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With slower than expected activity in the nonresidential construction sector in the first half of the year, projections for growth in spending have been scaled back. Led by the hotel and retail project categories, the commercial sector looks largely unchanged, but a noteworthy drop in demand for institutional projects has caused participants in the American Institute of Architects (AIA) semi-annual Consensus Construction Forecast , a survey of the United States leading construction forecasters, to reduce projections for spending to a 2.3% increase in 2013, with next years projections raised to 7.6%. A disappointing recovery of the U.S. economy is limiting need for new nonresidential building activity, said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. Optimism for a stronger performance next year is based on the recent increase in domestic energy production, the boost to the general economy from a resurgent housing market, and improving employment figures that should help drive demand in the design and construction sectors.

AIA construction forecast predicts brighter prognosis in 2014

November 2013

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WASHINGTON (May 23, 2013) Realtors who practice commercial real estate have reported an increase in annual gross income for the third year in a row, signaling the market is on the road to recovery. According to the National Association of Realtors 2013 Commercial Member Profile, transactions and sales volume have also increased since last year. The study shows median annual gross income for 2012 was $90,200, an increase from $86,000 in 2011 and is at its highest level since 2008. Brokers and appraisers reported the highest annual gross income while sales agents reported the lowest. The studys results represent Realtors who practice commercial real estate; these NAR members conduct all or part of their activity in commercial sales, leasing, brokerage and development for land, office and industrial space, multifamily and retail buildings, as well as property management. The commercial market is showing signs of improvement, which is reflected in the positive trends in income, transactions and

Realtors report positive trends in commercial market with increases in income, transactions
sales volume reported by our Realtor commercial members, said NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif. This is a hopeful sign for the future. Realtors who practice commercial real estate build communities by facilitating investment and promoting the sale and lease of commercial space. Theres no doubt that commercial market improvements will help spur economic recovery and growth for our nation. Commercial members completed a median of eight transactions in 2012, up from last year. The median sales volume also increased from last year and was $2,507,700. Brokers typically had higher sales transaction volumes than agents. The median dollar value of sales transactions was $433,600 and the median square footage was 10,400. Similar to the median sales volume, the median lease transaction volume increased this year by more than $70,000. In 2012 commercial members reported a median lease transaction volume of $476,400. Twenty-one percent of commercial members did not have a leasing transaction in 2012. The median dollar value of lease transactions was $169,100 and the median square footage was 4,200. Commercial members who manage properties typically managed 40,000 square feet, representing 15 total spaces. They also typically managed 16,000 total office square feet, representing six total offices. A majority of commercial members, 63 percent, reported they derive more than half of their annual income from the real estate industry. Thirty percent of respondents did not derive any income from commercial real estate leasing in 2012. Only 32 percent derived at least half to all of their income from leasing property. A large percentage, 85 percent, of commercial members earned at least some personal income from commercial real estate investments. Sixty percent of NARs commercial members are brokers. Licensed sales agents were the next largest segment at 25 percent. Most commercial members reported working in a firm that is local and 58 percent work within an office that has a mix of commercial

Commercial/Real Estate

and residential brokers and agents. Investment sales proved to be the most popular business specialty among commercial members. Identified by the highest proportion of members as their primary business specialty, investment sales was also the top ranked secondary specialty area. Land sales and retail leasing followed closely behind. The typical commercial member has been in commercial real estate for 15 years and involved in real estate in some capacity for 25 years. The median length of membership in NAR among commercial members was 17 years. With a median age of 59, commercial members are also predominately male. However, women are slowly coming into the business; 33 percent of those with two or fewer years experience are female, and sales agents have the largest representation of women with 29 percent. The NAR 2013 Commercial Member Profile was based on a survey of 1,796 commercial practitioners. Income and transaction data are for 2012, while other data represent member characteristics in 2013.

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TheBusinessJournal November 2013

