Crain's Cleveland Business

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VOL. 37, NO. 2

JANUARY 11-17, 2016

Business of Life

DOWNTOWN: Year-end data Office vacancies rise slightly

City tales

P. 4

For local groups, storytelling is an event

ECONOMY: Shifting gears Ashtabula partnership sharpens focus

P. 18-19

P. 6

CLEVELAND BUSINESS

FOCUS: Small Business Successful succession strategies P. 13-17

The List The region’s top SBA lenders P. 23

Port Authority is picking up steam Will Friedman believes that the Port of Cleveland is on its way to becoming a growing international port of call.

“We are carving out our niche here,” said Friedman, president of the Cleveland-Cuyahoga County Port Authority, which runs the lakefront docks. “(The service) is standing the test of time.”

Friedman was talking about the 2-year-old cargo service, dubbed the Cleveland-Europe Express, that is making regularly scheduled trips between Cleveland and Antwerp, Belgium.

In a year-in-review interview at the Port Authority’s office at the foot of West Ninth Street, overlooking the docks it runs on the lakefront, Friedman spoke optimistically about the future for the deal he negotiated in 2013 to bring regular international cargo service to Cleveland and the increased activity elsewhere on the docks.

What started as nine, monthly round trips in 2014 between Cleveland and Antwerp by ships owned by the Dutch Spliethoff Group grew to 24 during the nine-month, 2015 Great Lakes shipping season, with greater frequency anticipated after the Great Lakes thaw out this spring.

This service marked the first time in years that container shipping — which accounts for about 70% of all international shipping tonnage, according to the United Nations Conference on Trade and Development — entered the Great Lakes.

As oceangoing freighters got bigger starting in the 1960s, shipping into the Great Lakes declined as the biggest — and most cost-efficient — ships grew too large to pass through the locks at the entrance to the lakes.

It was cheaper to ship to Baltimore or another coastal port and finish the trip by rail or truck.

But delays at clogged East Coast ports are changing the supply chain

llack

jmiller@crain.com @millerjh

equation.

The Port Authority so far has bet nearly $11 million to subsidize the service. The goal is that, eventually, the service will be profitable for Spliethoff and the subsidy will end and, maybe, turn into a profit.

The service cost the Port Authority $5.9 million in 2014 and, when the books are closed, almost $3 million in 2015. The 2016 cost, according to Brent Leslie, the agency’s chief financial officer, is expected to be $1.8 million.

“It’s standing the test of time, growing and picking up momentum,” Friedman said. “It was initially met with skepticism. Now people understand it’s here for the long haul and people are taking a hard look at how they can use it.”

Scott Po

BY JAY MILLER

‘A ripple effect’ Judging from the industry’s response, the service has made the Port of Cleveland the envy of the Great Lakes.

“Cleveland-Antwerp container service takes wing,” headlined a story in the respected Journal of Commerce in July. The article noted that the service carried 752 containers, most of it westbound, into Cleveland in the first half of 2015, compared with 178 on the six monthly sailings after the service was launched in mid-2014.

Betty Sutton, administrator of the St. Lawrence Seaway Development Corp. (SLSDC), said the introduction of cargo service in Cleveland is having “a ripple effect” across the Great Lakes and beyond.

“This liner service has certainly raised the profile of the Great Lakes Seaway system,” she said. “Globally, we’re seeing those not doing business on the Great Lakes taking a second look at the market and the system.”

The SLSDC is the Washington, D.C.-based, federally owned company that operates the locks and canals that make up the U.S. portion of the

Entire contents © 2016 by Crain Communications Inc.

SEE PORT, PAGE 22

Browns flip the script Team’s ‘radical’ new front office look gets NFL’s attention

BY KEVIN KLEPS kkleps@crain.com @KevinKleps

The numbers are even less kind to the Cleveland Browns than an irate fan base after another disappointing, but expected, loss.

The Browns are looking for their fourth head coach in Jimmy Haslam’s 39 months of ownership.

Haslam is still paying millions to former CEO Joe Banner, who didn’t lead the latest regime to be shown the door, but the one before that.

Now, after a 3-13 season that was the franchise’s worst in 15 years, the Browns are generating headlines not just because they’re starting over again. Their latest rebuild, which will be led by a former attorney with little football experience and a former Major League Baseball executive best known for being portrayed by actor Jonah Hill in the 2011 movie “Moneyball,” is being described as the NFL’s most significant commit-

ment to analytics.

The Browns’ new organizational flow chart — with vice president of football operations Sashi Brown, chief strategy officer Paul DePodesta, team president Alec Scheiner and the yet-to-be-hired head coach all reporting directly to Haslam — is unique in the league. The three executives in place are big proponents of using data to spot inefficiencies and make better, more informed decisions.

In a regular business, that’s often welcomed. In the NFL, which has been the most resistant of the three major professional sports leagues when it comes to embracing analytics, it’s an approach as wild as Johnny Manziel reportedly spending the last weekend of the 2015 regular season wearing a wig and a fake mustache at a Las Vegas nightspot.

“To go to the length of bringing in a baseball guy (DePodesta) to give them an entirely different approach to evaluating talent and picking players, this has never been done before,” said Vic Carucci, a Buffalo Bills

beat writer for The Buffalo News and a former senior editor for the Browns. “This is radical. To call it out of the box is not giving it justice.”

Will it work? No one really knows.

Plenty of league insiders believe it won’t. The fact that no NFL team has ever gone “all in” on analytics contributes to the skepticism.

But the Browns, with one playoff appearance and a .320 winning percentage since 1999, also have yet to earn any benefit of the doubt.

‘Capable’ leader steps in Brown, Haslam’s unconventional choice to lead his beleaguered football operation, is a Harvard Law School graduate whose most significant gridiron experience is negotiating player contracts and managing the salary cap.

DePodesta, also a Harvard alum, played football and baseball for the Crimson, then spent the last 20 years crunching numbers and helping to SEE BROWNS, PAGE 22

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z JANUARY 11 - 17, 2016 z CRAIN’S CLEVELAND BUSINESS

Office vacancies go up; industrial outlook bright

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Look to hear less this year about construction of another downtown Cleveland office building and more about the building of industrial properties.

Those are two takeaways from the Beachwood-based NAI Daus real estate brokerage’s survey of office and industrial market conditions effective at year-end 2015.

Thanks to mergers and acquisition activity and the continued drive to downsize offices, the prime downtown Class A office market vacancy jumped to 18.7% in 2015 from 15% a year earlier.

The setbacks offset expected gains in occupancy of older office buildings, as the likes of Garfield and Standard get converted to apartments and force tenants to find new offices in the same price range, often in structures of comparable vintage.

The result: Overall downtown Cleveland office vacancy climbed to 23.4% in 2015 from 22.9% a year earlier.

Alec Pacella, NAI Daus managing partner, said the uptick will “definitely stunt the conversation about a new downtown office building.�

Meantime, David Hexter, an NAI Daus principal, expects to see construction of at least one more speculative office/warehouse rental building in the region.

That’s no small stretch, as four huge office/warehouse buildings are under construction in the region, three of them on a speculative basis.

Industrial construction fell to 1.6 million square feet as 2015 drew to a close from almost 1.9 million square feet at the same time last year.

Although a handful of manufacturing and distribution concerns shut plants or announced plans to shut them, momentum in the industrial sector remained positive.

Vacancy dropped to 5.5% at the end of 2015 from 5.9% the like period last year. The amount of vacant industrial space in the region fell to 18.9 million square feet in 2015 from 20.3 million square feet a year ago.

That decline took place as the amount of industrial space in the region climbed to 343.6 million square feet from 342.6 million a year earlier, thanks to construction of large office/warehouse buildings in Euclid, Stow and Twinsburg.

Jeff Calig, an NAI Daus senior vice president, said the shutting of multiple small to modest factories or plans to shut properties in the 20,000 to 75,000-square-foot range has actually aided industrial space users looking to expand. “It’s a little bit softer, but the market is still tight,� Calig said. “It gives prospects a little more to consider.�

The decline in industrial vacancy was felt throughout each of the seven submarkets in the region, ranging from Lorain to Lake and Summit counties.

The largest industrial submarket — the southeast market along the I480 and I-271 corridor from Solon to Streetsboro with 85 million square feet of properties — had vacancy of just 5% as 2015 ended, down from 5.43% a year ago.

Industrial activity was driven by manufacturers, Hexter said, especially those who supply parts to the automotive industry, as well as distributors who store products in warehouses.

Big moves, big impact Although movement in downtown Cleveland’s trophy properties pushed up downtown office vacancy, continued gains in the suburban office market moderated the damage.

Total suburban office vacancy fell to 16.5% at the end of 2015 from 18% a year earlier. As a result, the region’s total office market eked out a gain. Regional office vacancy fell to 20.4% at 2015’s end from 20.8% in 2014’s like period.

The south suburbs along Interstate 77, which includes the Rockside Road office market in Independence and Seven Hills, notched the greatest improvement among suburban markets. Vacancy fell to 12.5% at the end of 2015 in the south suburbs from 16.4% a year ago, NAI Daus reports. New owners of several buildings in the area won tenant expansions to score the gains in occupancy.

However, the size of downtown office buildings compared to their suburban counterparts and the size of downtown’s office market — 20 million square feet downtown versus 15 million square feet in all the suburbs — created the office market’s downdraft with a handful of setbacks.

Two of the largest reflect bigger trends in business as OM Group was acquired by affiliated funds of Apollo Management Group, which moved surviving staffers to St. Louis and emptied a full floor at Ernst &

Correction A story in the Jan. 4 edition of Crain’s Cleveland Business about the new Arhaus LLC headquarters in Boston Heights contained some incorrect information. Arhaus, which has 60 locations in the U.S., opened eight new stores in 2014 and seven sites in 2015. It plans to open five to seven locations in 2016. About 350 to 400 employees will relocate to the new headquarters in 2016.

Young Tower that the company made available for sublease.

Another 11 floors were emptied at Key Tower as KeyCorp shrank its footprint at its namesake to 487,000 square feet from 700,000 square feet under a lease it signed in 2013.

Meantime, the BakerHostetler law firm will not move into five floors of the former Key space it leased in 2014 until later this year.

