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FedFirst Financial Corporation |
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February 11, 2013 Issue |
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The Most Powerful Name In Corporate News and Information |
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As a Community Bank that is truly woven into the Fabric of the Communities where They are Located in Southwestern Pennsylvania, FedFirst Financial Corp. and their First Federal Savings Bank subsidiary are Bringing Value to Main Street America |
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FedFirst Financial
Corporation is a stock holding company established in 2010, whose wholly
owned subsidiary is First Federal Savings Bank, a federally chartered stock
savings bank. Through its wholly-owned subsidiary FedFirst Exchange
Corporation, the Bank has an 80% controlling interest in Exchange
Underwriters, Inc. Exchange Underwriters is a full-service, independent
insurance agency that offers property and casualty, commercial liability,
surety and other insurance products. First Federal operates as a
community-oriented financial institution offering residential, multi-family
and commercial mortgages, consumer loans and commercial business loans as
well as a variety of deposit products for individuals and businesses
from seven locations in southwestern Pennsylvania.
Mr. O’Brien is actively
involved in many community and business organizations in the region.
Currently, Mr. O’Brien serves as the Board Chairman of the Washington
Hospital Foundation, Chairman of the Washington County Chamber of Commerce,
Board Member of the Boy Scouts of America – Greater Pittsburgh Council, Vice
Chairman of the Boy Scouts of America – Mingo Trails District, Board Member
and Treasurer of West Penn Power Sustainable Energy Fund, Board Member of
Economic Growth Connection of Westmoreland County and Board Member of North
Bethlehem Township Planning Commission. Mr. O’Brien is also actively
involved with his church, Bethlehem Church in Glyde, PA. |
Financial Business Bank
FedFirst Financial Corp
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Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – February 11, 2013
Mr. O’Brien: The bank was founded in 1922 in the Mid Mon Valley area of the Pittsburgh Pennsylvania market. The bank grew up around the steel industry of the Mid Mon Valley and in Fayette County Pennsylvania, which is a bordering county to this area. It was primarily founded to provide home ownership for the people of the Mon Valley area. It was also a means for them to be able to save their money through traditional savings and loan products such as CD’s or passbook savings. As the bank developed and the industry developed, in the late nineties into the early 2000s, it became apparent that the bank needed to modify and change itself to compete in the market with a broader array of products and services. In 2005, the bank did an initial public offering of stock to bring in new stock and to begin to transform itself into a broader base commercial bank. That is the time I and a new team of people that had a commercial banking background joined the bank. We expanded into Washington County with two new locations and while we continue to be a good lender of money for people to purchase, construct and refinance their homes, we now have a much broader array of products and services where we can serve the businesses of our communities. Such products and services include business loans, business deposit accounts, cash management services, online banking services and remote deposit…just to name a few.
CEOCFO: Who are your typical customers? Is there a particular sweet spot that you target? Mr. O’Brien: Yes there is, on the commercial side. We are typically dealing with companies that are smaller, closely held and many times family-owned. Industries range from small manufacturing firms to real estate development companies. From a size perspective, those companies can range from as small as $100 thousand in annual sales up to $25 million.
CEOCFO: How has the economy fared in your area compared to the rest of the country? Mr. O’Brien: In southwestern Pennsylvania, we have been very fortunate. Our real estate values have been more stable, as we did not experience a significant spike in values that many parts of the country experienced in the early 2000’s. Those values have since plummeted. Secondly, our employment numbers have hung in there pretty well. They have been bolstered by the natural gas play known as the Marcellus Shale, which is very popular on a national and international basis. That has helped support employment, which in turn has helped support real estate values and kept the economy in this area doing well.
CEOCFO: What is the competitive landscape with other local banks? Mr. O’Brien: It is very competitive. Both large competitors and smaller competitors heavily bank the greater Pittsburgh market. We compete heavily for good commercial loans and good consumer relationships as well.