The performance of the economy has significant implications for the commercial real estate sector, particularly through its impact on job creation and interest rates. Since we officially exited the recession, the economy has been growing at a snails pace. Year-over-year gross domestic product growth has been about 1.6 percent, well below the 40-year trend of 2.5 to 3 percent growth. This leaves us with a current GDP of just under $17 trillion, about $2.4 trillion dollars less than if that normal trend had continued. To give some perspective to this shortfall, $2.4 trillion equals the entire GDP of Brazil or the United Kingdom. We would essentially need five years of GDP growth at 5 percent just to get us back to our long-term, trend-line level. The influence of a sluggish economy on the jobs market is very clear. Jobs, more than anything else, affect the underlying fundamentals of real estate. During the Great Recession, the U.S. lost 8.7 million jobs. About 70 percent, or 6.1 million, have been regained. Therefore we remain about 2.6 million jobs below where we were before the recession. However, since 2008, our population has grown by about 15 million people. With a present participation rate of about 63 percent, to feel as good as we felt pre-recession, an additional 9.5 million jobs would have to be created. In total, we have a shortfall of about 12.1 million jobs. Other economic metrics are currently mixed. Things like corporate profits are great (mainly because companies have cut expenses to the bone), and net exports are at record levels. However, real GDP per capita, real median home prices and durable and non-durable industrial output are stuck below the historic norms. So are consumer confidence and consumer spending. These factors are inducing the Fed to maintain its easy money policy, which is keeping interest rates low, benefitting the commercial real estate sales market significantly. These low interest rates are also helping the government significantly with its budgetary problems. For instance, over the past year, the U.S. added about $1 trillion in debt, but our interest payments, to service that debt, have been reduced by almost $50 billion a year. This is creating tremendous incentive for the government to do what it can to keep rates low. Clearly, we need the economy to gain some traction, and a sensible fiscal policy would help get us there. We need a balanced approach from Washington and some real political leadership. Revenue as a percentage of GDP is near historic lows, and spending as a percentage of GDP is near-

Hows the economy doing and how is it impacting commercial real estate?

ing historic highs. On the revenue side, it is clear that tax reform is needed, and taxes need to be increased. In 1980, 16 percent of Americans paid an effective federal income tax rate of zero percent. Today that percentage is nearing 50 percent. On the spending side, entitlements in the form of transfer payments have been soaring. Today 49 percent of Americans receive some sort of transfer payment. Thirty years ago, only 20 percent did. Since 1990, for example, the number of Americans receiving social security disability payments has tripled. Unless a balanced approach is imple-

mented, which will take some political courage, our trillion-dollar deficits and massive debt will catch up with us in a very significant way. It is remarkable to think that just four years ago, our Federal debt per household was approximately $40,000, while today it is approaching $100,000 per household. Low interest rates, which are being kept artificially low by the Fed, are currently bailing

out the government by masking the severity of our budget crisis. When rates rise, well truly feel the consequence of what has been going on for many years. From a commercial real estate perspective, the questions we would love to know the answers to are: When do jobs come back in a meaningful way? How long do interest rates stay low? And can Washington get its act together to put our economy on a tangible track to recovery? These answers will likely shape our market for years to come.
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November 2013 TheBusinessJournal

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The Ottoville Bank Company, with roots firmly planted in rural Putnam County, takes great pride in serving the growing financial needs of bank customers. As a full service, community bank, The Ottoville Bank Company offers customers a variety of banking services. In addition to checking and savings accounts, the bank offers loans for home, auto, commercial, farm and personal uses. Credit cards, debit cards, wire transfers, IRAs and more are also offered, as is Internet banking and bill pay. The Ottoville Bank Company is a locally-owned and operated bank and has served its community and the surrounding area for more than 100 years. The bank was incorporated in October 1903, and its first day of business was Feb. 2, 1904. The Ottoville Bank Company was originally located at the corner of Third and Canal streets in Ottoville. The present location at 161 W. Third St. became the banks home in July 1939. The structure was remodeled in 1975 and included the addition of a drive-up window. The building doubled in size in 1986 and an ATM machine was installed. Its hours of operation are Monday-Thursday 8:30 a.m. to 3 p.m.; Friday 8:30 a.m. to 5:30 p.m.; and 8:30 a.m. to noon on Saturday. In November 2009, the bank opened a lending center at 940 E. Fifth St. in Delphos. Its hours of operation are 9 a.m. to 5 p.m. Monday through Friday. The Ottoville Bank Company is Large enough to serve you, small enough to know you.

Ottoville Bank

Regional Financial Institutions

Headquartered in Lima, Superior Federal Credit Union has ten branches located in Lima, Delphos, Ottawa, Wapakoneta, and St. Marys. The credit union provides consumer and mortgage loans, brokerage services, home and auto insurance, checking and savings accounts, and small business services and loans. Membership in the not-for-profit, member-owned financial cooperative is open to anyone who lives, works, worships, or attends school in Allen, Auglaize, Hardin, Mercer, Putnam, and Van Wert counties. In early 2013, Superior Federal Credit Union (SFCU) surpassed the 50,000 member milestone. SFCUs membership grew 6.8% in 2012, more than three times the growth rate seen by credit unions nationally. In 2012, US credit union memberships grew by 2.1% over double the rate of population growth and the strongest advance in the past decade. More than 95.7 million Americans, including 2.7 million Ohioans, are now credit union members. In addition to growth in membership, SFCU made major moves to increase its service offerings to members in 2013. One of the most technologically advanced financial institutions in the region, the credit union launched a major upgrade to its online and mobile banking offering in April. This upgrade included enhanced bill payment service, money management capabilities, and mobile/tablet apps. Additional enhancements will be launched in 2014including

