Lake Shore Bank CEO embraces turnaround task

Dunkirk-based Lake Shore Savings Bank was under intense pressure from federal regulators. Since February 2023, the bank has operated under a consent order, with firm instructions to improve its business practices. 

The bank’s longtime president and CEO, Daniel Reininga, retired in March 2023. Lake Shore needed a new leader to turn things around, and Liddell was hired for the job.

The North Carolina native and Northern Virginia resident knew what he was getting into when he came aboard last April as president and CEO.

He has led turnarounds at banks before, and his top priority is clear: Get Lake Shore out from under the consent order, by satisfying the regulators’ requirements.

“Until we get outside the consent order, that’s got to be our No. 1,” Liddell said.

The problems plaguing Lake Shore weren’t financial, unlike banks that ran into trouble during the Great Recession, he said.

“I would say for (Lake Shore), it was more complacency,” Liddell said. “Not necessarily we weren’t doing the right things. We weren’t moving at a pace that the regulator wanted.”

The regulators identified deficiencies in information technology security, risk governance, management oversight and anti-money-laundering efforts. To fix those shortfalls, Lake Shore has created and filled new executive roles to beef up oversight.

Liddell, 63, feels the bank has made “significant” progress. He believes it’s a matter of demonstrating the issues have been resolved and proving the bank can maintain those results. The regulators “want to see you operate for a period of time without going backward,” he said.

Lake Shore has 11 branches in Chautauqua and Erie counties, and had assets of $725 million as of Dec. 31. It ranked 11th among all banks in the Buffalo Niagara region for its market share based on deposits, according to data from the Federal Deposit Insurance Corp.

Last year, the bank recorded nearly $1.4 million in expenses related to resolving the consent order. But Lake Shore still was profitable, earning $4.8 million for the year.

“That’s a really good sign that fundamentally we’re pretty strong,” Liddell said. “We’re really strong. There’s just some operational areas we needed to fix.”

Lake Shore has overhauled its management team. “We are rounding out to be a really good one,” Liddell said. “Like any team, you’re going to keep evolving.”

Familiar faces like Reininga, who served as CEO for over 12 years, and Rachel Foley, who worked for Lake Shore for 24 years in different capacities, have left.

Under Liddell, Lake Shore has added two veteran bankers from M&T Bank to its team: Brian Keicher, as Bank Secrecy Act officer, and Kimberly Januszkiewicz, as senior credit administrator.

“When I talk to folks like that, I say, ‘You’re going to banking heaven,'” Liddell said. “There’s no better place than working at a community bank where what you do impacts your customer base and your employees. We’re not an aircraft carrier – it doesn’t take a mile to make a turn.”

Last year, Lake Shore had three different individuals serve as chief operating officer. A COO was among the leadership roles Lake Shore created in 2022 as a result of the shortcomings identified by regulators.

Jennifer Zatkos took the job in late 2022, but left after five months, saying the position required more time than she expected. Foley moved into the COO role after serving as chief financial officer for 17 years, but resigned last December. Melissa Sprague was promoted to COO last December and remains in that position.

Lake Shore also hired Taylor Gilden, who previously worked with Liddell at a bank in Maryland, as CFO. And the bank hired Ben Pietak as controller, who was formerly with pharmaceutical company Athenex.

Liddell has put his stamp on Lake Shore in other ways. In the fourth quarter, the bank slashed its advertising spending by 75%, or $194,000, from a year earlier.

“It’s a challenge for me to figure out the return on our investment (in ads) at our size,” Liddell said. “I think the way you build a bank is by customer to customer, referral business, doing a great job.”

Liddell said he encourages customers who have had a positive experience – whether lawyers, doctors or the owner of a plumbing business – to refer businesses in their same discipline to Lake Shore.

“I think that’s the best way to build a strong, long-term financial relationship,” he said.

Over the past year, Liddell – who is married with five children – has become more familiar with Western New York.

He lives here during the week and travels home to Northern Virginia on weekends. He respects the bank’s roots, which run 133 years deep. He has attended Buffalo Bills games and has been welcomed to town by other bankers through lunches and dinners.

“At the end of the day, we all want each other to do well,” Liddell said. “It’s not good for any of us to have someone fail or have problems. You want the industry to be looked at as strong.”

Liddell jokes that he “failed” at retiring before agreeing to become Lake Shore’s CEO. He has discovered being engaged in his work gives him energy.

While Liddell and his management team concentrate on resolving the regulatory issues, he urges the bank’s staff to focus on taking care of the customers.

“I always say, ‘Hey, if we do a really good job, you’re going to take some more pride when we come out of here. We’re going to be so much better, and it’s a team effort.'”