchased a commercial bank on Staten Island as part of our business plan to become more commercially oriented. In 2000, we expanded our franchise into New Jersey with two key acquisitions. The first was the purchase of First State Bank, a commercial bank with $327 million in deposits. In December we completed the acquisition of four branch locations with $41 million in deposits from another commercial bank. These acquisitions along with a de novo branch opening gave us a presence in Ocean, Monmouth, Middlesex and Union Counties of New Jersey. In 2000 we also opened our second branch in Brooklyn, New York. We now have 30 branches, 17 on Staten Island, two in Brooklyn and 11 in New Jersey. One of our main strengths is our low cost core deposit base. Approximately 60% of our base is considered core. In addition approximately 17% of our total deposit base is made up of non-interest demand deposits. Another strong trait is our ability to generate loan growth through our core lending business that originated $1.7 billion in 2000. Average loan growth over the past two years has been 40%. In addition to the bank lending operations, our core lending business includes SIB Mortgage Corp. which does business as Ivy Mortgage and American Construction Lending Services Inc. (ACLS, Inc.). Ivy is our mortgage-banking unit, which has offices in 27 states. ACLS, Inc. is a direct lender specializing in non-speculative residential construction loan products throughout the United States. At December 31, 2000, Staten Island Bancorp Inc. had $5.2 billion in assets. Our stock is traded on the New York Stock Exchange and we have a capitalization of approximately $822 million. In 2000 we were selected for inclusion in the S&P Small Cap 600 index. Also, in 2000 we had a 17% increase in core earnings per share and a 20% increase in core cash earnings per share.

TWST: Could you tell us about your outlook for the next couple of years?

Mr. Coyle: In the next couple of years we expect to continue to expand the bank through a combination of whole bank and branch acquisitions. We have also done significant work in trying to find de novo locations that meet the demographic that is necessary for us to establish branches that can support the products and services that we feel are necessary to succeed, from both the deposit and lending side, and are attractive to both the consumer and business community.

TWST: Tell us about the demographic you’re looking for.

Mr. Coyle: We’re looking for a demographic area that has a strong blend of business and residential concentrations. When we look at a lot of communities, you see some that just have the households and have a very weak concentration of business. We are firm believers that to grow bank deposits in this competitive market, you have to attract stable businesses, which is the basis of maintaining low cost of funds. We feel that the products and services that we offer the commercial business are somewhat unique. It’s a lot of hands-on. And in all of our markets we find that the customers do come to us for that added special touch that we have. As an example, one of the major features of our checking account service is that we will notify customers if they are going to bounce a check. There’s always a fee associated with it, so we make fee income. And customers are very pleased with that service. They’d rather not have a check bounce. They’d rather be notified and given the chance to cover the check and not have the embarrassment of bouncing a check with a vendor or a client. We do this on a daily basis, in an efficient manner, that, we think, gives us kind of a leg up on some of the competition.

TWST: The bank has been extremely successful in a highly competitive business. Is there more that you can tell us about why you have been so successful? Is it all in the same vein as what you were just saying?

Mr. Coyle: I think it’s a bit more than that. We also try to expand the products and services that our customers use. We have a strong commercial lending arm that constantly calls on our existing customers. Branch managers also are required to make calls on customers that we have identified as potential borrowers. We also have a very successful business development arm that is always prospecting for new customers. These types of efforts help us develop a full deposit and lending relationship with our customers.

TWST: Can you tell us a little bit about your personnel policies?

Mr. Coyle: Our personnel policies are geared toward developing each person to realize their full potential. We accomplish this through a strong in-house training program, as well as incentive programs that reward operating performance and sales goals. Our branch incentive program, called “Success,” rewards branch personnel on attaining certain sales targets. We constantly focus on keeping the branch people, the lending people, our trust people, all up to speed on what’s going on in the marketplace. And we constantly strive to deliver outstanding customer service.

TWST: What’s happening to Staten Island? I should think Staten Island’s probably becoming more and more prosperous. What is the picture of the population that you serve?

Mr. Coyle: Staten Island has a population of about 420,000 people in approximately 146,000 households. The median household income is in the mid-$50 thousands, which is second highest after Manhattan, in the City of New York. Our deposit penetration is approximately 72,000 households, and our loan penetration is approximately 18,000 households. There are about 12,000 businesses on Staten Island and approximately 90% of these have sales of less than $5 million. We have approximately 9,700 business checking accounts in Staten Island. The age of our customer base typically matches the age distribution of our market area, which is something that we have strived to do. We wanted to make sure that we didn’t have a disproportionate aging deposit base. So we’ve done things to attract younger families, things along the lines of electronic services at a reasonable cost, good offerings with CDs, good offerings with investments, and low-cost or properly priced loans.

TWST: Can you comment on your use of the Internet?

Mr. Coyle: We currently have an interactive Website at sibk.com. which provides product information as well as investor information. There are also a variety of tools and links that can assist users in various aspects of financial inquiries, such as loan calculators, retirement planning, etc. We also have an on-line banking solution, called PC direct, which is currently not on the Internet. Software is provided to the customer that enables them to interface with our data service provider. PC direct provides a full range of options, including account review, bill paying and internal transfers. PC direct has been very successful with a penetration rate of about 10%. We plan to migrate this service to the Internet in 2001. We view the Internet as part of our overall strategy to deliver the best service to our customer. Through our mortgage-banking subsidiary, we have done a couple of pilot loan origination programs through the Internet. These have not been successful in generating substantial business. It appears that the great majority of people still want hands-on service. They want to go see someone and sit down and discuss the various products that can be offered in the lending process.

TWST: Can you mention any other things which might distinguish you from other people who are in the same or similar business?

