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In the Niche of Time

By wmadministrator

When military personnel are fulfilling their missions overseas, often in harsh, sometimes life-or-death situations, the last thing that should be on their minds is making sure their bills are being paid. But paying the bills back home – wherever ‘home’ may be – is a fact of life, a responsibility that grants no exemptions for patriotic duty or unavailability.

This creates a little-known niche banking service that an Elizabethtown institution has stepped into, filling a need and generating a dependable non-interest income.

The military allotment services is provided through FirstNet, a division of First Citizens Bank Corp. in Elizabethtown, which in turn operates under the umbrella of Frankfort-based Farmers Capital Bank Corp. Lloyd Hillard Jr., longtime president of First Citizens Bank, was promoted in January to president of Farmers Capital.

First Citizens Bank celebrated 45 years in business in 2009 and is a $300 million community bank with six full-service locations – four in Hardin County, two in Bullitt County, and three additional locations with ATMs – two in Hardin County and one in Bullitt County. It employs about 85 full-time employees, Hillard said.

A timely acquisition
FirstNet, as a source of non-interest income, does help stabilize the bank’s earnings in these difficult economic times when loan activity has been down, Hillard said. It’s not a balance sheet cure-all and isn’t likely to grow in leaps and bounds, but it does help keep First Citizens on a steady track.

The size of the military and the level of deployments are factors that impact FirstNet. Likewise, if the more than 1,000 companies it works with directly experience a decline in business, the number of FirstNet “user customers” would also decline, Hillard said.

“The growth that we will see will be depending on the strength of the companies that we deal with” along with any future acquisitions, he said. “We are where we are. We’ll have small growth.”

The bank does not issue comprehensive details of FirstNet’s operations, but the 2008 Farmers Capital annual report states that allotment processing fees generated $4.8 million in 2008, which turned out to be the toughest year for the banking industry in generations and one in which Farmers reported overall net income of $4.3 million.

FirstNet, Hillard said, was purchased in August 2004, and PNC Bank’s military bill payment service was added in January 2007. Its operations are headquartered on the second floor of a First Citizens Bank branch in Radcliff.
Allotment fee income was $4.36 million in 2007, according to the Farmers Capital annual report, and had been $2.6 million in 2006.

With Hillard moving on to Frankfort, Scott T. Conway was recently named by the bank’s board of directors as chief executive officer of First Citizens in Elizabethtown, and Marilyn B. Ford as president and chief operating officer. The FirstNet division reports to Ford, Hillard said.

Shortly before taking up his new duties, Hillard, along with FirstNet Senior Vice President Brenda Gayler, discussed the military allotment service and its niche role.

Service worth paying for
Services like FirstNet, with its Hardin County location in close proximity to Fort Knox, were first offered in Hardin County more than three decades ago, Hillard said. The company continues to evolve and grow with acquisitions, and FirstNet is currently the largest allotment and bill-payment service of its kind in the market. Even though the military offers its members a similar service for free, fast availability and the level of customer service FirstNet associates provide attract lots of the troops to pay its monthly fees.

“We’re very efficient in handling these transactions,” Hillard said.

The process is straightforward, beginning with an individual, whether military or civilian, obtaining a loan or purchasing merchandise to be financed, Gayler said.

“Our process is a vehicle for them to make that payment,” she said.
Allotment services arrange and schedule loan or purchase payments to come directly out of clients’ civilian department or military paychecks before they’re direct-deposited into a bank account.

FirstNet pays creditors for the clients, according to prearranged wishes or needs, Gayler said. It allows a soldier to pay off an obligation as quickly or slowly as they decide.

In addition to the basic clients, FirstNet customers include companies providing them goods and services, Hillard noted.

“Our bread and butter is the military, but we also deal with civilians and non-government employees,” Hillard noted.

The service makes its money through monthly fees paid by the individuals, Hillard said – the number of subscribers couldn’t be disclosed, but he would say that FirstNet works with more than 1,000 companies.

They do not contract payments with payday lenders, currency exchangers or pawn shops, Hillard and Gayler are quick to point out.

Business-friendly Web site
Norfolk, Va.-based Freedom Acceptance Corp. has been affiliated with FirstNet as a corporate client for more than a decade, said Stephanie M. Williams, its vice president of collection operations. Freedom Acceptance operates Freedom Furniture & Electronics and Military Credit Service, a company that provides financing for various product dealers nationwide.

“We deal with military personnel as 95 percent of our customers,” Williams said.

She complimented FirstNet for its comprehensive Web site, which helps make payment allocations an easy process to navigate for her and her clients.

“It’s the most wonderful thing in the world, helping them set their payment up on allotment,” she said. “We get our payments on time. … I just love working with the people that work there. All of the people in that department have the best attitudes in customer service that I have ever seen.”

Just as importantly, that customer service extends to clients trying handle financial life from afar, Hillard said.

Hillard said individuals can e-mail, call or write FirstNet offices to ask for more information or to make changes to their accounts, and thousands of calls each month are received from clients around the world.

“It relieves the stress so they don’t have to worry that a car payment is not being made, that a loan payment is not being made or that a furniture payment is not being made,” he said. “It’s a convenience.”