Fulton Bank is investing $1 million to help minority and women-owned businesses grow.
Fulton, a subsidiary of Fulton Financial Corp., invested the funds in Innovate Capital Growth Fund, L.P., which provides capital and operational expertise to minority- and women-owned businesses.
The investment is part of Fulton Bank’s Commercial Affinity Banking initiative, which is designed to increase access to financial services for diverse businesses, the bank said.
“Fulton Bank’s investment will advance our mission of connecting institutions with minority businesses, unlocking the potential for future growth,” said Innovate Capital Growth Fund Partner Della Clark. “There are more than 3,200 minority-owned and 8,800 women-owned businesses in our target market in the Mid-Atlantic region and providing them with equity capital represents a significant opportunity to contribute to overall economic growth.”
Based in Philadelphia, Innovate Capital Growth Fund is a Small Business Investment Company (SBIC) focused on providing equity investments in women- and minority-owned lower middle market firms in the Mid-Atlantic region.
Innovate Capital Growth Fund said it typically works with businesses with annual revenues of approximately $2 million to $10 million from a range of industries, including manufacturing, consumer products, technology, and healthcare services.
“Fulton Bank is committed to ensuring that businesses in the communities we serve have access to the capital and banking services that will empower them to grow and thrive,” said Curtis Myers, chairman and CEO of Fulton Financial Corp. “We are excited about the opportunity to invest in Innovate Capital Growth Fund, which is focused on supporting diverse businesses.”
Senior Vice President and Director of Commercial Affinity Banking Joel Barnett said, “This investment in Innovate Capital Growth Fund is part of Fulton Bank’s Commercial Affinity Banking Program. As part of that program, we are creating a suite of commercial banking solutions which includes access to capital and deposits and payments. Fulton bankers are undergoing training on these new programs and resources to develop expertise in assisting diverse businesses.”
In December, many people develop annual budgets and financial plans for the upcoming year. As we plan for 2023, there’s good news for those saving for retirement as well as for retirees themselves. Contribution limits have increased for many retirement saving vehicles and new cost-of-living adjustments for Social Security and Supplemental Security Income (SSI) recipients will take effect as of January 2023 and December 30, 2022, respectively.
From a “financial planning best practices” standpoint, it is a good idea to increase your retirement saving plan contributions – ideally to the new maximums allowed, but if that’s not doable, then by as much as possible. And if you’re a retiree who is fortunate enough to not be fully dependent upon Social Security income for your living expenses, below are some financial planning ideas for making the most of your increased benefit.
Increased Retirement Plan Contribution Limits in 2023:
401(k), 403(b), 457, and TSP Contribution Limit Increases
So that workers can contribute enough to keep up with cost-of-living increases, the IRS announced nearly a 10% increase in the amount individuals will be able to contribute to their 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan in 2023. That contribution limit will be $22,500 next year (whereas it was $20,500 in 2022). The catch-up contribution limit for older employees, age 50 and above, will be $7,500 in 2023 (while it was $6,500 in 2022). It is recommended that workers take full advantage of the tax savings offered by these contribution limit hikes and automate higher contributions to these plans.
IRA Contribution Limit Increases
Those contributing to IRAs will be happy to learn that annual contribution limits will also increase – from $6,000 in 2022 to $6,500 in 2023. There is no cost-of-living adjustment (COLA) for the IRA catch-up contribution limit for those age 50 and above: That contribution limit continues to be $1,000.*
SIMPLE IRA Contribution Limit Increases
If you contribute to a SIMPLE retirement account, your contribution limit will increase from $14,000 in 2022 to $15,500 in 2023. For those age 50 and above, the catch-up contribution limit will increase from $3,000 in 2022 to $3,500 in 2023.
Increased Social Security and Supplemental Security Income Benefits:
You’ve likely heard that 2023 will bring an 8.7% cost-of-living adjustment increase to the approximately 70 million Americans receiving Social Security and Supplemental Security Income benefits. This is the largest COLA jump in over 40 years. According to the Social Security Administration, “The purpose of the COLA is to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation.” With U.S. inflation at 7.7% (as of October 2022) and many people feeling an economic pinch, this is a welcome development.
If you are fortunate enough to not be dependent upon Social Security income to cover all your retirement living expenses, the following are a few ideas about what you can do with some (or all) of your additional 8.7% income.
Increase contributions to your investment accounts
Increasing investments will positively impact your retirement nest egg.
Set up an automatic monthly transfer of funds.
Add to your emergency fund
We recommend having 3-6 months’ income in a high interest money market account.
Set up an automatic monthly transfer of funds.
Gift the funds
Consider establishing a 529 college savings account for grandchildren, children, or family friends and contributing to it monthly. Accounts grow tax-deferred and withdrawals are free of federal and state taxes when the funds are used at eligible institutions. You may also get a state tax deduction for your contributions.
