First Place gets tough with suppliers and finds new purchasing methods.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
WARREN -- A new efficiency effort at First Place Bank is providing cash that is helping to fuel the company's growth.
An in-house task force created a year ago has identified 1.75 million in annual savings. In the past three financial quarters, 1.2 million in savings has been realized, said Steven Lewis, First Place president and chief executive.
"We're trying to be more efficient so we can invest in our facilities," Lewis said.
Locally, First Place has built a new branch in Howland, moved its Poland branch and broke ground for a new branch in Canfield Township. It also has built two new offices in Michigan
"We're trying to grow this franchise," Lewis said.
Warren-based First Place has been expanding for six years, acquiring companies in Ohio and Michigan, but officials decided a year ago to take a good look at what was happening with expenses during that growth.
Lewis said he is pleased with the results so far.
One way financial institutions judge efficiency is with a ratio that takes overhead expenses and divides it by average assets. First Place dropped that ratio in its most recent quarter to 2.42 from 2.51, while the average ratio of the company's peer group is 2.78.
Lewis said First Place has been able to be more efficient without cutting employees. Because of past acquisitions, it has administrative functions spread out over three locations, with about 100 employees in Warren, 80 in Boardman and 75 in Ravenna.
Other companies often hire outside consultants to find ways to become more efficient, but First Place has used its own staff to review operations. The effort is headed up by Albert Blank, chief operating officer.
One example of savings is the upcoming renegotiation of the contract for processing ATM transactions, Lewis said. This market has become more competitive recently, so First Place expects to save about 600,000 a year through negotiations with potential vendors, he said.
A get-tough strategy is being applied to all suppliers, including health-care insurers, he said.
"We're putting a lot more pressure on external vendors to be more competitive," he said.
First Place also is looking to outsource the purchasing of forms and other supplies. Lewis said some suppliers buy in large quantities and can achieve lower prices than an individual company can.
Lewis talked about the efficiency effort after the company reported that it posted record earnings for its first fiscal quarter, which ended Sept. 30. First Place earned 7 million, compared with 6.2 million in the same quarter last year.
First Place attributed the increase mostly to the sale of assets that were acquired as part of the acquisition of Northern Savings & amp; Loan Co. in Elyria.
The First Place board approved increasing the quarterly dividend to 15.5 cents per share, a 1.5-cent increase. The dividend is payable Nov. 9 to shareholders of record as of Oct. 26.
First Place operates 33 branches, two business financial service centers and 16 loan production offices.