The moves are so large they include as much as several much smaller suburban buildings and have a pronounced effect on the market, according to Deirdre McGuane, NAI Daus director of research and marketing.

Key’s drive for right-sized offices — partially due to redesign and partially to staff cuts — reflects the drive among office tenants to reduce property costs by occupying less, but nicer, space. Likewise, the shuttering of OM Group’s Cleveland headquarters reflects the fallout from last year’s massive merger and acquisition binge nationally.

Back on the list Meantime, the substantial Leader and Standard buildings in downtown Cleveland are scheduled for conversion to apartments but remain counted as office buildings because they still have office tenants in them, McGuane said.

Pacella pooh-poohed the poor showing in downtown office space, especially compared to the backdrop of the Great Recession when office vacancy shot up and took a long time dribbling down to current levels. “Long term,� Pacella said, “downtown will be fine.�

Bob Brehmer, majority partner of NAI Daus, said the downtown office market benefits from the gains downtown is making as an exciting place to live or go for entertainment. “In the past, business owners seeking office space would say, ‘I’ll look in Beachwood on Chagrin Boulevard or Green Road.’ Downtown Cleveland was not part of the conversation,� Brehmer said. “Now downtown is very much on the list.�

Volume 37, Number 2 Crain’s s Cleveland Bus sines ss (ISSN 0197-2375) is published weekly at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright Š 2015 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASs Cleveland Bus sines ss, Circulation TER: Send address changes to Crain’s Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912.

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CRAIN’S CLEVELAND BUSINESS z JANUARY 11 - 17, 2016 z PAGE 5

The Week THE BIG STORY The Cleveland Browns fired general manager Ray Farmer and head coach Mike Pettine, and brought in former baseball executive Paul DePodesta as chief strategy officer to work alongside Sashi Brown, a Harvard Law School grad who was named vice president of football operations.

Brown and DePodesta will lead an unconventional front office that is light on football experience but heavy on smarts, and with deep backgrounds in analytics.

See analysis, Page One

THE FUTURE IS NOW The Cleveland Clinic laid out details of the plan to close Lakewood Hospital and replace it with a $34 million family health center. Inpatient services will end Feb. 5. Lakewood Hospital’s emergency department will remain in operation until the opening of the family health center, which will have its own emergency department. The Clinic said construction of the 62,000-squarefoot family health center will begin during the fourth quarter at the southwest corner of Belle and Detroit avenues, across the street from the hospital. The health center is expected to open in mid-2018.

FRESH START Global Cleveland named its new president: Cleveland city councilman Joe Cimperman. The economic development organization, which aims to attract and welcome people from across the world to Cleveland, has been without a permanent president since April 2015, when Joy Roller resigned. Cimperman, who currently represents Ward 3, said he doesn’t expect to dive into his duties at the nonprofit until after budget hearings for council wrap up, likely by March.

THEY GET AROUND Group RMC, a New York-based private equity fund, acquired for $30 million a portfolio of seven suburban Akron office buildings from

Rubenstein Partners L.P. and Beachwood-based investor Mark Munsell. The transaction puts Group RMC in Northeast Ohio’s three most prominent suburban office markets.

Six of the just-sold buildings are in Fairlawn, and one is in North Canton, near the entrance to the Canton Akron Airport. Group RMC last year acquired Summit Office Park in Independence and Corporate Place in Beachwood. The portfolio consists of 400,000 square feet of office space and is best known as the former portfolio of Fairlawn-based developer John Dellagnese. Five of the buildings are in Fairlawn’s Embassy Corporate Park.

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END OF THE LINE Macy’s Inc. announced it will close 36 Macy’s stores, including its stores at Chapel Hill Mall in Akron and Midway Mall in Elyria, and will cut jobs in the wake of what the company characterized as “disappointing 2015 sales and earnings performance.”

The Chapel Hill and Midway Mall stores are the only ones in Ohio affected by the store closings. The Chapel Hill store, opened in 1967, measures 169,000 square feet and has 91 workers. The Midway Mall store, which opened in 1995, is 105,000 square feet and has 64 employees. Macy’s did not provide an exact closing date for the stores.

Final clearance sales will begin on Monday, Jan. 11, and will run for eight to 12 weeks.

IN AILING HEALTH HealthSpot appears to have shut down much if not all of its operations. The company abruptly closed the futuristic kiosks that allowed patients to electronically communicate with doctors from 25 Rite Aid drug stores across Ohio.

The kiosks also are gone from Cleveland Clinic facilities. HealthSpot CEO Steve Cashman didn’t respond to a request for comment. The Dublin, Ohio-based company formed relationships with the Clinic, MetroHealth and University Hospitals over the past few years.

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z JANUARY 11 - 17, 2016 z CRAIN’S CLEVELAND BUSINESS

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Business and civic leaders in Ashtabula County are charting a new, more focused effort to boost the county’s economy and labor force.

Through the Growth Partnership for Ashtabula County, a group of 60 business, public, educational and philanthropic partners, they have identified the county’s most pressing economic dilemmas and are rolling up their sleeves to plot a three-year course of action to make some headway.

While unemployment in this county of 100,000 people has declined, at 5.6% in November, it is still well above Cuyahoga (3.9%), Geauga (3.0%) and Lake (3.3%) counties to the east, though typical of neighbors to the south and east.

At a meeting Dec. 15 at the Spire Institute in Geneva that was attended by more than 100 civic leaders, Don Iannone, the partnership’s executive director, and economist James Trutko opened a campaign to kickstart a civic effort to bring that rate down.

“You’re losing talent,” Trutko said as he started a data-heavy slideshow on the state of the county economy.

“I’m worried that the downward lines will continue without an action plan.”

The county’s economic problems are not unique, but this leadership group is going the extra mile to analyze them and plot a course forward.

The members of the growth partnership have developed a strategic plan and have created a dashboard — an online, visual economic scoreboard — to help leaders set goals and keep an eye on their progress.

The planning work began in August 2014 with the hiring of Iannone, a former director of the Economic Development Center at Cleveland State University and an economic development consultant with a national practice.

The key issues, Iannone and Trutko explained, are the need to offset a loss of employment in key sec-

tors, the decline in the number of businesses in the county and the slow pace of new business formation.

“We have a tremendous number of organizations that support economic and community development,” said Scott Becker, the president of the board of directors of the nonprofit economic development organization, after the presentation.

“What we don’t have is a countywide focus on a couple of key items to move the needle in the right direction.”

Becker is president and CEO of Chromaflo Technologies Corp., one of the county’s largest manufacturers, which makes colorants and pigment dispersal systems for the architectural and industrial applications.

The county has a diversified economic base. It’s led by manufacturing, which includes firms like Chromaflo, Molded Fiber Glass Co. and Kennametal Inc. Manufacturing represents about 31% of the county’s economic output. Government, health care and other social services combined generate about 21% of local output. Within manufacturing, the chemical and plastics industries provide the anchor.

Trutko said the county can build on its plastics and chemicals base, but it also needs to bolster its underdeveloped service sector. The focus, though, should be on businesses with geographically diverse customer bases.

“You want (new) businesses that have a regional or national market that will bring dollars into your county,” he said. “And you have to look at extending the reach” of local businesses.

Although the county unemployment rate has declined, Trutko said the rebuilding of the workforce hasn’t kept pace with the region or the rest of the country. Data gathered by the growth partnership show the county has been losing between 350 and 500 people from the labor force annually. Some stopped looking for work or couldn’t find a job, while some found work outside the county.

“The whole workforce/talent issue is critical,” Iannone said. “We

need to be attracting skilled people to Ashtabula.”

Iannone believes the county’s low cost of living and small-town quality of life near metropolitan areas like Cleveland and Buffalo, as well as the recreational opportunities along Lake Erie, can be selling points.

As important, Iannone said, was building up the skills of kids coming out of the local high schools so that, if they aren’t going on to college, they can meet the needs of local manufacturers, some of whom are facing workforce shortages. But the Ashtabula workforce is slightly less educated than the average Ohio workforce.

“The school systems have made progress, but we need more,” he said.

Temporary solution Becker said his company is struggling to maintain its workforce.

“We’ve managed to bring in some top talent,” he said. “But more fundamentally, we have a problem attracting just quality mid-level and even operational people.

“I have 30 temporaries in my building right now,” he said. “I shouldn’t have any. All these other manufacturers who are here have the same problem.”

While it will continue to work to attract new businesses to the county, the strategic plan emphasizes helping existing businesses grow, since those companies typically account for nearly 60% of new jobs.

Ken Johnson, general manager of Greatwave Communications, the local telephone and Internet service company, said in a later telephone interview that keeping businesses alive and local can be difficult. Many businesses were started in the 20 years after World War II, and those entrepreneurs are ready for retirement and can’t count on keeping them in the family and local.

“Kids grow up and look at the economic realities and go, ‘This isn’t what I want to do,’ ” Johnson said.

“So the owner gets older and he doesn’t have anybody to hand the business off to, and all too often those businesses close.”

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CRAIN’S CLEVELAND BUSINESS z JANUARY 11 - 17, 2016 z PAGE 7

Banks are open about private push KeyCorp, other large institutions are doubling down on client relationships to grow that segment of biz

BY JEREMY NOBILE jnobile@crain.com @JeremyNobile

Terry Jenkins is no architect, but he has spent the last year building infrastructure at Key Private Bank.

Like most large and super-regional banks, Key wants its private bank and wealth management segment to play a larger role in the company overall. KeyCorp tapped Jenkins to lead the charge in an increasingly competitive and challenging market that has been hindering growth in bank margins.

Jenkins became president of Key Private Bank last February. Since then, Jenkins has placed a variety of new staff from sales leaders and a new head of the private bank’s family wealth business segment to additional bankers and relationship managers with the goal of capturing new market share across the entirety of Key’s expanding footprint.

“We’re building this business for the future,” Jenkins said.

These aren’t exactly new strategies. Yet, they underscore a way large banks today are looking to grow revenues in a prolonged lowinterest rate environment by enhancing their private banking and wealth management services.

Through the two years preceding 2015, Key saw revenue in its community bank — under which the private bank operates — fall about 4%, although income grew 14%, according to company filings.

Key chalks that change up to a reduced provision for loan and lease losses and lower noninterest expense.

