InSp - Generations Bank · We believe in the spark of imagination and ... The Lion King, and...
Transcript of InSp - Generations Bank · We believe in the spark of imagination and ... The Lion King, and...
S e n e c a - c a y u g a B a n c o r p , I n c . a n n u a l r e p o r t 2 0 1 4
InspIratIonr o o t e D I n t H e t H I n g S t H a t M at t e r
eMMa Degroff
We are dreamers, too. We dream of the future for our communities and for
the families that live in them. We believe in the spark of imagination and
how one moment can make a huge impact. It is why we are so committed
to supporting the arts through our multi-year partnership with the
Finger Lakes Musical Theatre Festival and The PiTCH in Auburn, NY.
You never know what might ignite a child’s imagination. But chances are that dancers and singers and an occasional cute stray dog can inspire a young girl to dream of Broadway.
Emma DeGroff started dancing when she was two. At six, she started taking in shows like Peter Pan, Annie, The Lion King, and Newsies. But it was only when she grew up at the ripe old age of seven that she began to realize that the performing arts were her true calling.
She started truly chasing it with a passion when she was cast in Singing in the Rain at the Merry-Go-Round Playhouse. She followed it up the next year in Will Rogers Follies cast as the daughter of Tony Award nominee Tom Wopat, squeezing in 27 performances a month along with school and homework and being a kid.
At age 13, Emma is looking at New York City colleges perhaps to study to be a music teacher. Not as a backup plan, because there is no chance that she will fail at her dream, but as something to fill the downtime between dancing and singing and acting and playing the ukulele and simply being amazing. And to give back to other aspiring performers like so many people have done for her.
That’s the magic of a small stage in a small town. It brings possibilities that might seem as far away as the lights on a fabled New York City street home to a little girl’s heart. And it shows everyone in the audience that with a combination of aspiration and perspiration, of dreams and hard work, anything is possible.
In 1870, we opened our doors as Seneca Falls Savings Bank.
It was a simpler time—yet a harder one. Saving was the way
people lived. And one thought guided them year after year—
to save as much as possible to make sure the next generation
was a more prosperous one.
We are now Generations. And our charter has expanded
far beyond where it began 145 years ago. We’ve become a
full-service financial partner for families as they grow and
businesses as they plan for the future. But we haven’t lost sight
of our roots and the lessons and values of a simpler time.
There are things beyond money worth saving. >>>
things worth saving
it’s where we started. and where we’re going.
Since 1870, the communities and customers we serve
have looked to us as trusted partners. I had the
opportunity to read through some
of our Board of Directors minutes, focusing on
important events in history. The first item of note is
that our 1865 charter approval was postponed due to
the turmoil and uncertainty of the times (i.e., the
Civil War had just ended and President Lincoln was
assassinated). One of the hallmarks of my review
was that even in the worst of times—the outbreak of
no less than eight wars, the assassination of three
more U.S. presidents and the Great Depression—
trust placed in our organization never faltered.
I believe the reason we have kept the public’s trust
is that we didn’t lose sight of our primary reason for
existing— to promote thrift in our communities,
to prudently provide credit to community members
and to support our communities’ endeavors.
I can’t help but marvel at the technological gains we
have seen since our institution opened its doors.
Consider the transition from the telephone in 1876
to the touchscreen cell phone in 2007 and now to
the Apple Watch just released. Generations has kept
pace with the technological advances over the years,
and in October 2014, we opened our tenth office
in Farmington that hosts a bevy of integrated
technology. Our interactive teller machines (“ITMs”)
are utilized by customers to make deposits,
loan payments, account transfers and withdrawals
while speaking to a live video feed from our
Phelps Office. With the ITMs taking on these tasks,
our personal bankers in the Farmington Office are
able to work face-to-face with our customers—
as they are accustomed—to open accounts, inquire
about loans and address any banking concerns.
In addition, our “Smart Office” provides our
customers with access to other personal
P r e s i d e n t ’ s L e t t e r
bankers, licensed mortgage originators, insurance
agents, investment advisors and financial planners
located at other offices in the event someone is not
available at the Farmington Office.
One thing we know—customers choose a bank,
insurance agency or investment advisor primarily
due to the ability to personally interact with another
person. While technology will continue to advance,
we will continue to invest in our employees and
ensure that they remain an integral part of their
community’s social fabric. We have many employees
that chose Generations for a long-term career; some
celebrating 20, 30 and even nearly 40 years of service
in our company. So, while we just announced that
check deposits can now be made through our
mobile banking app, I doubt that you will see us
eliminating that personal interaction that is
important to us and to our customers. We can’t
imagine doing it any other way!
