Emerald Financial Corp. Aims to Expand and Modernize in a Conservative Banking Market

Strategic Insights -

Emerald Financial Corp., the parent company of Strongsville Savings Bank, is set to expand its operations with the opening of new branches, a name change, and a renewed focus on winning over investors on Wall Street. Despite concerns from executives about alienating old friends on Main Street, the company is confident that its conservative approach to banking will continue to serve it well. With a long history of financial prudence and a reputation for being a "very conservative bunch," Emerald's leadership has built a loyal customer base in Strongsville, but also faces challenges in adapting to changing market conditions.

Key Takeaways:

  • Emerald Financial Corp. plans to open a new branch in Avon Lake on February 18 and two additional East Side offices by the end of the year, increasing its number of branches to 17 and giving it its first physical presence east of the Cuyahoga River.
  • The company will change its name from Strongsville Savings Bank to Emerald Savings Bank on April 1, a move that has executives concerned about alienating customers in their hometown.
  • Emerald's leadership has been with the company for an average of over 20 years, with six of the nine directors having been with the company for at least 10 years, and three for over 20 years.
  • The bank's conservative approach to banking has earned it high marks among financial sector analysts, with a net chargeoff ratio of 0.11% in 1998, and an efficiency ratio of 48.35%, which is at least five percentage points better than most thrifts.
  • Despite its conservative approach, Emerald's net income grew 28% in 1998 to $7.8 million, and its dollar volume of new loans increased 52% to $350 million in 1998.
  • Analysts predict that thrifts such as Strongsville Savings Bank will need to open more branches to generate higher earnings, with Emerald eyeing opportunities created by recent banking mergers and acquisitions.
  • Emerald's tight-fisted control on costs has earned it a reputation for being labor-intensive, with the company's directors meeting weekly to examine every new loan application.

Statistics:

  • Number of branches: 17 (increasing from 14)
  • Assets: $670 million
  • Net chargeoff ratio: 0.11% (1998)
  • Efficiency ratio: 48.35% (1998)
  • Net income: $7.8 million (1998)
  • Dollar volume of new loans: $350 million (1998)
  • Increase in new loans: 52% (1998)
  • Time period for loan approval process: Up to 3 hours
  • Number of directors: 9
  • Average tenure of directors: Over 20 years
  • Number of employees: 131
  • Increase in employees: 7 (1998)

Sources:

  • "Emerald Financial Corp. to Expand and Change Name," The Plain Dealer
  • "Strongsville Savings Bank's Net Income Rises 28%," The Plain Dealer
  • Interview with Thomas Perciak, President and CEO of Emerald Financial Corp.
  • Interview with John Ziegler, Executive Vice President and Chief Financial Officer of Emerald Financial Corp.
  • Interview with Mark Davis, Research Director at Banc Stock Group Inc.
  • Interview with Ross Demmerle, Financial Sector Analyst with McDonald Investments