But Jenkins doesn’t talk so much about cutting costs today.

Indeed, he’s investing heavily in new people and technology that combined are designed to draw customers from other areas of the bank, like the business and corporate banking segments, to private bank services.

While still early in Jenkins tenure with Key, he says those efforts are already starting to show client growth.

Notably, the company had already logged 1.7% growth in revenues in 2015’s third quarter and nearly 4% growth in total income in the community bank.

Of course, the bank’s expansion in New York with its acquisition of First Niagara Financial Group of Buffalo, which will bring the bank to $135 billion in total assets (a 40% increase), offers a truly untapped customer segment.

But drawing existing customers, like those with corporate and business accounts, to the private bank will remain the major focus, Jenkins said, because that’s naturally the lowest hanging fruit.

“We want to take market share and continue to have clients do more business with us than they currently do now,” Jenkins said.

“I don’t think you’ll see us go into XYZ city where this is not a KeyBank presence.

“We want to build around the community bank platform.”

Relationship management Yet, competition remains high as other companies take a similar approach.

Bankers and money managers at large companies say achieving growth comes down to managing client relationships better than competitors as fee costs and even historical portfolio performances seem to take a lower priority for clients compared with feelings of trust and connectivity.

That’s a change from many years ago, when interest rates were high.

“Early in my career when interest rates were very steep, returns were steep, and it seemed like everyone was shopping based on return,” said Ronald Ambrogio, Ohio regional president for BNY Mellon Wealth Management, which also offers some private banking services.

“I interview clients as they fire or hire us. And today, for clients, it’s not about fees or performance, but usually responsiveness and quality of responsiveness,” Ambrogio said.

“It’s much more relationship driven.”

For a large banking company like BNY, the goal is to create a boutique feel by keeping a money manager’s number of relationships in check.

For Key Private Bank, which manages more than $40 billion in totals assets today, that’s why investments internally are bolstering client-facing personnel and services today versus, say, improving software and back office functions that have already been streamlined as all banks

Terry Jenkins trimmed costs across their business lines through the wake of the recession.

In one example, since Jenkins joined Key, the bank has added a team of more than a dozen bankers solely devoted to serving private bank customers with retail accounts.

“We’re putting less money into back-office operations and more into tools for bankers, advisers and clients,” Jenkins said. “We’re spending a lot closer to the client and closer to the adviser where, historically, technology spend has been further away from the client.”

A future of fusion The theme for private bankers today is that focus on premium

bankers and communication, which in turn is creating competition among banks to attract top talent.

Jenkins, for instance, has quite a résumé that most recently includes serving as president and CEO at Chicago-based BMO Private Bank U.S.A. “Long gone” are the days of a private bank simply offering trust administration and bill payment services, said David Campanella, leader of the Cleveland and Columbus markets for US Bank’s Private Client Reserve.

“If you’re simply attacking and growing from a tactical approach, you may even lag in the private banking space,” he said. “If you look to 2016 and beyond, those firms that can artfully navigate these very delicate conversations with family members, in my opinion, will have the competitive advantage that will lead to growth in the marketplace.”

Disruptors are few in the private banking sector, yet still not as significant to the value of premium relationships. The popularity of roboadvisers, for example, which is a general term applied to fully automated investment services, aren’t a big concern to these large banks — although you “ignore them at your peril,” Jenkins said.

“For us, the future is a fusion of adviser and technology delivered through community bank model where we’re local and close to the client, yet backed by a large platform,” Jenkins said.

“When we do that, we become a bigger part of KeyBank.”

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z JANUARY 11 - 17, 2016 z CRAIN’S CLEVELAND BUSINESS

Richmond Park building is bought for $22.5M

BY STAN BULLARD sbullard@crain.com @CrainRltywriter

Richmond Park Apartments in Richmond Heights are neither new nor glitzy, but the four-building complex is big and just changed hands for $22.5 million, according to Cuyahoga County land records.

The sale also put the 736-suite complex at 444 Richmond Park Drive in the hands of a Beachwood-based investor, BEK Developers Inc. BEK on Dec. 15 bought the complex of four six-story buildings in the name of 444 Park Apartments LLC from Atlantabased Tritex Real Estate Advisors, an investor and broker that bought the property at a sheriff’s sale in 2013.

BEK is led by investor and developer Bob Risman, part of the Risman family that has been a major player in Northeast Ohio real estate for decades. An administrative assistant at BEK’s offices declined to make executives available for an interview because they said they were “too busy” to discuss the purchase and their plans for the property.

The deal ranks as the largest apartment sale in 2015 in Northeast Ohio, according to research by Michael Barron, a first vice president at Marcus & Millichap’s Cleveland office. He should know: the Barron, Burkons & Wintermute team of which he is a part at Marcus & Millichap represented Tritex in the sale of the Richmond Heights complex, which dates from 1968. BEK represented itself in the transaction.

Rents in the complex range from one-bedroom suites for $500 monthly to three-bedroom suites going for more than $1,000 monthly,

according to the listing for the property on ApartmentGuide.com.

Ralph McGreevy, executive vice president of the Northeast Ohio Apartment Association trade group, said BEK has the experience to successfully manage a complex of Richmond Park’s size. McGreevy said he recently ran into Risman, who mentioned he wanted to up his firm’s activity level in the “Northeast Ohio apartment game.”

The sale also marks the end of a period of distress at the complex, which includes a building with offices, a pool and other amenities connecting the four structures.

The complex previously was owned by an affiliate of Fairview Park-based Niederst Management.

Tritex acquired it at a Cuyahoga County sheriff’s sale in 2013, which capped a foreclosure proceeding that began in 2010 on a $30 million mortgage guaranteed by Fannie Mae. Tritex obtained the building at foreclose sale with a bid of $23 million to satisfy a mortgage outstanding on the property, which it had previously acquired for an amount that local public records do not disclose.

Like other large older suburban apartments, the complex suffered in the housing boom that preceded the Great Recession in 2008 as would-be renters qualified for homes and occupancy plummeted.

Ironically, the housing bust that accompanied the recession led to weaker home sales that have only recently returned to normal. In the meantime, renters barred from buying homes and millennials hitting the prime renting age created a strong apartment market marked by construction of apartments and rising rents nationwide.

2016 is likely to be a Smaller institutions expected to be major acquisition targets

BY JEREMY NOBILE

National Bank, was bought out by Warren, Pa.-based Northwest Bancshares Inc. in a $183.3 million deal, marking the latter company’s entry into this market.

Talmer Bank and Trust of Troy, Mich., which has about $6.4 billion in assets, entered the Northeast Ohio market in 2013 when it bought First Place Bank of Warren.

Most recently, CNB Financial Corp. of Clearfield, Pa., which operates CNB Bank, announced its acquisition of Lake National Bank of Mentor for nearly $25 million.

Lake’s $152 million in assets will bring CNB to more than $2.5 billion in assets. CNB executives have said they’re focused on growing the Lake County market as the bank is rebranded under CNB’s ERIEBANK division.

“There are a lot of banks outside our region today that would love to come play,” said Frederick DiSanto, CEO of Cleveland investment adviser The Ancora Group, “and they may find some opportunities with some other community banks.”

jnobile@crain.com @JeremyNobile

Acquisitive growth is expected to top a lot of bankers’ New Year’s resolutions for 2016.

The banking sector continued to shrink this past year as companies continued to be bought and sold in an ongoing wave of consolidation. Experts and other data indicate that activity should persist in Northeast Ohio and across the country in the coming year as banks look to bolster slowly growing margins and expand their footprints.

“The banks need to grow to justify a healthy stock price for Wall Street,” said Bob Wagner, managing partner at Shale Community BanFund LP, which invests in community banks, including several in Northeast Ohio.

“I would expect M&A will continue like this for years to come.”

The activity in Ohio offers a good snapshot of all the deals happening across the country.

Take Farmers National Bank of Canfield, which made two acquisitions of smaller community banks in 2015 — after doing zero deals in the 21st century — for about $88 million in total.

Those deals bring Farmers just shy of $2 billion in banking assets, which is growth of more than 60% compared with a year ago.

In 2016, the strongest small banks will be likely acquisition targets, while the larger community banks might seek out deals they hadn’t considered just a few years ago. On the other end of the spectrum, there’s banking giant KeyCorp, which announced in October one of the biggest deals of the year in the industry with its plan to acquire First Niagara Financial Group of Buffalo, N.Y., for $4.1 billion.

Key was reportedly one of several regional banks who competed for that deal.

Meanwhile, banks in neighboring states like Pennsylvania continue to hungrily eye the Northeast Ohio market, and analysts expect that will continue.

For instance, LNB Bancorp Inc., the parent of Lorain

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Quest for growth This year, community banks — both large and small — could be increasingly hungry for acquisitions, experts say. In particular, those closer to $1 billion in assets who haven’t made deals lately could find a good fit in the smaller $100-$200 million asset banks and pull the trigger on a deal.

Banks of the size and scope of Ohio’s Middlefield Banking Co., which has about $708 million in assets, might make those kinds of acquisitions, Wagner said.

Those are the banks likely to be motivated more by growing assets as opposed to expanding their reach as corresponding market share for those groups tends to be rather small.

Meanwhile, The Cortland Savings and Banking Company in Ohio, with about $566 million in assets, is an example of a strong community bank with a target on its back. The bank is performing well, making it an attractive acquisition even though it would likely draw a high multiple in a sale.

Other large banks in Cleveland could make some moves — like PNC Bank, FirstMerit Bank and Huntington Bank — all of which surely want to chip away at Key’s

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CRAIN’S CLEVELAND BUSINESS z JANUARY 11 - 17, 2016 z PAGE 9

e a year in which banks bulk up dominant market share.

According to the Federal Deposit Insurance Corp., Key maintains about 28% of deposit market share in the Cleveland MSA. That’s well ahead of its closest follower PNC, which controls about 12% of the same market.

FirstMerit, notably, which has just about 6% market share in the same region, recently claimed naming rights of what is now the FirstMerit Convention Center of Cleveland — a move some analysts have said could signal the bank’s goal for growing its presence here. In that case, a local acquisition could make sense.

All the banks who made deals this past year say they’re open to additional acquisitions. Yet, it’s unlikely, although still possible, that anyone who inked deals this past year will do so again in the coming months as they wait for the dust to settle.