Having employees from, and active in, their markets
is what truly sets us apart from our competitors.
There’s a genuine concern about their communities
which is probably best exemplified by a story
published in our local
newspaper about a
family that was facing
foreclosure because of looming medical bills. The
medical bills were the result of a heart transplant
obtained by one of the family members who had
previously served as the Executive Director of our
community’s food pantry. Unfortunately, the family
had their mortgage
with a very large national
bank that was unwilling
to refinance their
mortgage. Our team saw
that story and was knocking on the couple’s door
the next morning, ready to listen and to find a
solution to their dilemma.
I believe the reason we have kept the public’s trust is that we didn’t lose sight of our primary reason for existing …
Menzo D . ca S ePresident & CEO
family
On February 12, 2015 the Generations family suffered a grievous
loss when Bob Rosenkrans passed away following a courageous
battle with cancer.
Bob was a man of many passions—from reading to farming to his
beloved Detroit Tigers. But nothing burned more brightly in him than
his love for his family. Fortunately for us all, his definition of family
extended beyond his wife and children to the community he called
home since age seven. His life’s work was dedicated to making our
area and our residents more prosperous in so many senses of the
word. We are incredibly proud for his 40 years of service.
With his passing, we’ve lost a leader, a generous spirit and a
man of great humor. Our family is greatly diminished—but Bob’s
memory never will be.
We refinanced their mortgage which reduced their
monthly payments significantly, afforded them
the opportunity to stay in the house that the
husband’s father built and relieved some of the
pressure they were facing so they could focus on
the wife’s healing and recovery. This is why I and
my fellow employees choose to work at and be a
customer of a small community bank, and I believe,
this is why our customers choose us as well.
We have a unique footprint spanning 60 miles of the
Finger Lakes region from Auburn to Farmington.
There’s a commonality within the region that I think
is drawn out in the movie It’s a Wonderful Life;
we value the individual and those that offer their
support in efforts to improve and maintain a
reasonable quality of life. Generations proudly
supports—with volunteer hours and dollars—
a number of organizations that echo what’s
important in our communities. Organizations
supported include D.A.R.E. in three counties,
Habitat for Humanity, The PiTCH series of the
Finger Lakes Musical Theatre Festival, the National
Women’s Hall of Fame, the Seneca Falls Historical
Society and various initiatives focused on children
like music programs, sports teams, spelling bees
and more.
I n M e M o r I a M
Bob Rosenkrans
I remind myself often that our life is but a vapor
that appears for a little time and then vanishes away.
I and the other Generations employees may not
be long remembered, but our labors support
something bigger than ourselves and ensure that
our communities continue to thrive. It is what was
important to us when we started in 1870, and it is
still the core of our important work as community
bankers, insurance agents and brokers today.
I haven’t mentioned much about our 2014
financial performance; however, a summary of that
information is included in this report. Overall,
it was a terrific year. Our net income was $2.1 million,
or $0.88 earnings per common share. The Bank’s core
capital ratio is 9.84%, and we are anticipating that the
Bancorp will repay the $5.0 million borrowed from the
Small Business Loan Fund by the end of 2015.
Assets growth, driven by loan volume, was modest
during the year, and we expect similar growth in 2015.
In the pages to follow, you will get a glimpse of our
community, as represented through five individuals’
unique stories. In life, there is no straight line and
no easy path. There is, however, the beauty of people
and their stories of strength and wit, smiles and tears.
These individuals are from across our footprint and
we share them with you because what matters to them,
matters to us. Enjoy these snapshots of Inspiration,
Responsibility, Loyalty, Optimism and Service.
Thank you for investing in our company,
…our labors support something bigger than ourselves and ensure that our communities continue to thrive.
Menzo D . ca S ePresident & CEO
responsIbIlIty
Karen Simon
Karen Simon is in the responsibility business. For 25 years, she taught in schools around Western New York. Fifteen of those years were spent in the 5th grade where she was first exposed to D.A.R.E. and the work they did helping students learn the dangers of drugs and smoking. When her own kids reached high school, Karen got her administrative degree and held a variety of administrative positions over the next decade.
Throughout it all, she became increasingly involved with D.A.R.E. and increasingly intent on giving back to her community. Karen’s father always told her that if you have a talent, you have a responsibility to share it and to leave the world a better place than you found it. And D.A.R.E. became Karen’s tool.
