A 132-year-old upstate New York community bank believes its most promising growth market lies south, down the Hudson River Valley in the Bronx.
Orange Bank & Trust in Middletown plans to open its second Bronx branch in mid-2025 near the sprawling Hunts Point Cooperative Market. Michael Gilfeather, the $2.5 billion-asset Orange's Bank & Trust's president and CEO, said he believes the New York City borough "could be our biggest market within five years."
Founded in 1892, Orange Bank & Trust operates 16 branches, including seven in its legacy Orange County market, where it holds $1.1 billion of deposits. That is about 10% of the $10.8 billion deposit market, according to the Federal Deposit Insurance Corp.
Gilfeather took over as CEO in 2014. He's spearheaded Orange's southward push. To date, Orange has focused more on Rockland and Westchester counties, where it's opened eight branches since 2015, the latest in January. Both of those suburban markets are substantially more affluent than the Bronx, which has a median household income of $47,000, according to the U.S. Census Bureau. Still, Orange's lone Bronx branch, which opened in July 2021, has amassed $81 million of deposits and more than $250 million of loans. "Those are very significant numbers" for a bank whose loan and deposit portfolios total $1.8 billion and $2.1 billion, respectively, Gilfeather said.
In the Bronx, which "is home to a dynamic business ecosystem," Orange markets itself as a "boutique" commercial bank, Gilfeather said. As it expands, Orange will focus on nonprofits and small businesses. It also expects to pay particular attention to construction lending, tapping into what Gilfeather described as a red-hot local market.
"There's an insatiable appetite" for housing, Gilfeather said. "It's pretty much `build it and they'll come.'"
Other banks are seeing similar opportunities. The $3 billion-asset, Bronx-based Ponce Financial Group has seen its construction and land portfolio spike to $631.5 million as of Sept. 30, up from $235 million 18 months earlier. "We're doing a lot more construction lending than we have in the past," CEO Carlos Naudon said Wednesday on a conference call with investors.
According to New York's Department of City Planning, the Bronx accounted for 35% of new housing completions in 2023, outpacing the four other Gotham boroughs.
With a population of 1.3 million, according to the Census Bureau, the Bronx is the second-smallest of New York's five boroughs by population after Staten Island. Its $17.4 billion deposit market is dominated by big, money center banks, with five institutions — JPMorgan Chase, Citigroup, TD Bank, Bank of America and Capital One — controlling more than 70%. That creates opportunities for smaller, nimbler community banks to promote a more relationship-centered approach, Gilfeather said.
Branch density in the Bronx is also significantly lighter than in other boroughs. A total of 124 branches are located in the borough, according to the FDIC. That compares to 328 for Brooklyn, 361 for Queens and a whopping 529 in Manhattan. Staten Island has slightly fewer branches, with 95, but its population of 492,000 is less than half that of the Bronx.
"Understanding the unique needs and opportunities of Bronx businesses will be a vital component of delivering the personalized service and strategic insights that our clients deserve," Anthony Mormile, Orange's senior vice president and senior commercial loan officer, said last week in a press release.
Mormile, who has spent most of his banking career in the Bronx and serves as chairman of the Bronx Chamber of Commerce, has played a key role guiding Orange's expansion there, Gilfeather said.
