UTICA— On Halloween of 1898, while many Saranac Lake residents thought of ghosts and goblins, some were busy incorporating the Saranac Lake Cooperative Savings & Loan Association.

The S&L’s charter was premised on providing banking services to the area based on integrity, frugality, and community involvement. While the nation has experienced many changes in the past 114-plus years, the original mission is unchanged even though the bank has undergone name changes — today it’s called Adirondack Bank –— and changes in corporate status.

“Change is good,” says Gary Walter Kavney, Adirondack Bank’s president and CEO. “I like a changing landscape, because it provides opportunities [for growth].” With all of the merger-and-acquisition activity in the area disrupting people’s banking relationships, Kavney sees “… the potential to attract new clients and to generate more business.” He also has hired talented bankers available due to mergers and acquisitions, thus improving the quality and capabilities of his staff.

In 1936, the co-operative changed its name to Saranac Lake Federal Savings & Loan Association. Saranac Lake Federal ran into financial trouble during the savings-and-loan crisis of the late 1980s and was recapitalized in 1990 as a stock corporation, owned by one individual — Harold T. (Tom) Clark, Jr., who is chairman of the corporation. In 1995, Clark re-chartered the bank as a community bank and changed the name to Adirondack Bank N.A. At the time Clark moved the headquarters from Saranac Lake to 185 Genesee St. in Utica, he converted the bank in December 2003 from a federal to a state charter. Adirondack Bank is privately held by 30 stockholders with the Clark Family Trust holding a majority of the shares.

Kavney assumed the role as president and CEO of Adirondack Bank in 1998 after a three-decade stint with First Trust & Deposit Co., which was later acquired by KeyBank. He started at KeyBank as a teller, posting records in pen and reviewing checks by hand. When he left KeyBank after working in a number of upstate cities, Kavney was the senior vice-president of private banking and wealth management with responsibility for Key Trust Co. Clark was a client of KeyBank and, over time, “…convinced me to make the move,” says Kavney. “I had the opportunity to shape the direction of [Adirondack Bank] … with an entrepreneur [Clark] who never sees any barriers [that can’t be overcome] … I took the challenge.”

Since his arrival 15 years ago, Adirondack Bank has generated steady growth. The assets have grown from $130 million to more than $600 million at the close of 2012. From its current 17 locations in the North Country, the Mohawk Valley, and Central New York, the bank, which employs 165, annually generates $25 million in gross revenue and nets more than $4 million. Under Kavney’s watch, Adirondack Bank has also diversified, creating in 2009 the subsidiary Adirondack Insurance Services, which offers life- and property-and-casualty insurance products to the bank’s clientele. The bank also has an affiliate — Adirondack Financial Services Corp. — which is wholly owned by Clark and headed by William F. Locke. Locke sits on the bank’s board, and the financial-services office is located in the bank’s headquarters building in Utica.

“This growth has been achieved while guaranteeing [financial] safety and soundness in our operations … The bank operates well above its regulatory capital requirements,” says Kavney as he proudly points to the most recent Bauer Financial report, which has given Adirondack Bank an “excellent” rating for 24 consecutive quarters. Bauer evaluates an institution’s capital level, profitability, reserves, asset quality, regulatory compliance, and many other factors. Financial safety and soundness are critical to the bank’s mission, but it is not the only focus. “Adirondack Bank prides itself on giving back to the community by donating a significant amount of its net income to community events and charitable organizations as well as donating thousands of hours of staff time to civic groups, youth organizations, and senior citizens,” adds Kavney.

The business community is never far from Kavney’s mind. “For the last four years, Adirondack Bank has been the number-one SBA lender in Central New York,” says the banks CEO, pointing proudly at the plaques in the bank’s boardroom. The bank loaned $1.1 million to small businesses in the 12-month period closing Sept. 30, 2012.

Kavney, 67, also is focusing on managing succession at the bank, creating mobile-banking applications, and developing long-term relationships in the community. “We don’t serve customers,” says Kavney, “we serve clients. Customers are transaction oriented; clients are relationship oriented.”

Kavney’s goal is to implement Clark’s vision of growing the bank to $1 billion in assets, remaining independent, and increasing the profits. He recognizes the challenges of the regional economy which grows slowly, a requirement to invest heavily in technology, and a regulatory burden that places increasing costs on the bank’s operations. “Loan quality used to be the most important concern in banking. While it is still a major component of banking operations, IT and compliance have now risen to the forefront,” says Kavney. “IT has five to seven people and compliance has [another] seven. Compliance alone now costs the bank $500,000 a year.”

Despite the obstacles, Kavney is optimistic. “The bank isn’t trying to attract shareholders [like a public company]. We have a long-term focus to grow the bank carefully and responsibly without [distorting] our balance sheet,” says Kavney. Nor is he concerned by the merger-and-acquisition activity of competitors. “We prefer to grow organically by listening to our clients, continually looking for opportunities, and thinking out of the box,” he adds.

“Much has changed at the bank since it was incorporated, but not the mission,” says Kavney. “[More than a century later], we still provide banking services based on integrity, community involvement, and a word not heard very often today — frugality.”

Kavney and his wife Judy live in New Hartford. They have four daughters and a son plus 12 grandchildren, who all live in Upstate. Kavney’s son is the regional president of Central New York for First Niagara Bank, and one of his daughters manages the Adirondack Bank branch office in downtown Syracuse.

Contact Poltenson at npoltenson@tmvbj.com