Key has its hands full, for instance, and Farmers will likely focus on integration of its two recent deals.

Wagner suggests outside banks will continue getting involved. Banks like Northwest could try to grow their positions here. And then there’s F.N.B Corp. (First National Bank) of Hermitage, Pa., which bought Park View Federal Savings Bank in 2013.

“It would not surprise me to see F.N.B. make another acquisition in the Northeast Ohio market area,” Wagner said. “I don’t think the Park View deal gives them as a big a presence as they would like.”

The Cleveland market is appealing because banks are doing comparatively well, credit quality is good, and the regional economy bodes well for lending portfolios.

“The potential number of quality commercial loan customers is a lot greater in the Cleveland/Akron area than smaller communities,” said Charlie Crowley, a managing director at Cleveland investment bank Boenning & Scattergood.

A seller’s market There are a variety of factors at play.

On the buy side, the prolonged low-interest rate environment has made it tougher to grow margins organically, while credit quality has improved during the economic recovery. Those both make acquisitive growth more appealing, DiSanto said.

Meanwhile, community banks are generally much

stronger today, particularly as the recession and its following recovery weeded out most of the strugglers, Wagner said.

That, coupled with a smaller overall pool of potential targets, is driving high valuations at the best banks — which in turn is convincing some to sell when they might not have before.

“Banks with strong currency are clearly in the driver’s seat,” DiSanto said.

When Northwest bought LNB, it paid 195% of book value. Key, meanwhile, is paying 168% of the book value for First Niagara.

“It’s simply supply and demand,” Wagner said. “I expect M&A premiums to go higher as the world of potential acquisition targets shrinks.”

According to SNL Financial, there were 236 bank M&A deals completed in 2014 compared with 287 in 2015 — a 21% increase — so the pace is picking up despite fewer banks overall and virtually no new charters forming.

Meanwhile, according to November’s 2016 Bank M&A survey by Bank Director, a publication for bank execs, 67% of 260 CEOs surveyed said they need more scale to survive, and 51% said they intend to purchase a healthy bank in the next year.

Of respondents who completed a merger in the past three years, 55% reported that shareholder returns were a primary driver of the deal.

Today’s cost of doing business is also a general factor.

Bankers and analysts alike emphasize that improvement of technology and regulatory expenses are squeezing margins.

However, despite those pressures bankers routinely mention as challenges to the business, it’s just one element of the M&A flurry. The consensus among surveys and analysts is that banks below $1 billion in assets aim to hit that threshold to operate comfortably.

Only 27% of respondents in the Bank Director survey, though, cited regulatory burdens as a primary motivator for considering a sale.

“The regulatory environment is just a piece of this,” said Jenni Frazer, a bank examiner for the Federal Reserve Bank of Cleveland.

“We have low interest rates, which have been low for quite some time. There is an earnings and profitability component.

“There’s also a lot of competition. So banks are really looking at acquisitions as a way to grow.”

“The banks need to grow to justify a healthy stock price for Wall Street. I would expect M&A will continue like this for years to come.”

— Bob Wagner, managing partner Shale Community BanFund LP

“There are a lot of banks outside our region today that would love to come play, and they may find some opportunities with some other community banks.”

— Frederick DiSanto, CEO The Ancora Group

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z JANUARY 11 - 17, 2016 z CRAIN’S CLEVELAND BUSINESS

Opinion From the Managing Editor Custom and Special Projects

Maintaining a clear division in a gray area

Editorial

This way up?

“Once upon a time, Cleveland was a proud football city where losing was the exception, not the rule. In the 49 years of the original Browns, the team recorded only 12 seasons where it was under .500.

“Now, the Browns are a league doormat, a franchise synonymous with ineptitude. … You can enhance the fan experience by installing big new scoreboards, improving the stadium’s sound system and holding weiner dog races, but it all means squat if the losing continues.

“As they say during the NFL Draft, you’re on the clock, gentlemen.”

Those words of warning for Browns owner Jimmy Haslam and his then-CEO, Joe Banner, concluded a Crain’s editorial in early January 2014, days after another losing Browns season ended with the firing of another Browns head coach.

Hard for many Browns fans to believe, but things somehow managed to get worse over the next two years.

New coach Mike Pettine racked up a record of 10-22, dropping 18 of his final 21 games, and was shown the door last week only hours after floundering general manager Ray Farmer was let go.

A sad ending to a season with more lows than highs. A firstround quarterback who treated playing in the NFL more like a distraction than a privilege. A general manager who was suspended for four games for sending texts to the sideline. A wide receiver who sat out the season because of a substanceabuse violation.

You can’t blame Browns fans for asking: Is this worth my time, money and emotional investment? And as news developed throughout the week — Sashi who? A baseball guy as chief strategy officer? — you could understand fans’ frustration and anger.

We are trying, desperately, to take a more pragmatic ap-

proach. Instead we’ll look at Haslam’s front office hires this week from a business owner’s perspective. Yes, the choices are unconventional, but they are not different from those many leaders make on a regular basis.

Think about it. How many of you hire and promote the smartest people you can find? They often bring a fresh analytical perspective to processes and strategies. As Kevin Kleps reports in this week’s issue, new vice president of football operations Sashi Brown has a reputation for not only his intelligence but for being a consensus builder. While Paul DePodesta isn’t a professional football guy, he comes with a proven track record of turning struggling sports enterprises into success stories. It’s also essential that Haslam, who splits his time between Northeast Ohio and his native Tennessee, is putting someone in charge of strategic thinking and is creating a structure of equals reporting to him.

While Haslam appears to be finally treating the Browns like the business it needs to be, he needs to cut ties with Johnny Manziel and his immature antics. We’ve all hired an employee with raw talent and high potential. You work with the person, trying to get their best. They show flashes of greatness, but also make some boneheaded choices. You counsel them.

You push them. You’re patient when needed. Eventually, though, the mistakes outweigh the benefits. Any HR person will tell you, sometimes you need to part ways.

That time has more than come with Manziel.

He’s a distraction. We hope, for his own sake, that he addresses the problems that lead to his behavior. But he can’t do that as a Brown.

The new front office has much work to do. Hire a general manager and a coach, identify a new quarterback of the future through the draft or otherwise, and build the winner that the city and its fans deserve.

You may have heard this somewhere before, but it’s still appropriate: “You’re on the clock, gentlemen.”

ACTING PUBLISHER AND EDITOR: Elizabeth McIntyre (emcintyre@crain.com)

CLEVELAND BUSINESS

MANAGING EDITOR: Scott Suttell (ssuttell@crain.com)

About three months ago, I moved over to the so-called dark side.

I packed up 10 years’ worth of paper clips, file folders, pens and notebooks and moved out of Crain’s Cleveland Business’ newsroom, leaving behind the finest group of journalists with whom I’ve ever worked.

Sound dramatic?

It was.

That’s because after nearly two decades of working as a reporter and editor at Crain’s and several daily newspapers, I made the decision to become managing editor of custom and special projects and move to the business side of our publication.

It’s a new position at Crain’s Cleveland Business, and one that is of increasing importance in the changing world of journalism, marketing and advertising.

In this role, I am heading up Crain ConAmy Ann tent Studio – Cleveland, a subsidiary of Stoessel Crain’s Cleveland Business that now is in place to provide custom content solutions for paying clients.

This doesn’t mean we will just be publishing more paid advertorials. Custom content can take the form of everything from a digital campaign and sponsored blog post in an email newsletter to a special print supplement or customized event.

(Go to www.crainscleveland.com/section/custom to see some of the work we already have done.)

As a result, Crain’s advertisers now have more control and more methods through which to present their stories.

With custom content, clients can position themselves as thought leaders to the Crain’s Cleveland Business audience by taking advantage of our distribution avenues.

Just as important, however, is that this new role and initiative — which has been replicated at several other Crain Communications properties — proves this publication’s commitment to transparency and unbiased, non-influenced coverage of the Northeast Ohio business community.

Make no mistake: There is no such thing as “pay to play” on our editorial and news pages.

Period.

However, if the Crain Content Studio – Cleveland logo appears, whether as part of a special supplement or within the pages of the issue itself, a sponsor or advertiser had some input or influence on the corresponding content’s production.

Our ultimate goal is to clearly mark and indicate all paid custom content in print and online, making it look as different as possible as the weekly stories produced by Crain’s Cleveland Business journalists.

There should be no question from our readers as to the origin of the content, and whether an advertiser had a say in its creation. But, it doesn’t mean that paid content won’t be interesting or valuable to the reader — it’s my job now to make sure that it is.

Stoessel is the managing editor of custom and special projects for Crain’s Cleveland Business. She can be reached at astoessel@crain.com or 216-771-5155.

WRITE US: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing letters@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.

SOUND OFF: Send a Personal View for the opinion page to emcintyre@crain.com. Please include a telephone number for verification purposes.

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Web Talk Re: Future of Hawthorne Valley Golf Club With the proper marketing manager/ plan in place, the membership drive goal of 300 members is doable.

— Jim Daniloff The problem is that many younger people are not playing golf and not joining clubs. You have to offer something else — workout rooms, restaurant, etc.

— Verity Pendelton

Re: Browns’ changes at the top No offense to Sashi Brown, the new executive vice president of football operations for the Cleveland Browns, but if this was a prudent structure to run a football franchise, why haven’t other teams utilized it? Obviously, only time will tell if this works, but until then, I’m extremely skeptical given Jimmy Haslam’s poor choices, lack of patience and quick trigger finger.

— Ted Grabowski Instead of firing Mike Pettine and Ray Farmer, why didn’t we just get rid of Haslam and Manziel? Collectively, they could do the job if they did not have the interference of Jimmy and Dee. It is not that difficult to recruit a good quarterback. Haslam makes it out to be almost unobtainable, along with that of hiring a good head coach. Remember, a lot of this has to do with karma, and let’s be honest, the karma of the Pilot Flying J debacle has hardly been forgotten. You think I am kidding. Bring in a good, honest, multibillion-dollar man and then the proof will be in the championship team we will become. It is not going to happen on Haslam’s watch.