CEOCFO: In terms of customer service and relationships, what do you do that sets you apart? Mr. O’Brien: It starts with who we believe we are and how we approach our business every day. We believe we are part of a noble profession at First Federal. Many people may furrow their brow a bit and say “Bankers, a noble industry? How can that be given the financial crisis over the last number of years?” We like to think in anybody’s life there are things that are very important to them. We know somewhere in the top six or seven most important things in everybody’s life typically are their faith, family, friends and finances. We believe in treating our customers right and being flexible, helping them get all of their service taken care of whether it is on the commercial side or the consumer side. Our customers can then put their finances to the side and they can focus on things that are even more important to them. That is our approach to serving our customers each day. For example, the town where our bank was founded and is still headquartered is a town called Monessen, Pennsylvania, which was one of the great steel towns of the 1900’s. Much of the steel produced for WWII and for the build-up of our country was in Monessen and the Mon Valley. Our town has suffered from the economics over the last forty years and we have been able, in spite of some of the challenges of the economy of the town, to help businesses grow and thrive here. Most recently, there was a long-time family-owned bakery that was transitioning from one generation to the next. We knew, based on some of the financial statements, it would be very difficult to provide the financing needed for that next generation. Because we are headquartered here and because we understand the community, the business and the family, we were able to put financing in place. That company has survived and continues to employ people and continues to be a family-run business right in the heart of our community. That is just one example of how we work a little harder than some of our larger competitors and how we can provide a true value to the communities that we serve.
CEOCFO:
How do you reach potential customers?
CEOCFO: I see on your website the tagline “The Good Business Bank,” what does that mean to you? Mr. O’Brien: We want to be able to tell a story to whomever looks at us that if you come here and do business with us, you are going to be treated fairly and you are going to be with somebody that cares about you and your success. As you look at that, whether you are a consumer or a business customer, you can say, “Hey, that is a good place to do business. They will treat us fairly and help us achieve our financial goals.”
CEOCFO: Are there service or products that you would like to offer? Mr. O’Brien: We are considering products as we continue to grow and modify ourselves. At some point in time we might consider doing some wealth management business where we would link up with investment professionals to be able to provide services beyond the traditional banking and FDIC insured products. There is some wealth being created by the Marcellus Shale and having a wealth management option would allow us to appeal to some of our customers that are enjoying those benefits, as well as reach out to others that may not be doing business with us.
CEOCFO: Are many of your customers taking advantage of the retail services? Mr. O’Brien: Many of our business owners enjoy the benefit of doing business with us on the consumer side when they need to buy, build or refinance a home. They find having their checking, savings and certificates of deposit with us brings the additional convenience of having a one-stop shop. On top of that, we bring an additional piece of value through our ownership of a casualty insurance company called Exchange Underwriters. So we can take care of their personal and commercial insurance needs.
CEOCFO: Would you like to see the mix between consumer and commercial change or do you like the 50/50? Mr. O’Brien: We are working to build a greater commercial portfolio and we would like to see that continue to grow in proportion. The reason for that is first and foremost, we think we can help this area by helping businesses grow, prosper, and employ more people. Secondly, it is vital from a standpoint of our balance sheet and income statement. From a balance sheet perspective, if you understand how we do business, we bring deposits in at a certain rate and then lend them out in loans at a certain rate. That margin between is where we make our money. Many times the deposits that we bring in are very short term in nature, meaning that they can re-price frequently. If rates were to go up, we need to re-price them up so we can continue to grow and retain those deposits. For example, we are currently bringing 3.5% mortgages onto our books with a fixed rate for thirty years, meanwhile our deposits can re-price every six months to a year or even more frequently. That can squeeze you when rates begin to rise because your deposits will come up in cost faster than your assets, i.e. your loans. By bringing more commercial business onto our balance sheet, we get more non-interest bearing checking accounts, which helps keep the cost of our deposits a little bit lower. Also, when we lend money to businesses, many times those loans will re-price more frequently. For example, with commercial lines of credit, many times the rate is a floating rate with prime rate. So as rates rise, the rates on those lines of credit will go up commensurately. If it is a commercial term loan, many times those rates will re-price every three or five years and that gives us more flexibility in a rising interest rate environment. For that reason, we are continuing to pursue a balance sheet that is comprised of a greater amount of commercial deposits and commercial loans.