In 2006, Karen was named D.A.R.E. Educator of the Year and in 2012 she was honored as National Educator of the Year by D.A.R.E. International.
With leaders like Karen at the helm, D.A.R.E. changed as the world did, expanding to deal with the social issues of violence and bullying—and stress. Go to a 5th grade classroom and you’ll hear 9-year olds concerned about state exams, about whether to go to mom or dad’s house after school, and about if there will be enough money for food, even with mom working two jobs.
Does D.A.R.E. help with such overwhelming problems? In high school, Karen’s daughter was selected as D.A.R.E. role model. It led to family discussions about why she was able to stay away from temptation while friends had drifted toward hard drugs. The answer wasn’t because of fear of her mother who was her swim coach or her father who happened to be her principal. It was because she couldn’t stand the thought of disappointing Officer Bennett—her D.A.R.E. officer.
It turns out that responsibility is a family business after all.
We see part of our role as teaching responsibility and then trusting
in people. We support programs like D.A.R.E because it does the same.
At the same time, we hold a deep sense of responsibility to increase
your security in an ever-changing world. This year we moved our
banking system to a new platform to make all of our customer
information as secure as possible.
FRANK CARATOZZOLO
Frank Caratozzolo looks forward to going to the bank. It gives him a sense of satisfaction every time he stops in, says hello to old friends, makes a deposit and leaves with a lollipop. Of course, Frank Caratozzolo is five years old.
When the littlest Frank runs the hallways of Generations Bank, he probably knows that his dad, Frank Caratozzolo III wired the building. And maybe he knows that his grandfather and great grandfather both banked there. But he probably doesn’t understand the significance of any of it just yet. One day he will.
Loyalty runs deep in the Caratozzolo family.
As a small business owner and a proud small town resident, Frank III appreciates both sides of loyalty. He was standing there when Generations Bank opened their new headquarters and Menzo Case proudly called attention to the local craftsmen who built the walls, laid the flooring and did the plumbing—everyone who got the building ready to throw the switch, turn on the lights and start serving customers. Frank understands that there are a lot of electricians in the phone book. And he also remembers that when he needed a loan to purchase a bucket truck, one bank didn’t hesitate to show faith in him.
In Frank’s world, that means something. No, that means everything.
Someday, little Frank will take over the business from his dad that he took over from his dad. And just like his dad, he’ll get pursued by other banks to take his business there. Frank will listen politely, because it’s just the way you do things, but he’ll know the importance of loyalty.
Because his dad taught him more than the electrical business.
Since 1870, we’ve welcomed generations of families as customers and
as friends. Because we are a proud community bank with deeply
rooted relationships, we understand that loyalty, like the Main Streets of
our towns, has two sides. We have always been dedicated to supporting
local businesses and craftsmen, just as they have always supported us.
It’s the right way to do business and the right way to be neighbors.
loyalty
optImIsm
SHELLEY TAFEL
They say bad things happen in threes. But don’t try to tell Shelley Tafel that. It isn’t that she hasn’t endured three health setbacks in recent years. It’s just that she doesn’t know the meaning of bad things.
Step back three years and Shelley had started to feel pain in her feet and had trouble getting up and down the stairs. Finally, after two years of testing, she was diagnosed with MS. She went home, told her family and then insisted they go out to celebrate the fact that she finally had answers.
Six months later, she felt lucky again. A form of breast cancer that normally grows behind the breast grew an offshoot in the front where Shelley was able to detect it. She had a double mastectomy and immediately started to plan to return to work.
And then, because of complications from her MS, she developed an infection that almost took her life.
If you spend any time with Shelley, you’ll notice a phrase or two that epitomizes her view of the world. One is “No one lost a body part here.” It’s her way of keeping things in perspective—when the car won’t start or a pipe bursts from the cold.
Another is “Everything happens for a reason.” When she was diagnosed with MS, her daughter, a University of Rochester student, organized a team to participate in an MS walk. Because they were poor college students, they didn’t raise a lot of money. Unsurprisingly, Shelley had a unique view of the situation—pointing out that perhaps one of those medical students would one day cure MS. Maybe that was the reason she contracted the disease.
In Shelley’s world, you get up in the morning and just decide to have a good day. There is no other option. After all, “No one lost a body part here.”
Even when someone has.