Good riddance, Jimmy. It has not been nice knowing you. Certainly, there is truth in the adage about all that glitters not being gold, because Jimmy Haslam tarnished fast. There is nothing he will ever be able to do in terms of having a winning team except get out. Then we will have a chance to become a proud NFL franchise in Cleveland. Until the Haslams are gone, we will remain the bottom-feeding joke of the NFL. — Peter Angelone We should petition the team to change their name from “Cleveland Browns” to just “Browns,” in order to remove a stain on our city.

— Robert Fritz

Re: Looking to the future There were many great predictions from local leaders in the Jan. 4 issue of Crain’s, and hopefully, the vast majority of them will happen. If we really want to assure the right outcome, the city and community has to develop and empower strong leadership. Strong leadership will help all the separate entities work together to take better advantage of the often-limited resources and then get real results. Strong leadership starts with political leadership that is committed to the community to create the platform for all the other leaders to — Neil Dick really lead!

Personal View

Stopping the big power play

BY TODD A. SNITCHLER A Dec. 13 Crain’s editorial, “Pull the Plug,” pointed out many reasons why the Public Utilities Commission of Ohio (PUCO) should reject FirstEnergy’s request for guaranteed profits for two outdated plants, the Sammis coal-fired plant along the Ohio River in Jefferson County and the Davis Besse nuclear plant on the shores of Lake Erie in Ottawa County.

As you pointed out, this proposal — and a similar one submitted to the PUCO by American Electric Power (AEP) of Columbus — would force many of Ohio’s businesses and residential consumers to pay billions of dollars more for their electricity, just to subsidize the utilities’ bad investments and reliance on old, inefficient and unprofitable power plants. In addition, these proposals would turn the clock back to the old days when utilities were protected by monopolies.

FirstEnergy clearly doesn’t like competition, even though electric choice is working to lower electric bills and increase power reliability in Ohio.

Thanks to deregulation, independent power producers are investing billions of dollars throughout the state to build new, cleaner and more efficient power plants.

Two plants are being constructed in FirstEnergy’s backyard — an $899 million natural gas-fired plant in nearby Carroll County, just southeast of Canton, and a new $850 million plant near Toledo.

Crain’s reported in August that energy company Dynegy, based in Houston, has spent billions acquiring plants in Ohio, and millions more to make those plants more efficient.

In addition, at least four other gas-fired plants are in the works — some new and some conversions from coal to natural gas.

They represent significant investment that, once complete, will generate as much as 4,300 megawatts of electricity by 2019 — all from cleaner, more efficient natural gas.

In addition, they’re employing thousands of Ohioans, including construction workers, and pumping millions of dollars into local economies and schools.

FirstEnergy ratepayers aren’t paying for these plants. Investors are taking a risk to build these plants at no cost to ratepayers.

They’re willing to invest in Ohio thanks largely to deregulation and energy choice.

Now, FirstEnergy and AEP want the PUCO to do away with choice and force households and businesses to pay more to subsidize their old, inefficient and unprofitable power plants.

In effect, they’re demanding a return to the old days of monopoly and higher bills for business and residential customers.

FirstEnergy argues that it needs subsidies to ensure a reliable source of electricity for customers, but that’s a bogus argument.

FirstEnergy has committed to run these plants until at least May 2019 and new, cleaner power plants coming online will produce enough power to fuel about six million homes with safe, reliable energy.

If the PUCO approves these bailouts, Ohio will be less attractive as a business location.

Why would competitive companies invest billions of dollars to build new plants if a competitor is guaranteed profits on outdated, inefficient plants? In fact, why would any business consider locating or expanding in Ohio?

Instead, smart business leaders will invest in states that support competition and lower energy costs.

Ohio has worked very hard over the past decades to attract investment, new businesses and expanded job opportunities.

We urge your readers to contact the PUCO, Gov. John Kasich and their state legislators to say “no” to utility bailouts that will raise their electricity bills and discourage investment in Ohio.

Let’s pull the plug on utility bailouts.

Snitchler is a former Ohio PUCO chairman and a principal with Vorys Advisors LLC. He serves as spokesman for the Alliance for Energy Choice, an Ohio nonprofit corporation whose members include Advanced Power, Calpine, Dynegy, Energy Professionals of Ohio, NRG Energy, PSEG Energy Resources and Trade, Retail Energy Supply Association and Talen Energy.

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TAX LIENS The Internal Revenue Service filed tax liens against the following businesses in the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federal government.

The lien is a public notice to creditors that the government has a claim against a company’s property. Liens reported here are $5,000 and higher. Dates listed are the dates the documents were filed in the Recorder’s Office.

LIENS FILED KSK HEALTH SERVICES OHIO CORP. 6929 W. 130 St., Suite 503, Parma Heights Date filed: Dec. 11, 2015 Type: Employer’s withholding, unemployment Amount: $58,903 BLUE ROOM LTD 3031 Monticello Blvd., Cleveland Heights Date filed: Dec. 11, 2015 Type: Employer’s withholding, unemployment, return of partnership income Amount: $42,967

BWELL-IINFORMED LLC 2012 Rossmoor Road, Cleveland Heights Date filed: Dec. 11, 2015 Type: Partnership income Amount: $42,428

PARMA PRE-S SCHOOL INC. 17974 Potomac Drive, Strongsville Date filed: Dec. 11, 2015 Type: Employer’s withholding Amount: $23,936

B TELECOM INC. 16462 Stone Ridge Road, Chagrin Falls Date filed: Dec. 11, 2015 Type: Employer’s withholding, unemployment Amount: $37,717 SURGICAL IMPLANT INNOVATIONS INC. 4538 Edmond Drive, South Euclid Date filed: Dec. 11, 2015 Type: Corporate income Amount: $35,908 RCA MANAGEMENT INC. P.O. Box 512, Richfield Date filed: Dec. 11, 2015 Type: Employer’s withholding, unemployment, corporate income Amount: $33,640 FAIRWEATHER FARM INC. P.O. Box 23669, Chagrin Falls Date filed: Dec. 11, 2016 Type: Employer’s withholding Amount: $29,080

MEDICAL RESOURCE GROUP INC. 26016 Detroit Road, Suite 5, Westlake Date filed: Dec. 11, 2015 Type: Employer’s withholding, failure to file complete return, corporate income Amount: $23,242 ELITE CUSTOM CONTRACTORS 1672 Algeris Drive, Mayfield Heights Date filed: Nov. 12, 2015 Type: Employer’s withholding, unemployment Amount: $10,391 MEDICAL CARE CENTER LLC 1250 Superior Ave. E, Cleveland Date filed: Nov. 12, 2015 Type: Employer’s withholding Amount: $10,300 CHIROPRACTIC CENTER OF SOLON INC. 633141 Bainbridge Road, Solon Date filed: Nov. 12, 2015 Type: Employer’s withholding Amount: $9,425

TYLER DISPOSAL INC. P.O. Box 30141, Middleburg Heights Date filed: Nov. 12, 2015 Type: Employer’s withholding Amount: $8,964 MARS GROUP INC. ACTION PEST CONTROL P.O. Box 18721, Cleveland Date filed: Nov. 12. 2015 Type: Employer’s withholding Amount: $8,782 OHIO MOBILE WIRELESS INC. 1301 E. 9th St., Cleveland Date filed: Nov. 12, 2015 Type: Failure to file complete return Amount: $7,137 HUNTINGTON THEATRE INC. P.O. Box 770056, Lakewood Date filed: Nov. 12, 2015 Type: Employer’s withholding Amount: $5,934

LIENS RELEASED APPLE CONSTRUCTION 2893 Euclid Heights Blvd., Cleveland Heights Date filed: May 17, 2011 Date released: Nov. 12, 2015

Type: Employer’s withholding Amount: $8,032 BLUES TO YOU INC. 812 Huron Road E., Cleveland Date filed: March 5, 2008 Date released: Nov. 12, 2015 Type: Employer’s withholding, unemployment Amount: $6,191 IMPRESSION TOOL & MOLD CO. 1050 Brookpark Road, Cleveland Date filed: July 31, 1992 Date released: Nov. 25, 2015 Type: Employer’s withholding, unemployment Amount: $27,739 IMPRESSION TOOL & MOLD CO. 1050 Brookpark Road, Cleveland Date filed: Sept. 17, 1992 Date released: Nov. 25, 2015 Type: Employer’s withholding Amount: $11,172 PHILLIPS-C CRAWFORD CARPET CO. 23533 Mercantile Road, Beachwood Date filed: Nov. 16, 2005 Date released: Nov. 12, 2015 Type: Employer’s withholding Amount: $33,875

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Focus SMALL BUSINESS

ADVISER - P. 15

z

Q&A - P. 16

z

TAX TIPS - P. 17

“What I could not have anticipated was how much my involvement with the company has made me still feel connected to Mark.

It turned out to be one of the best things that’s ever happened to this company.”

ROGER MASTROIANNI

— Bettina “Tina” Katz

Planning a successful succession

See next page for the story

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SMALL BUSINESS

Unexpected tragedies can leave businesses in a bind

BY LEE CHILCOTE clbfreelancer@crain.com

When Nesnadny + Schwartz founder Mark Schwartz found out two years ago that he was dying of cancer, he told his wife, Bettina “Tina” Katz, to sell the company. He didn’t have a succession plan in place and didn’t want her to be burdened with running the firm.

Yet today, the 10-person graphic design company based in University Circle is stronger than ever. Katz became chair of the company after he was gone, and key personnel stepped into leadership positions. The 30-year-old business has retained all of its staff and clients.

“As with many things in our marriage, I didn’t listen to him,” said Katz with a laugh.

“What I could not have anticipated was how much my involvement with the company has made me still feel connected to Mark.” She added, “It turned out to be one of the best things that’s ever happened to this company.”

Similarly, Happy Dog owner Sean Watterson didn’t have a plan in place when his friend and business partner, Sean Kilbane, died in a tragic accident in 2014. Watterson was forced to cope not only with grief but also with learning how to do all the things Kilbane used to do.

“Personnel changes so much around here, it’s a pretty dynamic environment,” Watterson said. “To me, a written succession plan was something that I’d read about in an article. If I can find the time to do it once, how can I find the time to do it every six months?”

Nonetheless, both businesses now have succession plans in place.