CEOCFO: The bank has a considerable history; do you feel that is relevant today for potential customers? Mr. O’Brien: We are very fortunate to have a group of loyal customers and loyal communities because we have been here for ninety-one years. I believe we have served the customers and communities well where we are located. In today’s world of internet and electronic communication and commoditization of financial products and services, it is incumbent upon us to be able to build that loyalty with the younger generation as we go forward. We think that we can continue to build that loyalty with future generations. We will continue to reach the communities through community service and commitment from our employees who give back to our communities in many different ways. That will stay an important reason why customers, both business and personal, choose to do business with a bank like ours.
CEOCFO: Would you tell us about the community involvement for the bank? Mr. O’Brien: It is fairly broad based, but for me in the role I play, I do a great deal of outreach into economic development groups to help promote business in our region. Washington County Chamber of Commerce has been an area where I have done a great amount of volunteer work through most of my career but we also do a lot of work with nonprofits as well. I serve the local community hospital on their foundation board with fundraising for the local hospital. Almost all of our employees have some type of outreach. We do a great deal of work with the local Rotary Clubs of our area. The churches that our employees attend, many times we are in leadership positions, treasurers or on the councils. The Salvation Army, American Heart Association, United Way, all have been community groups that we work hard to support not only financially but also with our volunteer time and expertise in financial services.
CEOCFO: What do you look for in your people? Mr. O’Brien: A true commitment to service of other people. That resonates first with serving our banking customers but it also gets into what I just talked about a moment ago in a desire to serve a community. To promote and support that community so that it may thrive and prosper. That heart for service is definitely one that we put high on the list when we are talking to potential employees at the bank.
CEOCFO: How have you worked with your customers over these tough times and how do you reassure your customers? Mr. O’Brien: As you know, many times the media will paint a broad brushed picture of what is happening in the economy and many times that picture is not accurate. If you dig deeper, you will find the facts of what is really happening with employment numbers or investment in the area. Those facts can give a business a different perspective on the environment in which their company exists. In addition to that, by communicating with them often, by participating in Chambers of Commerce and other economic development groups, different opportunities can be expanded and exploited to help local businesses tie into those opportunities. The Marcellus Shale has been a great example of that. We have worked hard to stay as educated on the development of that as possible. We continue to be part of networking groups that can help local businesses tap into this industry that were not prevalent five years ago in this market. There are many companies coming in from other parts of the United States and finding a way to help our customers’ network into that is something that we have worked hard for as well.
CEOCFO: How is business? Mr. O’Brien: While I am not allowed to talk about the final numbers until they are released, I can say through the first three quarters of the year, our bank was on a very good track of earnings. It was one of our best three quarters in the history of the bank from an earnings perspective. From the standpoint of loan growth, we have continued to be able to grow our loans during a time when it was difficult to lend money and competition for good loans was high. In these last few years, we have been able to grow our loan portfolio which is where our primary income is derived. We feel good about the performance of the company and we feel good about the market that that we serve.
CEOCFO: Why should the business and investment community pay attention to First Federal?
Mr. O’Brien:
I think they should pay attention to First Federal because of who we are as
a company, who we are as individuals that make up our company and what we
believe in and how we are working to serve our customers, employees,
community and shareholders. Equally important would be who we are within our
industry. The banking industry is painted with a broad brush and community
banks, like First Federal, are much different than the large money-center
banks that have been criticized over the last number of years. We approach
our business with much more of a grassroots approach and I think your
readers should pay attention to companies like ours because we are ones that
are truly woven into the fabric of our communities and bring value to Main
Street America. |
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“The banking industry is painted with a broad brush and community banks, like First Federal, are much different than the large money-center banks that have been criticized over the last number of years. We approach our business with much more of a grassroots approach and I think your readers should pay attention to companies like ours because we are ones that are truly woven into the fabric of our communities and bring value to Main Street America.”- Patrick G. O'Brien |
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