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Five Star Bank plants flag with downtown branch

If you're a bank that wants to make its presence known in downtown Buffalo, why not open a branch in the heart of the financial district?

That was Five Star Bank's approach to setting up shop in the 40-50 Fountain Plaza office complex, which will open to customers on Monday. Bank of America has its regional headquarters just across the plaza. M&T Bank has corporate offices across Main Street. And KeyBank has a regional office a few blocks away on Delaware Avenue.

Five Star isn't shying away from its competition. The bank's Warsaw-based parent company, Financial Institutions Inc., had its sights set on making greater inroads in Buffalo and accelerated those plans last year when Key acquired First Niagara Bank and caused upheaval in the market.

Five Star already has three branches in Erie County, but none in Buffalo until now. The bank is a small player in deposit market share in the Buffalo Niagara region, ranking 10th in the most recent figures from the Federal Deposit Insurance Corp. The new branch reflects Five Star's push to increase its visibility and gain customers.

Key completed its deal for First Niagara last summer, but Martin K. Birmingham, Five Star's president and CEO, said he believes the effect of the market disruption is "really in the early stages. I think customers are seeing how it's playing out, with a new relationship with basically a new bank. Clearly employees are doing the same, and so is the marketplace."

Ted Oexle, Five Star's regional president, said the bank already has relationships with a couple of tenants in the building, the law firms Lippes Mathias and Harter Secrest, and looks forward to IBM building up its work force inside the complex. But Five Star also faces the challenge of capturing business in a market where M&T and Key are the dominant players, and other competitors are trying to make their own breakthroughs.

"That's always a challenge, but there's always opportunity," said Oexle, who rejoined Five Star last October. "A lot of commercial banking is relationship oriented. Let's face it, money is a commodity, and we've got a seasoned staff who have developed relationships." The bank will also step up its advertising in the coming weeks.

Like many banks, Five Star has adopted a style for its new branches that favors open space, technology and a small but versatile work force. Five Star signed a 10-year lease for the Fountain Plaza space, at the corner of Pearl and Chippewa streets, and spent about $350,000 to renovate a former Key branch. The location has four employees.

When customers walk in, they'll be greeted and asked what they need. "We're going to be more the financial consultants as we go through the process, versus the order takers," said Michael D. Burneal, chief risk and enterprise administration officer.

In the center of the branch is an "in-lobby teller," a machine which handles the functions of an ATM, along with additional features. "Ultimately this will be able to do 90 percent of all transactions you can do at the teller line," Burneal said.

This is the first location where Five Star has installed an in-lobby teller machine. Customers will eventually be able to use the machine to cash checks.

Off to one side of the branch is a "tech pod," with tablets customers can use to take care of banking tasks on their own if they choose. If customers want additional help, they can walk up to one of teller desks.

There are conference rooms where customers can meet privately with employees, and a lounge complete with a flat-screen TV, drinks and danishes. Separate from the branch are offices that other Five Star employees, such as its community development officer or its wealth-management personnel, can use for work and meetings.

Five Star officials declined to identify a deposit goal for the Fountain Plaza branch. But the bank's experience with a new-format branch it opened last year at CityGate in downtown Rochester offers perspective.

Kevin B. Klotzbach, the chief financial officer, said when a bank opens a branch, "you try to achieve $30 million to $40 million in deposits. That is typically somewhere around the break-even for costs. Usually it takes two to three years to do that. We were able to accomplish that in four or five months at CityGate, so it's been very successful."

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