Dave Gaino, chairman of the accounting firm Apple Growth Partners, said that it’s important for businesses to have a succession plan in place in the event of an owner’s untimely death.

If they don’t, they may find it difficult to thrive or even continue.

“We use the phrase, ‘This is your business baby,’” Gaino said.

“The owner probably cares as much or almost as much about the company as a family member. Like a family, there are a lot of needs — the urgent items and the ones we’ll get to tomorrow. When an owner dies, the consequences can be really drastic.”

For example, if there are multiple owners and deficiencies in the buy-sell agreements, the company could wind up “in the hands of the people least capable of maintaining it,” Gaino said.

Additionally, family members could end up in conflict with one another without a clear successor. Finally, employees, vendors and customers could be left in a tough spot.

Gaino recommends that every business complete a human resources assessment as well as a long-range succession plan and update them regularly. That includes assessing whether key personnel are in the right positions and providing them with adequate training.

A succession plan must spell out how the transfer would take place, and it should be communicated to all employees.

“If there is at least a plan in place, and in year one or two of that plan there is an untimely death, then we just have to go in and say, ‘Gee, is the next generation far enough along in development that we can put the plan in place, or do we have to go back and look for interim leadership?’” Gaino said.

Get talking Communication is also important.

“The worst thing you can do is be silent,” Gaino said. “Then employees assume you’re going to sell the company and they might be out of a job.”

“The owner probably cares as much or almost as much about the company as a family member. When an owner dies, the consequences can be really drastic.”

— Dave Gaino, chairman Apple Growth Partners

Succession plans should be reviewed on a regular basis to ensure they’re still sufficient, said attorney James Spallino, a partner in Thompson Hine’s personal and succession planning practice.

Spallino also recommends to clients that they place their ownership interest in an irrevocable trust to avoid probate court, and put one or more trust advisers in place.

Meanwhile, a board of advisers proved essential to Nesnadny + Schwartz’s continuing success, Katz said. That outside group of advisers, which was made up of people with backgrounds in art or graphic design, helped Katz steer the ship after her husband’s passing. She still continues to tap the board for ex-

pertise at times.

Because Schwartz thrived on collaboration, the staff had good relationships with clients and were able to step in and take on increased responsibilities.

“It’s allowed our designers to find their own voices,” she said.

“This place is not just going to be about the legacy of my husband’s vision.”

Greg Oznowich, creative director with Nesnadny + Schwartz, said that while everyone still misses their beloved founder, they’re also excited about the future.

“We’re working for ourselves,” he said. “I feel empowered to spring out of bed every morning and say, ‘Hey, I can run this company.’”

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Commercial Banking

ADVISER: John Dill

Personal bank accounts can be risky for business Small business owners are often so focused on their day-to-day operations that they struggle to keep up with other aspects of their operation.

This can be especially true when it comes to managing the finances of their business. In fact, a recent survey from Citizens Bank found that a quarter of small business owners are using their personal bank accounts for their companies instead of opening a separate account dedicated to the business.

But this practice creates risk — not just for the business, but for the personal finances of the owner.

Using a personal account for business finances is an easy mistake to make when starting out, but it can quickly become a liability. For example, paying personal expenses using business money or vice versa makes it far more difficult for a small business owner to get their accounting right at tax time.

Business owners also need a separate account for business so they can build a financial history that they can later use to apply for credit and other products or services they

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Dill is the business banking market manager for Northeast Ohio at Citizens Bank. need to run their business.

Finally, not having a separate account can make it too easy for companies to spend personal funds that may be needed for personal mortgage payments and other important household expenses.

Managing cash flow is one of the most important yet under-appreciSEE ADVISER, PAGE 16

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SMALL BUSINESS Q & A: Josh Womack

ADVISER CONTINUED FROM PAGE 15

ated challenges faced by small businesses today. Business owners who take a proactive and strategic approach to managing cash are able to avoid problems and create new growth opportunities through reinvestment and making their capital work better for them. Having a strategic approach to managing cash flow is important, and the following seven tips can be helpful: Understand your operating cycle: Regardless of size, every business must deposit, monitor and manage cash; make payments; fund purchases; invest in their company and receive payments. Reviewing and understanding each step in this cash flow cycle can help a company work more efficiently.

Encourage faster payments: Can you provide an incentive or discount to customers or vendors to encourage them to pay faster?

The sooner a payment is received, the sooner you can put that revenue to work for your company. Collections services like lockbox also can help post payments to your accounts more quickly.

Consider remote deposits: Some banks offer customers the opportunity to make remote check deposits from their mobile device, sparing them trips to the branch.

This allows companies to save time and to keep their workforce focused on operations — a benefit of particular importance for companies with only a few employees.

Review your payroll process: If you pay your employees twice a month instead of every other week, you will be managing 24 payroll periods instead of 26 during the course of a year, making your company more efficient.

Direct deposit of employees’ paychecks into their accounts can also create efficiencies.

Evaluate real-time wires: If your small business is buying or selling overseas, real-time wires may be an option in lieu of visiting a bank branch. Some banks have the ability for customers to make ACH payments from their desk or office, which saves time and increases productivity.

Manage outgoing payments in an advantageous manner: Banks can help establish relationships with credit card companies that can expedite payments from customers while giving additional timing or flexibility for repayment to settle your account.

Have a Plan B: If you assume you can borrow funds to cover a cash shortfall, be sure to have a loan or line of credit setup before the cash is actually needed. Waiting until the shortfall occurs leaves you in a ditch as most financial institutions will hesitate to lend money when your business is already in financial straits.

It’s vital for business owners to take the time to understand their finances and their entire cash management process in order to make improvements that ultimately can help their bottom line.

Co-founder, Laugh Staff

Josh Womack and his partner, Cameron Amigo, launched Laugh Staff in 2013 with the mission of helping nervous best men and maids of honor. The process, they say, is simple. The customer buys a speech package ($124.99 for the basic), he or she fills out a detailed questionnaire and a comedian comes up with a speech.

So far, the local company has written more than 250 speeches — about 90% of which were for clients outside of Ohio (“I guess the Midwest is a little stubborn when it comes to asking for speech help,” Womack said). Also, Laugh Staff recently partnered with a dating platform in New York City, called Sparkology, to help members write dating profiles. Crain’s sat down with Womack to talk a little bit about what it’s like to help people be, well, funny.

What’s your background?

I started doing stand-up back in 2007, but my introduction into everyday humor came through my dad. Nobody works a room like him.

I watched how he greeted everyone with enthusiasm and how warmly he was received. Doing stand-up was just an extension of the interactions we had and still have. This past year I started as a copywriter at Progressive, which has been a great culture fit. When I marry Flo someday, I’ll write both sets of vows.

Where did you get the idea?

The co-founder of Laugh Staff, Cameron Amigo, got the initial idea after he had to pinch-hit a best man speech back in 2012. He called me the next day, and I fell in love with the idea. As with most startup ideas, we asked ourselves if we could move people closer to pleasure or away from pain. We thought the idea of having stand-ups helping to write wedding toasts was a great way to move nervous best men and maid of honors away from the pain perception of delivering their speech.

WE KNOW ALL SMALL BUSINESSES

Tell me about the process that goes into writing a speech.

The beauty is in the questions. We emphasize curiosity through sending each customer a questionnaire asking everything imaginable. How did you meet the bride or groom? What does the bride love about the groom?

What does the groom find annoying about the bride? Through this, we can also tell if they are leaning toward a humorous or sentimental speech. In the near future I hope to write Donald Trump’s inauguration speech. Goals, right?

Any idea how your speeches have gone over?

We follow up with every client the Monday after the wedding to see how their speech went and through the 250-plus speeches we’ve written, I would say less then a handful had a negative experience. We know comedy is subjective so when one of our comedians writes for a client we want it to sound natural. We encourage the client to read over the speech, and if they want us to switch something out so it sounds more like them, we are happy to do so. In terms of something that has perturbed a bride or groom, I

am sure it’s happened. Funny enough, some of the best men and maids of honor we write for tell us they don’t care much for the person their best friend is marrying! It’s our job to help them sound sincere.

What’s the most bizarre request you’ve ever received?

This past year one of our comedians wrote a eulogy. The gentleman was so grateful that we were able to capture the spirit of a lifetime of memories.

Comedians speak to a universal audience on stage every night so in my opinion, a eulogy isn’t that far off from a stand-up set. We’re glad he killed.

Have you ever faced any criticism for what you do?

I think maybe a Facebook comment or two when we first launched but I don’t give it much thought. We are helping educated and proud people conquer a major fear: public speaking. A wedding toast is the closest thing many people will come to doing stand-up and we want to maximize their experience.

When a stand-up nails a punchline and the crowd roars in laughter, it’s a beautiful thing. Everyone deserves that feeling, at least once.

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Join the leadership

TAX TIPS: Peter A. DeMarco

Identity theft isn’t just a personal problem Identity theft for individual taxpayers has received considerable attention in the past few years, but business owners face an extra layer of concern in protecting the identity of the business as well.

The Internal Revenue Service continues to regard taxpayer identity theft as a serious problem heading into the 2016 filing season. If a taxpayer’s information is used to file a fraudulent tax return, victims may face serious consequences. The difficulty of unraveling identity theft can include complications with employers, bank loans, education, housing, transportation and even other authorities beyond the IRS. The warning signs that an individual’s identity has been stolen are relatively easy to spot. The individual may have his or her own return rejected because someone else has already filed a return using that name, or the individual might receive a notice from the IRS asking for more information on a return when that individual has not yet filed a return.

For business owners, it can be more difficult to spot the best indicators the business information has been used by a thief. Those indicators might include having an original tax return for a particular year accepted by the IRS instead as an amended return, or getting a notice regarding fictitious employees.

It might also include noticing activity related to a business that is inactive. In the case of a small business, many of these events can occur as the result of clerical errors, so it may not

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be apparent the information has been used for illicit purposes.

While in the past, business owners might not have rushed to investigate such indicators, the current environment makes it more critical for business owners to take action when they receive such unexpected or unexplained notices from the IRS. Business owners must take many of the same steps as individual taxpayers when they notice something that suggests the business identity has been stolen. They should file reports with the police and the Federal Trade Commission. They should contact major credit bureaus and close affected accounts.