Superior FCU enjoys all-around growth

Remote Deposit Capture, where members can deposit endorsed checks by taking front and back photos with their phone and uploading to their account through online banking. The credit union also opened Superior Insurance Services in 2013 to provide discounted auto, home, life, and commercial insurance to its members. Superior Insurance Services is an independent insurance agency representing many of Ohios leading insurance companies including Grange, Progressive, Farmers, Donegal, Encompass, Safeco and Travelers. In November 2013, the credit union opened a title agency, Superior Title, to provide low-cost title insurance and services for its mortgage customers. Opening a title agency will allow Superior to further reduce mortgage closing costs, strengthening its position as the #1 mortgage lender in Allen, Auglaize, and Putnam Counties. In 2012, The Mortgage Center at Superior closed over 22% of all home mortgages within their field of membership. Additionally, The Mortgage Center provides mortgages services for more than two dozen other credit unions in eight different states. In August 2013, SFCU broke ground on a 14,000 square foot facility expansion to its Elida Road headquarters. Upon completion in early 2014, this new addition will house mortgage operations, Superior Title, and a new Member Services Call Center with extended hours.

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4B TheBusinessJournal November 2013

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November 2013 TheBusinessJournal

5B

Midwest Community
Midwest Community was originally founded by Louis E. Westrick in 1954 with an idea and a briefcase. Westrick sought the same financial incentives and treatment in the newly expanding rural area of Defiance as his urban friends were getting from bigger banks. He didnt like the way the local banks were treating him so he did something about it. An employee at General Motors, Westrick worked with fellow employees to pool their money and provide financial resources with higher savings rates, lower loan rates and a more personalized way of banking. And Midwest Community was born! The briefcase used to start the credit union is on display to this day in our main branch lobby. Although similar at first glance, banks and credit unions differ greatly. Banks are for profit companies with a responsibility to shareholders (who may not even be a member of the community or customer of the bank) to provide return on investment. They operate according to a paid Board. Credit Unions operate as not-for-profit cooperatives that focus on member financial health and education. Profits are reinvested and returned to members as increased services, lower loan rates, higher savings rates, and lower fees. Credit unions operate according to a volunteer Board democratically elected by members. The cooperative mindset means members pool resources to enhance their financial performance and improve the communitys health and stability. Sixty years later Midwest Community is a full-service, technology-friendly financial cooperative that would make Louis Westrick proud. Our history is rich with stories of members working together to help one another. While deep roots with General Motors employees remain, we have long since opened our doors to all who live, work, worship or go to school in Williams, Fulton, Defiance, Henry, Paulding and Putnam counties. Become a member today and share your story with us!

W E N
E-Statements Debit Card Overdraft Protection Free Online Banking Free Mobile Banking Free Account Alerts Visa Credit Card Available*

Mobile banking puts consumers in control

Consumers are adopting mobile banking and payments technologies at a record pace and in real-time. Theyre demanding convenience, security and personalized experiences across multiple screens. Indeed, banking customers are faster at conveying what they want than banks are at delivering the goods, bank technologists confided in a recent panel discussion. Customers are in control today quite a transformation from the not-so-distant past when banks waited for accountholders to call them. Being passive means being irrelevant, a space no financial institution wants to find itself in. The stats tell the story. Smartphones surpassed 125 million U.S. users in 2012 and tablets are owned by more than 50 million. One-of-three minutes online is now spent on devices beyond the PC. Enter omni-channel banking For financial institutions, omni-channel banking is forging the way forward for mobile. Forget the multi-channel days when banks concentrated on converting customers to the cheapest channel and strived to achieve a constant look across separate channels. With omni-channel banking, con-

Septembers growth in the Credit Managers Index (CMI) from the National Association of Credit Management (NACM) was driven primarily by increases in the indexs unfavorable factors, all of which registered improvements and some by substantial margins. The overall unfavorable reading leapt from 53 to 53.8, driven by big improvements in accounts placed for collection, from 52.5 to 54.3, dollar amount beyond terms, from 51.1 to 52.2, and filings for bankruptcy, from 58.7 to 59.8. NACM Economist Chris Kuehl, PhD noted that this reflected a shift in debtor behavior toward friendlier payment behavior with regard to their trade creditors. Essentially, businesses are settling their debts rather than trying to test the waters of late payment. When times are tough, debtors begin to take advantage of what leverage they have and start to test those that have given them credit. There are more slow pays and many of the negative indicators get progressively worse as companies try to hang on to their cash and test the patience of the credit manager, Kuehl said. There comes a point when these companies want access to credit again, prompting them to try to catch up and get back in the good graces of those from whom they seek credit. This could explain why the data within the unfavorable categories has improved.