Just as the sun will continue to rise each morning, our faith in bright days
ahead remains constant. But we aren’t content to sit back and wait for
those days to come. We are active in the lives of our customers, providing
the financial assistance that can change an uncertain future into greater
possibilities. It stems from optimism that itself grows from an unending
faith in people.
eD cHaSe
Ed Chase entered the service in 1943 as part of the greatest generation that saved the world from its greatest threat. He piloted 30 missions over Germany, every time returning safely to base while fewer and fewer of his companions did. Eventually, the Allies paused and let the Russians march into Berlin and the great evil of our time was defeated.
Ed left the service after the war, but in the years since, service never left him.
Soon after, Ed returned to his studies and married his college sweetheart. Together, he and Bobbi would move to Seneca Falls, build a comfortable home and raise two children. He brought his leadership and dedication and—there’s no other way to say it—his greatness to the community and many of its organizations, including Seneca Falls Savings Bank. He not only helped to build the town’s new library, he shoveled their snow and fixed their plumbing and replaced their light bulbs. It was a prosperous, idyllic small town life, just like the one he dreamed of as a young man growing up in the Dust Bowl of Iowa.
Until Bobbi started forgetting things.
Ed has been by Bobbi’s side every day for seven decades, even if she hasn’t been aware of it in recent years. With the onset of her Alzheimer’s, Ed promised himself to care for her as long as he is able. And a man like Ed Chase doesn’t break his promises. As he cares for the woman he’s shared his life with, it’s natural to wonder if the trials of depression and war made Ed Chase great or if it is simply a part of him. Like his heart. And his courage. And his need to serve.
Every day, and in many ways, service is at the core of what we do.
At Generations, it’s more than exceeding your expectations and delighting
our customers. It is a shared commitment to serve in our neighborhoods,
schools and communities. Through programs like Habitat for Humanity
and the countless volunteer hours of our staff, we help those who
only need a little assistance to get back on their feet.
servIce
In
m
IllIo
ns
loans
2008
$138.0
2009
$168.8
2010
$183.6
2011
$187.3
2012
$192.9
In
m
IllIo
ns
deposits
$128.9
2008
$175.4
2009
$189.5
2010
$187.1
2011
$196.3
2012
$201.1
2013
$199.5
2013
In
D
OLLA
RS
earnings per common share
2008 $ (0.21)
2009 0.21
2010 0.50
2011 0.57
2012 0.72
2013 1.03
2014 0.88
In
p
er
ce
nt
bank’s core capital ratio
2008 9.31
2009 7.80
2010 7.65
2011 10.18
2012 10.05
2013 9.78
2014 9.84
in
t
ho
usa
nd
s
net income2008 $ (487.9)
2009 475.6
2010 1,138.5
2011 1,343.2
2012 1,161.0
2013 2,376.6
2014 2,055.9
p e r f o r m a n c e h i g h l i g h t s
$205.6
2014
$198.9
2014
At and for the years ended December 31,2014 2013 2012
P e r f o r m a n c e r a t i o s :
Return on average assets 0.8o% 0.89% 0.65%Return on average equity 7.46% 8.97% 6.65%Interest rate spread(1) 4.12% 3.85% 3.62%Net interest margin(2) 4.22% 3.95% 3.73%Efficiency ratio(3) 75.54% 73.07% 74.40%Operating expense to average total assets 3.62% 3.32% 3.32%Average interest-earning assets to average 109.80% 110.61% 109.40%interest-bearing liabilities
a s s e t q u a l i t y r a t i o s :
Non-performing assets to total assets 0.80% 1.67% 1.53%Non-performing loans to total loans 0.86% 1.86% 1.75%Allowance for loan losses to non-performing loans 139.51% 61.25% 54.87%Allowance for loan losses to total loans 1.20% 1.14% 0.96%
c a P i t a l r a t i o s :
Average equity to average assets 10.76% 9.91% 9.75%Equity to total assets at the end of period 10.75% 10.30% 9.66%Total bank capital to risk-weighted assets 12.83% 12.91% 13.97%Tier 1 bank capital to risk-weighted assets 11.75% 11.88% 13.07%Tier 1 bank capital to adjusted assets 9.84% 9.78% 10.05% (1) Represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the period.(2) Represents interest income as a percent of average interest-earning assets for the period.(3) The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income, excluding net gains or losses on sale
of securities, net gain or loss on trading securities and security impairment losses.