Business owners need to monitor credit reports for the business and monitor online business registration information. They need to scrutinize all correspondence from the IRS and other state agencies, even for businesses or units that are closed.

Whether a business has already been hacked by a cyber crook or not, every business owner should review and update his or her computer security policies. Every office computer should be protected with regularly updated anti-virus software.

Employees must be trained to recognize and not fall prey to “phishing,� or attempts by fraudsters to get information electronically by posing as a legitimate entity. Employees should never open attachments they do not recognize or were not expecting. Fraudsters have become increasingly sophisticated with phishing ploys, sometimes even posing as

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DeMarco is vice president and director of tax services for Meaden & Moore in Cleveland. known business associates or entities employees might recognize.

Business owners also need to update their business filings with the IRS and the secretary of state’s office when any contact information changes. Where possible, business owners should get their returns filed as early as possible, so their own return arrives at the IRS before any fraudulent return, making it easier for the IRS to flag it as suspicious.

The IRS also wants to see any phishing emails disguised to look like correspondence from the IRS. The IRS website provides instructions for forwarding such emails.

Just as individuals must be vigilant in this era of cyber crime to protect their personal identities, business owners need to take some additional steps to assure the business identity is safe as well.

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Business of Life AROUND TOWN: Things to see and do Crain’s occasional look at events and happenings in the area. Submit suggestions to clevedit@crain.com

REBECCA R. MARKOVITZ PHOTOS

Story time for grownups

BY RACHEL ABBEY MCCAFFERTY

Storytelling as an art is nothing new.

“Humans have been doing this for a long, long time,” said Dave Sabol, founder and producer of local storytelling event Told.

But it’s a medium that has been gaining strength in the Cleveland market. In addition to Told, which Sabol started in early 2014, there is Keep Talking: A Storytelling Show; Sorry, Please Continue; and Story Club Cleveland. Keep Talking is entering its third year in the storytelling business, while the latter two are recent additions to the area that are based on established shows in other cities.

There are a number of commonalities between the events — the stories are true, the events are free or donation-based, and it’s easy to participate — but each has been carving out its own niche.

“No two of these shows are exactly alike,” said Sabol, who is a math teacher at Saint Ignatius High School.

Zachariah Durr, co-host of Keep Talking, helped start up the event a few years ago after realizing there were no such events in the area. He and his co-host normally work in comedy, but he said that medium can be “limiting” if there’s a story he wants to tell that doesn’t spark laughter.

Sorry, Please Continue, has its roots in comedy, as well. The format invites potential storytellers to perform on that month’s topic of choice, while a regular panel of comics interjects. Co-creator Kris Wernowsky said it’s a good approach for

UPCOMING STORYTELLING EVENTS STORY CLUB CLEVELAND: Jan. 12, at the BottleHouse Brewing Co. in Cleveland Heights SORRY, PLEASE CONTINUE: Jan. 21, at Mahall’s in Lakewood KEEP TALKING: Feb. 3, at Happy Dog in Cleveland TOLD: Feb. 10, at Market Garden Brewery in Cleveland

people who may be nervous about sharing their story, because the panelists can help out if they’re “flailing.” And it’s good for the comedians, too, because people can get burnt out on the sameness of standup, he said.

“It forces you to sort of write in the moment,” Wernowsky said. Wernowsky, the managing producer for crime at cleveland.com, began hosting shows locally about six months ago.

He said he was a bit hesitant to start the St. Louis-based show here because he didn’t want to step on toes, but he breathed a sigh of relief when one of the hosts of another show took part in his. Sabol said the local storytelling community is a collaborative one.

The other Northeast Ohio newcomer, Story Club Cleveland, follows a more straightforward storytelling format, with open mic performers and featured performers, the latter of which are paid with whatever donations the group collects that night.

Its founder, Dana Norris, started Story Club in Chicago about six-and-a-half years ago after failing to find a good venue to share the nonfiction stories she writes.

As participants moved across the globe, they would start Story Clubs in other cities.

So when Norris, who works for McMaster-Carr Supply Co., moved to Cleveland about six months ago, she gave herself the same challenge.

More than 50 people attended her first show in December, which she said shows there’s a hunger for it. While there are ways to keep tabs on the events outside of their regular venues through show-based podcasts and a literary magazine from Story Club, the event founders tend to focus on the connections the live events build.

On Jan. 6, Keep Talking hosted its first event of the year to a full room at the Happy Dog on Detroit Avenue. The stories all related in some way to the theme of “Lessons Learned,” and those lessons elicited laughter, knowing nods and spontaneous applause from the crowd.

Sabol contrasted storytelling with the experience of social media, where you give and take little bits of information. In storytelling, the audience gives all of their time to someone they don’t know — and they might learn something significant about them. Norris said that after a storytelling event, she often sees strangers interacting and sharing their own stories.

“It’s such an immediate experience,” Norris said.

We don’t just see people for who they are; we see

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In the past nine months, One of the longer-running storytelling shows in Cleveland is Keep Talking: A Storytelling Show. Its first event of 2016 at the Happy Dog on Detroit Avenue was full of guests who listened to speakers share tales about lessons they had learned, from the humorous to the serious. Above, Trish DiFranco discusses the “series of sterile waiting rooms” she experienced while trying to get a diagnosis for sudden, persistent dizziness. It turned out to be from texting.

98% of kids participating in United Way-funded literacy programs are now reading at grade level.

them for who they can become.

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BUSINESS OF LIFE

Source Lunch He’s the regional president for BNY Melon Wealth Management in Ohio, but Ron Ambrogio is as native as they come in terms of his Northeast Ohio roots.

Even if he works for a big New York-based bank, he still lives in the Highland Heights suburb where he grew up. He met his wife, Josie, at Mayfield High School and went on to graduate from John Carroll University, before earning an MBA from Baldwin Wallace. OK, he did go out of state to study securities at the Wharton Business School and to learn banking at the University of Virginia, but he hurried back home to put his knowledge to work at some of the city’s most famous banks.

Ronald S. Ambrogio

He knows more than a fair bit about finance, the economy and, perhaps most importantly, how it all matters — Dan Shingler to Northeast Ohioans.

So, you deal with people and their asset management issues all the time. What’s the mood out there among investors?

What I’ve found is people are still very suspicious of the future.

The increasing of the interest rate has eliminated some of the uncertainty, and uncertainty is a very dirty word.

We recently saw the first interest rate hike by the Federal Reserve since the Great Recession. Has that changed how people view the markets or the economy?

So now we’ve got our increase and we’ll see what happens. That eliminated some of the uncertainty, but people are still suspicious about the long term.

Even though we’ve had some tremendous growth, they’re still waiting for the proverbial crash.

Is the interest rate increase going to change people’s investment strategies?

What’s your outlook for 2016, both for business generally and your own business?

It’s a small increase, so it won’t make one asset class more attractive than another, but we’ll see what happens with further increases — it could eventually.

I think business is still going to be strong this year, generally — I’m very much an optimist in that regard. … We’re expecting good growth. We’ve had 14% (revenue) growth over the last four years, compounded.

Has BNY Melon changed its investment outlook recently?

We haven’t changed (because of the rate increase). We’re still keeping our investments short — short would be defined as one to three years.

What has changed in terms of investment strategies recently?

There has been a 25 basis point jump, and our philosophy is still the same. Nothing has changed.

We stick with people’s goals and objectives. ...Time horizons and risk talents are still the drivers in terms of how we invest your portfolio. I like to ask people: “If the market was up, how much would you expect to be up?” and they say, “Maybe 22%?” Then I ask, “If the market is down 20%, how much do you expect to be down?” and they say “none” or the really brave might say “10%.”

Outside of work, what’s your favorite thing to do in Northeast Ohio during the winter?

I’ll say sporting clays. Sporting clays is my winter sport.

FINANCE

FIVE THINGS: WHAT WAS YOUR FIRST JOB?

My first job was at what you’d call a landscaping company, when I was 14.

FAVORITE MOVIE?

I’m a big Monty Python fan; I’m just going to leave it at that. I like them all, from “Holy Grail” to “Life of Brian.” My wife and I went on our first date to see “Life of Brian” and she said, “You’re the only one laughing, stop it!”

FAVORITE MUSIC?

Classic rock. Aerosmith tends to be my go-to band.

BEST CONCERT ?

That would have to be Billy Joel and Elton John.

(2009, Quicken Loans Arena)

FAVORITE AREA RESTAURANTS?

I like Moxie, and also Delmonico’s. It’s a great place to meet people, and they have parking. Also, Paladar.

LUNCH SPOT Mitchell’s Fish Market 28601 Chagrin Blvd, Woodmere, OH 44122 (216) 765-3474

The meal One had The Big Fish Sandwich, with a cup of clam chowder and an iced tea, and the other had Chilean sea bass prepared Shanghai style, with broccoli and a cup of gumbo, iced tea and coffee.

The vibe Though a chain, the feel is upscale, and it fits right in at the Eton Chagrin Boulevard lifestyle center.

The place was busy over the holiday season and filled with a mix of professionals and shoppers. The staff is topnotch and up to speed on the current specials and catches of the day.

The bill $73.08, plus tip

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CRAIN’S CLEVELAND BUSINESS z JANUARY 11 - 17, 2016 z PAGE 21

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PORT

BROWNS CONTINUED FROM PAGE 1

CONTINUED FROM PAGE 1

St. Lawrence Seaway and markets shipping on the Great Lakes. Sutton is a Barberton native and former member of Congress representing parts of Akron and Youngstown.

After taking over as president of the Port Authority in 2010, Friedman began to investigate ways to rebuild cargo service.

Three years ago, Friedman negotiated a deal to subsidize regular, monthly cargo service between Cleveland and Antwerp, Belgium, during the nine-month Great Lakes shipping season.

Essentially, the Port Authority is chartering the 450-long Fortunagracht from the Spliethoff Group, making up the difference between the cost of operation and the revenue generated by cargo. The Fortunagracht is part of a fleet of smaller ships Spliethoff operates that can carry a mix of containers and general cargo.

Upgrades on the way To make shipping through the Cleveland docks more attractive, the Port Authority is spending $8 million to upgrade the infrastructure on the lakefront docks.

The money, from a combination of a federal grant and two forgivable loans from the state of Ohio, will buy a new warehouse to better shield international cargo from the elements and two mobile harbor cranes that will speed up the loading and unloading of ships.