September credit managers index inches up to 56.6 on strength of unfavorable factors

Elsewhere in the index, all but one of the favorable factors fell in the overall index, although each of them remain well above 50, the line that indicates each of these categories is still in expansion. Much of this decline in the favorable factors can be attributed to a slide in sales, which slipped from 63.1 in August to 62.7 in September. Improvements were also seen in the manufacturing and services sectors, again by improvements in the unfavorable factors, which further suggest that businesses are taking the time settle their existing debts before taking on new ones. The CMI has often functioned as a leading indicator, and other economic indicators have begun to mirror its growth readings, according to Kuehl. The CMI started to show these solid gains at the start of the summer and, in the months that followed, the Purchasing Managers Index (PMI) followed suit and was sitting at its highest point this year in August, he said. Thus far, the expectation is the PMI will continue to trend in the same direction as the CMI. This is a logical relationship that has been manifesting for some time. The thinking behind using the actions of purchasing managers to gauge the economy is that nothing happens in a business until a purchasing decision is made. By that same logic, no purchasing of significance is going happen without a credit decision.

Banking for Todays World

08770 St Rt 66, Defiance - 419-783-6500 1429 N. Scott St., Napoleon - 419-599-5522

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TheBusinessJournal

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*Credit card approval depends on creditworthiness and other qualifications

sumers interact across all channels and can research a home loan online, discuss it over video with a local branch loan officer and arrange for automated monthly payments using a mobile banking app. Omni-channel banking delivers more customer engagement, more contact opportunity and, ultimately, a source of future growth. Its another example of how mobile is transforming the banking landscape, reconstructing the industry to operate on customers terms. What explains this? One major reason: consumers are determining that mobile banking is easier and safer than they thought and they dont have to visit a branch. Aite Group researchers expect 96 million U.S. consumers will use a mobile device to access their bank account by 2016, up from 33 million last year. That represents a compound annual growth rate of 30%. The mobile banking craze is causing banks to think differently and to innovate. Theyre rushing to provide the strategies and integrated services and systems needed to create the personalized mobile experiences their customers desire along with the necessary security, of course.

November 2013

Fort Jennings State Bank

The purpose of The Fort Jennings State Bank is to become the Bank of choice in the communities we serve. We will accomplish this by offering to our customers the financial services they expect while providing a return to our owners. In accomplishing this mission, we will remain an independent community bank. The Fort Jennings State Bank has adopted the above mission statement, the purpose of which is to help all employees, Directors and stockholders realize the purpose of the banks existence to serve the customers. In 1918 Leo J Wildenhaus helped to organize and open The Fort Jennings State Bank. He served as the banks first cashier, holding that position until 1958. During his tenure, the bank experienced two World Wars and The Great Depression, including the infamous Bank Holidays. It continued to serve the local community and to grow. In 1970 it became apparent that new facilities would be required to serve its increasing customer base. The bank was originally located in what is now the U.S. Post Office in Fort Jennings. A new building was constructed across the street and to the north of the previous bank, and included one of the very first drive-up teller windows in the area. In 1988, an Automated Teller Machine (ATM) was installed, allowing customers access to their checking and savings accounts 24 hours a day. By 1990, continued growth led the bank to construct an addition that nearly doubled the size of the bank building. In 1993, it was decided to construct a branch office in nearby Ottoville, followed by the purchase of a branch office in Columbus Grove in March 1996. In April of 2001 construction of an all-new branch office was begun in Leipsic. In 2003, the decision was made to raze the Columbus Grove building to construct a new facility and in late 2006 a new branch office was completed and opened in Ottawa. From its inception in 1918, the bank had been owned by its stockholders. In December 1997, a holding company, FJSB Bancshares, Inc, was formed with The Fort Jennings State Bank as its wholly owned subsidiary. The stockholders of The Fort Jennings State Bank became the stockholders of FJSB Bancshares, Inc. In addition to the mission statement, a new motto the Bank of choice was implemented to show the commitment to providing a complete set of financial services to customers; ATMs, debit cards and Internet Banking complement traditional loan and deposit products. As the banking challenges of 2011 continue to present themselves, The Fort Jennings State Bank is proud that, as a result of our capital position and business plan, it has not accepted any funding from any federal relief programs. It remains an independently owned, community-oriented bank. The bank currently employs 34 people and had assets of $145 million.

The Fort Jennings State Bank has its customers and the communities to thank for 90+ years of success

The Fort Jennings State Bank

the Bank of choice www.fjsb.com
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November 2013 TheBusinessJournal 7B

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TheBusinessJournal

November 2013