The parent of Five Star Bank plans to spend the next six to nine months on a national search for a new CEO who can succeed longtime leader Peter Humphrey and “position the company for its next phase of significant growth,” its chairman and interim CEO said in a letter to shareholders.
The executive search by Warsaw-based Financial Institutions will identify “a pool of extremely strong candidates who will help us build on a 150-year tradition of serving the needs of our customers and the community,” wrote John E. “Jack” Benjamin, who has been chairman of the bank since 2010 and a board member since 2003.
“Our next CEO will be one that we believe can take us to the next level,” wrote Benjamin, who is president of Three Rivers Development, an economic development agency in Corning.
“Consistent with our overall management team, we seek proven leadership skills and knowledge of the company’s targeted marketplace as critical success factors for the next permanent leader of the bank. The ideal leader we seek will be capable of delivering on the strategic imperatives of further strengthening and growing Financial Institutions and our banking operations.”
He added that both internal and external candidates will be considered. The bank already promoted two executives, Richard Harrison and Martin Birmingham, to chief operating officer, and president and chief of community banking, respectively, “demonstrating for the entire company that we promote from within,” he noted.
Humphrey did not respond to calls seeking comment.
The letter from Benjamin, dated Oct. 5 and filed with the Securities and Exchange Commission later in the month, does not provide any new details about the sudden resignation of Humphrey on Aug. 28. But it hints at the source of tensions between Humphrey and the board, and points to the direction that the bank is pursuing.
In particular, the board may have felt it was time to break with the past and the family that dominated the company for so long, and time for a new leader with a broader vision for the bank’s potential, and more extensive experience from outside its rural upstate markets.
“Since the company’s founding, the Humphrey family has provided the company with decades of leadership,” Benjamin wrote. “Over the years, what is now known as Five Star Bank has gone beyond anything Wolcott Humphrey could have imagined, with four generations of the Humphrey family in leadership roles.”
Five Star predecessor Wyoming County Bank was founded by Wolcott Humphrey in the mid-1800s, and the family eventually owned three banks, including National Bank of Geneva, that were placed under a holding company in 1931. That company remained privately owned until 1999. The multiple banks were merged into Five Star in December 2005.
Humphrey, who had been with the bank for 35 years and led it since 1994, was the fourth-generation of his family at the bank, and he remains a director and significant shareholder. But his abrupt departure represents the first time in the bank’s 150-year history that a Humphrey family member has not run it – even though his son does work there in a more junior role.
In his letter, Benjamin noted “recent corporate developments” and credited Humphrey with leading the company “through the turbulent 2000s” so that it could “emerge from those difficult times as a financial institution positioned for enhanced stability and growth.”
Humphrey led the bank’s turnaround several years ago after an expansion into more agricultural lending turned sour when commodity prices fell and farmers struggled in the bank’s rural markets. And he used the federal government’s investment in the bank through the Troubled Assets Relief Program to bolster its balance sheet, before quickly repaying it.
Most recently, Benjamin cited the bank’s purchase of four former HSBC Bank USA branches and four First Niagara Financial Group branches, expanding its presence in key markets, particularly the Elmira area.
Wall Street has responded by sending the company’s shares to an 18-month high of $19.23 on Oct. 11, indicating “many investors share the perception of the company’s board of directors that Financial Institutions is the strongest it has been in many years, perhaps in its history, and poised for continued prosperity,” he wrote. Several of the bank’s executives even bought shares to show their own confidence, he added. Shares have since fallen back to about $18.45.
“There is no doubt that we have been growing, but while appreciating what we have accomplished, we have not lost sight on the direction we are headed,” he said, noting the importance of the bank’s staff and technology for its future success. “The future of this organization is in large part dependent upon the middle and senior members of our current management team.”