Anything that reduces the amount of time cargo and ships aren’t moving reduces costs and should make the operation more attractive to shippers.

The service appears to be working for Spliethoff as well.

“I’m very optimistic about the potential,” said Bart Peters, the director of the shipping firm’s Atlantic department. He told Crain’s that the company is building a broader service. The company’s ships now call on ports in Hamilton, Ont., Milwaukee and Duluth, Minn., and will add more when the opportunity arises.

It’s also looking to add European stops in Germany and the United Kingdom.

“We are building more than only Cleveland,” he said. “We are building trade into the whole area with Cleveland as the hub.”

International freight service is at the mercy of the international economy and its politics. At the moment, that means that, because of the strong U.S. dollar, American goods sell at a premium in Europe. So it’s harder to export.

But that didn’t stop Lubrizol Corp. from a pilot program last summer that put containers of the Wickliffe company’s premium specialty chemicals on ships leaving from the Port of Cleveland.

“We’ve really been pleased with it,” said Matthew Joyce, the company’s director of the Americas supply chain.

“Right now, we believe we’ve found an alternative (to East Coast port shipping) that’s providing better shipping times, safe and secure reliable service at cost-equivalent rates into Northern Europe.

“We’re looking at how and if we can expand (the Cleveland service).”

Shipments of general cargo — imported steel, machinery and natural gas pipeline pipe — also were up at the Port of Cleveland. Traffic, measured by weight, grew from 515,000 tons in 2014 to 545,000 tons in 2015, a 5.8% increase.

reconfigure baseball front offices and scouting departments.

Brown will have control of the 53man roster, and the top talent evaluator will report to him. The latter hire, which likely won’t come with a “general manager” designation, will come after the head coach — another against-the-grain move.

In announcing the promotion of Brown following the team’s season finale Jan. 3, Haslam said the organization was “marrying” the strategic, analytically inclined Brown “with a football person” (the top talent evaluator). Two days later, DePodesta, who was one of the driving forces in making an analytical approach the norm in baseball, was added to a front office that is very high on IQ and light on Xs and Os. Kevin Jones, a former Browns staff writer who left the organization in October, believes Brown “emerged out of the fray” between fired head coach Mike Pettine and deposed GM Ray Farmer as the voice of reason.

“From what I gather, he was against a lot of the bad moves that happened,” Jones said, while conceding that he couldn’t give specific transactions that Brown fought. “I think Jimmy started looking at him and thought, ‘Wow, why would I go outside the building when I can hire this guy who is capable?’ ” Giving Brown the keys to a flawed roster is easy to criticize. But the team’s former general counsel, who got his start working with Baltimore Ravens president Dick Cass at Washington, D.C.-based law firm WilmerHale, is described by seemingly everyone who knows him as a smart, effective leader.

“Sashi, the way he carries himself, he is a boss,” Jones said, “but a friendly, approachable boss. Very

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business-like. I really never heard anyone say a bad thing about Sashi.”

Squire Patton Boggs regional managing partner Frederick R. Nance, whom Brown succeeded as the Browns’ general counsel, said Brown is one of the most “capable leaders at this stage of his career” that he’s ever encountered.

“It’s becoming clear these days that raw analytical ability, while a critical asset, is not enough for leadership,” Nance said. “You have to be able to manage people. Sashi’s ability in that regard wildly exceeds his professional age.”

Brown’s people and management skills sound impressive. DePodesta’s analytical capabilities are without reproach.

But, the Browns’ detractors point out, that approach won’t work without top-notch football decisionmakers, and its effectiveness could be limited if the head coach and his assistants aren’t on board.

Jones, the former Browns staff writer, said one of the biggest lessons he took from working for an NFL team is that “assistant coaches run that building.” The coaches prefer to concentrate on football and are sometimes reluctant to take advice from the front office on such matters, he said.

“It seems like there could be trouble brewing before you get started here,” Jones said.

That’s the thing about NFL organizations and data: Each one employs an analytics team. How the findings are used, however, can vary appreciably.

Carucci, a plugged-in NFL writer who left the Browns in September 2014 to return to his native Buffalo, said the initial Haslam setup of Banner as the CEO and Scheiner as team president was one that was built

with the idea that analytics would help the football side make more informed decisions.

“My impression was it wasn’t used heavily, and the other impression I had was there was a resistance to it from the football people,” Carucci said.

Pettine and Farmer had more of a “traditional approach” to football evaluation, he added.

Carucci agrees that the next coach must embrace the organization’s forward-thinking, data-based models. But, looking over the list of possibilities linked to the Browns’ opening, he’s not sure there’s a match.

“Of the names you hear of likely candidates, I don’t know anyone fits that description,” he said. “However, it wouldn’t shock me that to get the job, you say and agree to pretty much anything, then sign the contract and do your own thing. They’re smart people. They’ll have to be aware of that (possibility).”

Mark Shapiro, who in October was lured by a lucrative offer to be the Toronto Blue Jays’ president and CEO, worked with DePodesta in the Indians’ front office until the latter left to join the Oakland Athletics in 1999. Shapiro has no idea if being a baseball numbers wiz will translate to football success, but he’s confident that Brown and DePodesta can find innovative ways to bring needed change to the Browns.

“My experience,” Shapiro said, “has been that good processes translate regardless of business, let alone regardless of sports.”

Haslam is banking on that being true. Many others are eagerly awaiting the results.

“I think it’s fascinating,” Carucci said. “I think the entire NFL is extremely interested in how this works because it is cutting edge.”

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CRAIN’S CLEVELAND BUSINESS z JANUARY 11 - 17, 2016 z PAGE 23

The List THIS COMPANY NAME YEAR HEADQUARTERS

NORTHEAST OHIO'S TOP SBA LENDERS

DOLLAR VALUE OF APPROVED LOANS FISCAL 2015

DOLLAR VALUE OF APPROVED LOANS FISCAL 2014 % CHANGE

NUMBER OF LOANS FISCAL 2015

NUMBER OF LOANS FISCAL 2014

% CHANGE

1

Huntington National Bank Columbus

136,272,400

141,264,400

-3.5%

1,201

1,275

-5.8%

2

Fifth Third Bank Cincinnati

17,494,000

15,177,000

15.3%

27

19

42.1%

3

U.S. Bank Minneapolis, Minn.

12,763,100

21,180,200

-39.7%

71

84

-15.5%

4

Northwest Savings Bank Warren, Pa.

11,962,600

————

————

26

————

————

5

RidgeStone Bank Brookfield, Wis.

11,796,000

1,002,200

1,077.0%

7

2

250.0%

6

KeyBank NA Cleveland

11,001,800

15,048,500

-26.9%

62

48

29.2%

7

FirstMerit Bank NA Akron

8,181,900

3,341,800

144.8%

33

35

-5.7%

8

PNC Bank Pittsburgh

6,931,200

7,934,700

-12.6%

35

25

40.0%

9

Live Oak Banking Co. Wilmington, N.C.

6,645,000

————

————

11

————

————

10

Stearns Bank NA St. Cloud, Minn.

6,150,500

4,700,000

30.9%

11

2

450.0%

11

First Federal Bank of the Midwest Defiance

5,801,500

1,530,000

279.2%

13

4

225.0%

12

State Bank and Trust Co. Defiance

5,669,000

1,705,000

232.5%

13

7

85.7%

13

JPMorgan Chase & Co. New York

5,600,000

18,088,600

-69.0%

36

57

-36.8%

14

Northwest Federal Credit Union Herndon, Va.

5,545,000

————

————

2

————

————

15

Consumers National Bank Minerva

5,228,700

2,137,000

144.7%

17

11

16

Metro City Bank Doraville, Ga.

5,000,000

————

————

1

————

17

Growth Capital Corp.

Cleveland

4,882,200

2,372,700

105.8%

36

26

18

Wells Fargo Bank NA Sioux Falls, S.D.

4,679,500

8,761,600

-46.6%

14

7

100.0%

19

West Town Bank & Trust North Riverside, Ill.

4,405,000

————

————

2

————

————

20

Peoples Bank NA Marietta

3,855,000

3,485,000

10.6%

6

4

50.0%

21

Citizens Bank Providence, R.I.

3,814,300

2,594,500

47.0%

38

23

65.2%

22

Pacific Premier Bank Irvine, Calif.

3,802,000

1,192,000

219.0%

2

1

100.0%

23

Resolute Bank (1) Maumee

3,737,500

165,000

2,165.2%

7

1

600.0%

24

CFBank Fairlawn

3,150,000

1,738,000

81.2%

1

9

-88.9%

25

Independence Bank East Greenwich, R.I.

2,925,000

————

————

3

————

————

26

Westfield Bank FSB Westfield Center

2,848,700

1,787,200

59.4%

9

9

0.0%

27

Newtek Small Business Finance Inc. New York

2,778,300

5,644,700

-50.8%

6

7

-14.3%

28

Celtic Bank Corp.

Salt Lake City

2,592,000

4,065,000

-36.2%

16

16

29

Grow America Fund Inc. New York

2,533,000

225,000

1,025.8%

3

1

200.0%

30

Proficio Bank Corronwood Heights, Utah

2,500,000

————

————

1

————

————

31

First Western SBLC Inc. Dallas

2,176,000

4,092,000

-46.8%

2

2

0.0%

32

Liberty Bank NA Beachwood

2,105,000

5,170,000

-59.3%

5

5

0.0%

33

Home Savings & Loan Co. Youngstown

2,007,000

10,810,000

-81.4%

2

7

-71.4%

34

NOA Bank Duluth, Ga.

1,770,000

————

————

1

————

————

35

Lake National Bank Mentor

1,735,200

1,058,800

63.9%

6

3

100.0%

36

Buckeye Community Bank Lorain

1,733,000

————

————

5

————

————

54.5%

————

38.5%

0.0%

RESEARCHED BY DEBORAH W. HILLYER This list was compiled from information provided by the Cleveland District office of the SBA for fiscal years ended 9/30/2015 and 9/30/2014. The Cleveland District covers 28 northern Ohio counties. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. (1) Formerly The Bank of Maumee.

20160111-NEWS--24-NAT-CCI-CL_--

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