Mr. Coyle: Yes, in the truest sense of community banking, we encourage our people to become very involved in the communities where they live. We don’t force everyone to do it. But we support our employees when they get involved in what happens in their community. And I think that helps. With our presence on Staten Island, we have employees who I would say touch probably every not-for-profit on the island, whether it be on the educational side, health care, nursing homes, museums, social, cultural. We’re basically touching and reaching vast and diverse groups of people. I think that kind of effort, most of which is done on their own time, comes back to the bank, in the form of new business. People see that we are involved, we are members of the community. We understand what it is like to be a Staten Islander, or to be from the communities we serve in New Jersey and Brooklyn. So I think that, at least what I see with our outreach, that’s a piece that even though it’s not strictly business-related, gives us a bit of an edge over our competition. In addition to employee involvement, our Community Foundation has made an enormous financial contribution to community-based agencies since its formation following our IPO three years ago.

TWST: Where would you like to be in the year 2003?

Mr. Coyle: We would like to expand and grow through various opportunities including whole bank acquisitions in the $400 million to $1 billion asset range, as well as developing de novo sites, most likely in Brooklyn and New Jersey. Our strategy will also include expansion through select branch acquisitions. The deposit base is critical to provide growth at reasonable costs. We also plan to expand our mortgage operations and commercial lending base. We feel that, a couple of years out that we should be growing at a pace of 5%-10% per year.

TWST: When you do acquisitions, are there difficulties about absorbing people into your own culture? You just described the way you do things, your social attitudes, the attitudes toward personnel, etc. How difficult is it to absorb another company and get that going there?

Mr. Coyle: It surprisingly is, in one respect, easy to do. And in another respect, it’s fairly difficult to get them on board with the sales and outreach piece of the culture. As far as teaching them banking practices, it’s kind of straightforward; it’s done through our training department. It’s done through putting our people in branches to guide them and bring them up to product levels and service levels that we expect. I must say that fortunately in the acquisitions that we’ve done over the past year, we’ve had the good fortune of having, a high level of service already being provided to the customer base. We try to retain as many people as we can through these acquisitions who will add to the growth and development of our business. That’s not to say that we don’t find synergies through staff reduction in operations that provide duplicate efforts. However, through severance packages and job search help we attempt to make the transition as smooth as possible. But as far as fitting the people in, I think we do focus on it. Our people on the branch administration and lending side are sensitive to those issues and try to bring the people in and make them realize that they are a meaningful part of our team.

TWST: Are there any things that you’d like to address, that you would like to strengthen or shore up in the company?

Mr. Coyle: As we expand, we want to make sure that people are on board to execute our strategic plans. This means extensive communications with our staff so they know how they can contribute to our success as we move down the road.

TWST: Are there any risks or any things that worry you in your situation?

Mr. Coyle: Monitoring and improving our interest rate risk is an on-going concern. The industry as a whole, including us, experienced pretty substantial compression on interest rate spreads and margins in 2000. Fortunately, we’ve seen a reduction in short-term rates by the Fed. We see that as actually taking some of the pressure off the tightening trend and giving us wider margins. In fact, it’s happening right now.

TWST: If you were speaking to a group of long-term investors, and you wanted to give them the best reasons why they should invest in your company, what would these reasons be?

Mr. Coyle: I think it would be that we have a very strong core earnings franchise. I believe that we have demonstrated that we can grow our bank. We can grow it both on the asset side and the liability side. We have a strong efficiency ratio. We’re constantly focused on trying to do more with the same or less — less on the expense side. I think we constantly keep focused on earnings. We realize that we have to build shareholder value. A good number of us, or I should say just about every employee in the bank, is a shareholder and our inside ownership is somewhere between 12% and 14%. So I think those things, I hope, would let an investor know that we’re working hard for them and we’re working hard for ourselves.

TWST: May I ask how long you yourself have been an employee of the bank?

Mr. Coyle: I have been with Staten Island Savings Bank and SI Bank & Trust for 30 years.

TWST: Could you just comment on how you mix new blood and old blood in the bank?

Mr. Coyle: When we recruit new people, we look for people who we believe culturally will fit with us. And the culture that we look for in a new employee would be one of a service culture, one of a sales culture. We look for people who are knowledgeable in the field. We believe that our old culture, the older people here, have grown with the times and that we are as much in tune with new people coming in as we would expect them to be in touch with our culture. We feel that our culture has grown and developed over the years and is anything but stale. We have gone to great lengths to make sure that we stay fresh and that we stay focused on what’s going on in the market and in our community, so that we can be responsive to our customer needs.

TWST: Thank you. (MC)

JAMES R. COYLE
 President & COO
 Staten Island Bancorp, Inc.
 15 Beach Street
 Staten Island, NY 10304
 (718) 447-7900
 (718) 448-5987 - FAX
 www.sibk.com

Each Executive who is the featured subject of a TWST Interview is offered the opportunity to include an Investors Brief or other highlight material to be provided and sponsored by and for the company.

To ask a question of this or any other publicly traded company, visit QAWire.com


Copyright 2001 The Wall Street Transcript Corporation
All Rights Reserved

The Wall Street Transcript (TWST) interviews are published verbatim, and TWST does not in any way endorse or guarantee the accuracy of any information or opinions expressed herein and all opinions are subject to change without notice. Nothing herein constitutes a solicitation to buy or sell any securities. TWST interviews with CEOs may include include "forward-looking statements", which are based on factors that involve risks and uncertainties. Actual results may differ materially from those expressed or implied. TWST shall have no liability whatsoever for any trading losses arising out of use of this information. Copyright 2001 Wall Street Transcript Corporation. All Rights Reserved.