ESSA moves into area scene

Last updated: April 07. 2014 11:29PM - 3375 Views
By Andrew M. Seder

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For years, the westward migration from the Poconos has come to Lackawanna and Luzerne counties in terms of people. But now a Monroe County-based bank is following suit.

ESSA Bank & Trust completed its acquisition of Franklin Security Bank’s Scranton and Wilkes-Barre branches and all its assets over the weekend and has entered the local banking market.

Indications are that this might not be the end of its expansion that has seen it go from a handful of locations in the Stroudsburg and East Stroudsburg markets with a few million in assets to now having total assets of more than $1.5 billion and 27 offices throughout the Greater Pocono, Lehigh Valley, Scranton and Wilkes-Barre markets.

Gary S. Olson, president and CEO of ESSA Bank & Trust, said that “this acquisition provides a platform for ESSA Bank & Trust to expand its presence northward to an adjacent regional market. Franklin’s capabilities in commercial banking, government lending and indirect auto lending businesses will provide added diversity to ESSA’s loan portfolio and add to our core deposits.”

ESSA is on state Route 315 in the Wyoming Valley and in downtown Scranton in Lackawanna County. Olson said other locations in the two counties are already being eyed for additional expansion.

There are 124 banks in Luzerne County. By comparison, PNC Bank has 22 locations, M & T Bank has 15, Community Bank N.A. has 11 and First National Community Bank has 10.

ESSA is the latest bank to acquire or merge with another bank company with local offices. In the past year, five other banks have entered the county via acquisitions, mergers or new branch openings. Among them:

• Penns Woods Bancorp Inc., the Williamsport-based parent company of Jersey Shore State Bank, acquired Luzerne National Bank Corp. and its eight branches in Luzerne and Lackawanna counties.

• Penn Security Bank & Trust and Peoples Neighborhood Bank merged bringing Penn Security’s branches in Duryea and Kingston under the new umbrella company known as Peoples Security Bank.

• Community Bank N.A., formerly First Liberty Bank, acquired eight area Bank of America branches and its deposits. Five branches are in Luzerne County, two are in Carbon County and one is in Lackawanna County.

• First Keystone Community Bank has opened two additional Luzerne County branches to expand its county footprint to eight.

• The Miners Bank began leasing a branch facility in Conyngham.

When The Miners Bank made the announcement it was moving north from its Schuylkill County base to expand into Luzerne County, its president and CEO, George H. Groves, called the market “strong.”

Professor weighs in

John Mellon, a business professor at Misericordia University in Dallas Township, said he’s not surprised to see so many banks entering this market. He said there’s still considerable money being spent here, especially in the health care sector, and banks want a piece of the action.

“We still have noticeable cash coming through this area,” Mellon said.

But even deeper than that, he said banks are constantly acquiring, merging and setting themselves up to be snapped up by larger ones. As a Wells Fargo Bank customer, Mellon said he has seen his bank change names through acquisitions and mergers six times in his adult life.

From American to Meridian, to Core States, to First Union then Wachovia and now Wells Fargo, his checkbook has displayed new names faster than he can go through checks.

He said he has long been told that one day there will be only three banks in operation in the nation, and while he doesn’t think it will happen in his lifetime, he does see signs that that’s the direction the industry is headed in.

Mellon said banks get bigger and bigger and accumulate assets so that larger banks take notice and acquire them. He can’t say that’s what happening in the case of ESSA, but he said that industrywide it’s the trend.

And instead of opening new branches and entering new markets, banks are smart from a business and marketing standpoint to acquire existing branches with existing customers in locations that are attractive.

“It costs less money to keep a customer than to get a customer,” Mellon said.

Olson said ESSA has long had an “independent streak” and didn’t see expansion as a means to an acquisition, but he said that is the trend in the banking industry.

“When I started 35 years ago there were 20,000 banks in America. Today there’s 6,900,” Olson said.

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