National Bancshares Corporation (NBOH-OTCBB)
August 6, 2012 Issue
The Most Powerful Name In Corporate News and Information
National Bancshares Corporation, Holding Company for First National Bank (Ohio) has Shown Tremendous Potential for Continued Growth in Profitability with Recent 25% Loan Growth Made Up of Strong Credit Quality
Corporation operates as the holding company for First National Bank that
provides financial services in Ohio. The company accepts various deposits,
which include regular and money market savings accounts, NOW accounts, and
fixed-maturity and fixed-rate certificates. Its loan portfolio comprises
commercial loans, commercial real estate loans, construction loans,
residential mortgage and home equity loans, and secured and unsecured
consumer installment loans. In addition, the company provides debit cards,
gift cards, travel cards, travelers` checks, official checks, money orders,
ATM services, and individual retirement accounts. It operates 14 offices in
Wayne, Medina, Stark, and Summit counties, as well as a loan production
office in the Columbiana county. Further, the company, through its
subsidiary, NBOH Properties, LLC, owns a multi-tenant commercial building in
Fairlawn, Ohio. National Bancshares Corporation was founded in 1881 and is
based in Orrville, Ohio.
Mark R. Witmer has served as President and Chief Executive Officer of National Bancshares and the Bank since January 1, 2012. Mr. Witmer served as Senior Vice President, Agribusiness and Community Banking from August 16, 2011 until December 31, 2011. Mr. Witmer served as Vice President, Agribusiness and Community Banking from July 26, 2010 until August 21, 2011. Mr. Witmer served as Dealer/Manager, Executive Vice President and Chief Credit Officer at Farm Credit, Kentucky and Pennsylvania from July 2007 until July 2010. Prior to his duties with Farm Credit, Mr. Witmer was Senior Vice President at Sky Bank, Salineville, Ohio from September 2000 until July 2007. Mr. Witmer has a Bachelors degree from Malone University and a Masters degree from Virginia Tech. The Board concluded that Mr. Witmer should serve as a director, as well as the President and Chief Executive Officer of the Company, due to his 25 years experience in and knowledge of community banking and agribusiness as well as significant community involvement. This background enables Mr. Witmer to provide valuable insights to the Board, particularly in evaluating the business conditions in markets in which the Company operates, as well as in setting corporate strategy and compensating the Company's management.
Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – August 6, 2012
Mr. Witmer: I came to the First National in July of 2010. Our CEO at that time was nearing retirement, so for the year and a half leading up to taking over as CEO, I was given a good indication that I would be assuming the role, therefore I was able to implement many things before officially becoming CEO in January. I was officially named CEO by the Board in September of 2011, and the public announcement was made. We are a community bank with about $450 million in assets and fifteen branches located in northeastern Ohio. Wayne County is our headquarters, and is one of the top two agricultural counties in the state of Ohio, in addition to many farms, there are many small businesses. Before I joined the bank in 2010, the strategy was to focus efforts to grow our commercial loan portfolio in the Akron and Cleveland area, as the belief was that there was not growth potential within our traditional footprint. The biggest change in philosophy over the past regime is the philosophy that we really can be a profitable community bank here in Wayne and the surrounding counties. A big part of my banking experience was with Sky Bank, which was a community bank that grew from a small bank up to an $18 billion bank. Sky was extremely successful in small towns and rural communities and I guess I look at First National Bank now as taking the same approach, and as a community bank being able to know the customers in these communities and having the ability to provide that extra level of service that will make us profitable. At First National, we still are able to add to our commercial portfolio in Akron and Cleveland, however we are really focused on the communities in which our offices are located, and growing profitability through gaining market share from our base.
Mr. Witmer: In Ohio in general, the unemployment rate is below the national average, and here in Wayne County, which is our headquarters, the unemployment rate is below six percent. We are in northeastern Ohio where there are two things that have made a very positive impact on our economy. Wayne County is ranked number two in the State of Ohio in agricultural income, and agricultural has been very good over the past several years, so the farmers and agricultural related businesses in the area have been very successful, which has a very positive impact on our economy. The other thing we have here in Northeastern Ohio is Marcellus and Utica shale drilling that has started to take place, which has really spurred the economy. In general, I would say our local economy is very positive at this point.
Mr. Witmer: When I joined First National in 2010, pursuing the community banking and agri-business market was a change in strategy and we have continued to focus on that sector. In my banking career, I spent a considerable amount of time with Sky Bank, which grew from a small community bank to a large regional bank. In my tenure at Sky Bank, I managed retail and mortgage, and was also an integral part of the management team as we made numerous acquisitions. I have also spent considerable time in the Farm Credit System, most recently as a Chief Credit officer, so while my experience is diverse, I do have a great deal of experience with agricultural and agri-business lending. It is not easy for community banks to enter the Ag lending market as it really does require specific expertise to be successful. There are many different challenges, so for any bank just to say that they are going to pursue that market can be a mistake. Some of the challenges are making sure borrowers are prepared to deal with weather changes and commodity price volatility. There is also a shortage of loan officers and credit analyst who have the knowledge and experience to originate and service ag loans.
