Most recently chief operating officer at Indiana, Indiana County-based First Commonwealth Bank, Mr. Best will take the top spot at Penseco on Jan. 3 as longtime CEO Otto P. Robinson Jr. retires.
Mr. Best faces challenges at Penseco’s top spot, ranging from stopping the erosion of deposits to the need to increase loan volume in a stagnant market.
As chief executive, Mr. Best said he would capitalize on Penseco’s strengths, such as high asset quality, positive cash flow and minimal charge offs.
Mr. Robinson declined comment, saying he didn’t want to disclose material information that may be in violation of Securities & Exchange Commission rules.
From June 2004 to June 2005, Penn Security lost more than $12 million in deposits, about 3.5 percent, according to the Federal Deposit Insurance Corp. The bank’s balance sheet also shows the need to make more loans. Of Penseco’s $568 million in assets, $302 million are in loans and most of the balance is in low-yield mortgage-backed investments.
"A bank wants to make loans with its money, not invest it," said Wilson Smith, a bank analyst with Boenning & Scattergood Inc., in West Conshohocken. "Those numbers tell me Penseco has almost as much of its assets in securities as it does in loans, and that’s not an ideal situation."
While Penseco’s investments don’t pack the return that loans would, Mr. Best said the move was wise at the time as the bank dealt with cash from loan payoffs. Over the last 18 month, Mr. Best said Penseco has been growing its loan base.
The second largest banking market in the state, Pittsburgh is dominated, as it is Northeastern Pennsylvania, by PNC Financial Services Group. Both markets are also relatively stagnant, with little growth. In recent years, First Commonwealth had acquired smaller banks, sold off under-performing branches, and gained a foothold in the Pittsburgh city market. Mr. Best has worked at First Commonwealth since 1986.
With his experiences in Pittsburgh, Mr. Best will be accustomed to the competitive, rate sensitive banking market in Northeastern Pennsylvania, said Mr. Smith.
"To run a bank in Scranton, you have to bring your best game," Mr. Smith said. "Penseco did well to pick off a guy from a bigger bank, in a similar environment, hardened by a tough market."
At First Commonwealth, Mr. Best was one of three candidate considered to replace chief executive Johnston Glass, who resigned in June. The job was given to Gerald M. Thomchick, chief operating officer for First Commonwealth Financial Corp., the bank’s holding company.
This is cache, read story here