For the year ended December 31,2014 2013 2012
S e l e c t e d o p e r a t i n g d a t a :
Interest and dividend income $ 11,819 $ 11,787 $ 11,220Interest expense 2,335 2,319 2,625Net interest income 9,484 9,468 8,595Provision for loan losses 360 600 600Net interest income after provision for loan losses 9,124 8,868 7,995Non-interest income 2,992 3,256 2,836Non-interest expense (9,260) (8,871) (8,505)Income from continuing operations before tax 2,856 3,253 2,326Provision for income taxes 800 876 665Net income $ 2,056 $ 2,377 $ 1,661
company financial summaryThe summary information presented below at or for each of the years presented is derived in part from the audited consolidated financial statements of Seneca-Cayuga Bancorp, Inc. and should be read in conjunction with our consolidated financial statements and notes issued under separate cover (dollars in thousands).
At December 31,2014 2013 2012
S e l e c t e d f i n a n c i a l c o n d i t i o n S d a t a : Total assets $ 281,239 $ 274,433 $ 264,699Loans receivable, net 205,592 201,080 192,916Securities 35,174 35,904 40,106Deposits 198,941 199,520 196,301Borrowings 48,473 42,689 38,562Shareholders’ equity 30,228 28,272 25,579
p e r f o r m a n c e h i g h l i g h t s
Year ended December 31, 2014 High LowCash
DividendDeclared
Fourth quarter $ 10.65 $ 9.70 $ —Third quarter 10.20 8.15 —Second quarter 8.61 8.15 —First quarter 8.37 8.00 —
Year ended December 31, 2013 High LowCash
DividendDeclared
Fourth quarter $ 9.26 $ 8.10 $ —Third quarter 8.70 7.80 —Second quarter 9.24 7.62 —First quarter 9.80 6.74 —
p e r f o r m a n c e h i g h l i g h t s
stockholder informationSeneca-Cayuga Bancorp, Inc. (the “Company”) is the federally chartered mid-tier stock holding company of Generations Bank (the “Bank”). The Company owns 100% of the common stock of the Bank and has not engaged in any significant business activity other than owning the Bank’s common stock and does not intend to expand materially its business activities (other than through the Bank).
Generations Bank was chartered in 1870 to provide a safe and secure depository institution for the small community of Seneca Falls and the developing communities in the northern Finger Lakes region. Today, with 10 offices, we remain committed to meeting that mission, serving both individuals and businesses.
The Northern Finger Lakes region is located in the western portion of New York State between the cities of Rochester and Syracuse, New York. Seneca Falls is located six miles south of Interstate 90, the major east-west highway that runs through the state of New York. Our market extends from Farmington, New York, in the west to Auburn, New York, in the east. Our corporate headquarters is located in Seneca Falls.
Generations Investment Services is a full service investment management team with offices in our Seneca Falls location as well as across our footprint in person and with our “Smart Office”, helping customers establish the financial systems needed to meet their investment goals.
our common stockThe Common Stock of Seneca-Cayuga Bancorp, Inc. is traded on the OTC BB market under the symbol SCAY. At December 31, 2014, the common stock was held by approximately 265 shareholders of record. The following table shows the range of high and low market prices for our stock for the quarters indicated. There were no common stock dividends declared or paid in any quarter. The payment of any future cash dividends is dependent on the results of operations and financial condition of the Company, as well as tax considerations, economic and market conditions, regulatory restrictions, regulatory capital requirements and other factors.
Board of DirectorsroBert e . K e rnan , J r .Chairman, Director
Menzo D . ca S ePresident/CEO – Director
BraDforD M . Jone SVice-Chairman, Director
Dr . H e r B ert r . HolDenDirector
geralD MacaluSoDirector
Dr . f ranK J . n I ccH IDirector
Dr . auguSt p. S I n I c rop IDirector
V I ncent p. S I n I c rop IDirector
DaV I D H . SwenSonDirector
SHareHolDergeneral I nqu I r I e SLori M. ParishCorporate SecretarySeneca-Cayuga Bancorp, Inc.20 E. Bayard StreetSeneca Falls, NY 13148-0111315.568.5855mygenbank.com
corporate o f f I c eSeneca-Cayuga Bancorp, Inc.20 E. Bayard StreetSeneca Falls, NY 13148
tranS f er agentComputershare Investor ServicesPO Box 30170College Station, TX 77842computershare.com/investor
I n D e p enDent auD I tor SBonadio & Co., LLP115 Solar StreetSuite 100 Syracuse, NY 13204
SpecIal counSelLuse Gorman Pomerenk & Schick, PC5335 Wisconsin Avenue, NWSuite 780Washington, DC 20015