Mr. Witmer: As a community bank, we will only be successful if we provide superior service and leverage our relationships. When I joined First National in 2010, we had some commercial lenders here that had some experience in ag lending and also had some relationships with local farmers. Even though we had not actively focused on ag lending, we tried to draw on their relationships with people in the community. The day after I was named CEO in September of 2011, I was able to convince Tom Stocksdale, whom I consider the best Ag lender in the State to join First National. He was working for a very large bank and had become frustrated with his bank’s lack of ability to provide superior service to his clients. The service level he was able to provide was hurting his reputation as a lender. As a community bank, I assured him we had the commitment and ability to provide the level of service his clients deserved. His addition has been a huge success as he has been able to provide superior service to his clients and he has moved most of his loan portfolio to First National. Many banks claim to provide good service, however at First National, we truly do provide fast, efficient, one on one service to our customers.
Mr. Witmer: It is always an education process when there is new management and new ideas. One of the biggest adjustments the team had to face was the implementation of a sales culture, as this was entirely new for the team. Our goal is not to sell everything we can sell, but to assess each customer’s needs and sell them what they need. At our very first all employee meeting, I made it very clear that our primary focus is to treat our team members and our clients better than we wanted to be treated. The fact that I worked at the bank for some time before becoming CEO was very helpful. The staff was able to witness first hand my work ethic, how I treated others, as well as my passion for providing superior service. I do not believe it works or is right to expect behaviors from others that I do not exhibit. While it took some time and there were some challenges, I can honestly say sitting here six months later, I feel that we have a very cohesive team top to bottom and everything has fallen into place very quickly.
Mr. Witmer: While we are always looking to improve, I believe at First National, we have an excellent mix of products and services right now. While we have made some additions in the past 6 months, I believe we can continue to improve on the execution and delivery of the products we have. Even though we are a small community bank, our product offering is every bit as strong as our much larger competitors are. The advantage we have at First National is the ability to deliver these products and services with a personal touch and when the customers need them. We do not have a call center and customers can always talk to a team member when they need help. All of our lenders have their office phone forwarded to their cell phone when they are not in the office and will always return calls the same day.
Mr. Witmer: A man called our branch office on a Thursday evening (our manager had the office phone forwarded to her cell) to ask if we would open an account for him but he wasn’t able to get out of his truck and come into the bank because he was disabled. He was unhappy with the way he was being treated at his current bank. Our manager (Tina) told him that she would be more than happy to help him. He said that he would come on Friday morning at 8:00. Tina told him that he could park in front of the office and call her cell phone when he had arrived. He called about 8:30 am she went out to his truck and shared the different accounts that we had to offer. She collected the required information, came back into the office, and opened the accounts. Tina thought it was only opening one account but the man opened two accounts and for a much larger amount than she ever expected. A couple of months later he came back (in front of the office), Tina again took a phone out and changed his social security deposit to his account at First National. He is now a loyal customer and tells all his friends to bank with First National. This is one example of the customer service we expect and receive from all of our team members.
Mr. Witmer: We have a board committee for charitable contributions and give generously to many local and national organizations. Even more importantly, we encourage all of our team members to give of their time to volunteer at many different community based non profit organizations and local churches. I personally am on the board of the local YMCA, County Economic Development Council, Boys and Girls Club, and volunteer for several other organizations.
Mr. Witmer: In 2009, and 2010, we made around $1.6 and $1.3 million respectively. Last year in 2011, we increased that to about $2.6 million, and in the first quarter of 2012, we made $700,000. Even more important is the loan growth that we have experienced in the last two years. Since 2010 when I came to the bank, we have focused our lending efforts to core community banking such as, mortgage loans, small business loans, and agricultural loans. We have grown our loan portfolio over 25% in the past two years, which has made an extremely positive impact on our financial picture. We have also reduced our non interest expense considerably in 2012. We are not cutting things that are needed, we are simply paying attention to what we are spending our money on, it is just common sense.
Mr. Witmer: For the most part, people would ‘say show me what you can do for me today’. However, I would say we have more appreciation in our local community for the time the bank has been here. I think there is definitely some appreciation for the history of the bank, but what we can provide today is what is going to win the business for us.
First National Bank has tremendous potential for continued growth in
profitability, which has been driven by the recent 25% loan growth made up
of strong credit quality. While there have been no acquisitions, there may
be opportunities for such. Our geographic location is an asset and the local
economy should continue to grow. We are just starting to experience the
positive impact on the Marcellus and Utica shale drilling, which is just
ramping up and is going to continue to be very positive for our local
economy. There is no reason to believe that with the growing world
population, agriculture will not continue to be profitable and have a
positive impact on our local economy. First National is well positioned to
take advantage of this market. While our primary focus is the small towns
and communities here in Wayne and surrounding counties, our proximity to
larger markets such as Akron and Cleveland give us additional opportunities.
We have many people on the team here that have a tremendous amount of
experience, and people want to be a part of our team as evidenced by the
number of team members who have joined us from bigger financial
institutions. Even though we have implemented a strong sales culture and
have raised the bar on expectations, our team members truly do feel make a
difference here at our community bank.
First National Bank has tremendous potential for continued growth in profitability, which has been driven by the recent 25% loan growth made up of strong credit quality. - Mark R. Witmer
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