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Farmers Sees Better Year Ahead, Shareholders Told
CANFIELD, Ohio -- Farmers National Banc Corp. took the tough steps needed in 2013 to have a year of greater growth in 2014, its chief executive officer, Kevin J. Helmick, and chief financial officer, Carl D. Culp, told shareholders Thursday.
Among the news made yesterday was Helmick’s announcement that Farmers Bank will open an office in Alliance in December. The 2,000-square-foot space will be a full-service branch across the street from the University of Mount Union.
By many measures, the parent of Farmers National Bank, Farmers Trust Co. and National Associates Inc., Rocky River, had a better 2012 than 2013 but this year’s first-quarter results (READ STORY) suggest the worst is behind the holding company and that it will resume its path of growth.
The company enjoyed net income of $7.78 million for 2013 compared to $9.93 million in 2012 and paid out less in dividends, 12 cents per share to 18 cents per share in 2012. Total assets remained nearly even, $1.142 billion to $1.118 billion in 2012 and the efficiency ratio for 2012 was 74.82% compared to 69.94% the year before.
On the bright side, the insurance subsidiary of the bank saw its revenues grow 108% from 2012 and the bank’s private banking program, helped by landowners who signed leases in the Utica shale, is serving 204 clients and increased its loans to $16.2 million. National Associates, with $505 million in assets under management, contributed $627,000 in revenues since becoming part of the holding company last July 1.
The trust company contributed $5.7 million in revenues, a record.
Realizing how high its efficiency ratio was, Helmick appointed a profit improvement committee who looked at all aspects of the company and their review led to the closing of the bank branches in Leetonia and on Youngstown Road in Warren.
Thirty positions were eliminated but only 20 employees lost their jobs in the third quarter, including Helmick’s predecessor (whose name was never mentioned). The first two questions during the portion of the meeting devoted to shareholders’ inquiries was about the departure of John Gulas (READ STORY) but Helmick iterated that confidentiality agreements preclude both parties from saying more than has been said.
The company looks to continue its trend of relying more on fee income and less on interest income. Since 2009, fee income has grown from 14.5% of Farmers’ revenues to 26.7% at Dec. 31.
The profit improvement committee also realized the bank had not revised its fee schedule since 2003 and “adjusted’ them accordingly. Resetting 40 to 50 fees led to $200,000 in new revenues, Helmick reported, and a savings of $36,000 in expenses.
The committee gave scrutiny to everything including the number of color copies copying machines printed to the number of corporate events.
The number of customers who left because of the two branch closings -- Farmers had other offices near both -- or were upset with the fee adjustments was “minimal,” the CEO said. He also said any further reduction in the number of employees would be the result of attrition, not layoffs.
Technology has changed the way customers make use of their banks, Helmick noted. Farmers today has somewhere between 12,000 and 13,000 customers who do most of their banking online and the number of Farmers customers who use mobile banking doubled in 2013.
An economy that’s improving but still causing small-business owners to remain wary of borrowing remains a challenge, Helmick said. “The bank has invested in systems, products and people” to encourage more borrowing including its “Express Business Solutions” aimed at small businesses that need to borrow less than $250,000.
Express Business Solutions is an automated underwriting program that quickly meets those owners’ needs, allowing credit officers and lending officers more time to pay attention to “bigger deals,” Helmick said. In good times and bad, including the Great Recession, “We never stopped lending,” Helmick stressed.
In the business portion of the meeting, Helmick, Gregory C. Bestic and Terry A. Moore were elected to three-year terms as directors.
Moore, CEO and president of Krugliak, Wilkins Griffiths & Dougherty, a law firm in Canton, succeeds Ronald V. Wertz, who joined the board in 1989. Wertz was chairman of the corporate governance and nominating committee and lead director before the company determined the CEO should not be chairman as well.
Bestic, a principal in Schroedel, Scullin & Bestic LLC, a public accounting firm in Canfield, was elected to his second term.
All three received votes in excess of 90% of the 14.62 million shares that voted. Common shares outstanding total 18.78 million.
Copyright 2014 The Business Journal, Youngstown, Ohio.
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