Consider contributing to a favorite charity or charities on a monthly basis. Set up automatic charitable deductions.
All in all, 2023 promises to be an easier year for those dependent upon government programs such as Social Security and SSI. And those who are able to use the increased benefits in other ways would be wise to utilize at least some of the funds to improve their overall financial well-being.
*In addition, the income phase-out ranges for those contributing to an IRA in 2023 have increased. Please go to www.irs.gov for more specifics regarding income phase-out ranges.
Sarah Caine, CFP®,is a Financial Strategist whose responsibilities include analysis and development of comprehensive financial plans and assisting in their implementation and on-going execution. A graduate of Lehigh University and a Certified Financial PlannerTM, Sarah can be reached at [email protected].
UGI Electric Division (IUGI Electric) is seeking to raise base rates for electric distribution by $11.4 million annually, increasing the average rate for residential customers by 8.9%, commercial customers by 10.8% and industrial customers by less than 1%.
The Denver-based company filed a request with the Pennsylvania Public Utility Commission Friday saying the rate increase would fund ongoing system improvements and certain information technology investments necessary to support customer service activities and maintain safe and reliable electric service.
“UGI Electric is working hard to manage costs and improve system performance while continuing our commitment to safely and reliably deliver electricity to our customers and the many communities we serve,” Eric Sorber, vice president and general manager- UGI Electric Division, said.
Sorber noted that since its last base rate case in 2021, UGI Electric has made and continues to make system investments to improve the quality and reliability of service to the company’s customers. These include construction of a new substation and upgrading of UGI’s Outage Management System.
“Adding anticipated investments included in this base rate increase request, UGI Electric will have invested nearly $70.5 million in the distribution system since the last time UGI Electric filed a base rate case,” Sorber said.
The investments include accelerated repair, replacement or improvement of aged and aging distribution infrastructure on its system and the ongoing upgrade of UGI Information Technology systems.
UGI Electric’s base rate increase request will impact only the delivery charge component of customers’ electric bills. The delivery charge, which this proposal would increase for certain customers, provides a utility with the funds needed to own, operate and maintain the electric distribution system and provide customer service and emergency response services.
If approved, the total bill for a residential customer using 1,000 kilowatt-hours (kWh) per month and receiving default power supply service from the company would increase from $192.73 to $209.96 per month or by 8.9%.
The total bill for a commercial customer using 1,000 kWh per month would increase from $199.06 to $220.49 per month or by 10.8% and an industrial customer using 50,000 kWh per month would increase from $6,455.07 to $6,475.18 per month or by 0.3 percent.
UGI Electric is requesting that the new electric rates take effect March 28, 2023. However, the PUC typically suspends the effective date for general base rate proceedings to allow for investigation and public hearings. The PUC proceeding is expected to last approximately nine months, which would delay the implementation of the new rates until fall 2023.
Gettysburg-based ACNB Corp., the financial holding company for ACNB Bank and ACNB Insurance Services Inc., announced record financial results for 2022.
ACNB posted net income of $35.752 million, an increase of $7.918 million, or 28.45%, compared with 2021. This year-over-year increase was primarily driven by increases in net interest income of $12.181 million and commissions from insurance sales of $2.156 million.
The corporation reported net income of $10.199 million for the three months ended Dec. 31, 2022, an increase of 126.90% compared with the fourth quarter of 2021.
“We, at ACNB Corp., are extremely pleased to report another year of record earnings for 2022 totaling more than $35 million,” James P. Helt, ACNB president and CEO, said in a release. “This corporate achievement was not anticipated at the start of the year, but neither were the economic conditions that evolved during the year. In response to inflationary pressures, the unprecedented actions of the Federal Reserve resulted in seven interest rate hikes beginning in March of 2022 for a fed funds target rate range of 4.25% to 4.50% at the end of the year.”
The steep interest rate changes during the year pushed the fed funds rate to its highest point since December 2007, he noted. “These interest rate increases were a major contributor to ACNB Corp.’s 2022 earnings performance as assets repriced more quickly than liabilities, which coupled with asset growth resulted in strong net interest income performance.”
“Despite these unusual and unprecedented economic times,” Helt said, the corporation completed key strategic initiatives planned for 2022, including the acquisition by ACNB Insurance Services Inc. of the business and assets of Hockley & O’Donnell Insurance Agency in Gettysburg in February and the opening of the new Upper Adams Office in Biglerville in October as ACNB Bank continued its plans for optimization of the community banking network.
Small employers who start new employee retirement plans under Secure Act 2.0 passed by Congress at the end of the year will find themselves faced with more paperwork for their efforts.
Deborah Lander, senior retirement plan advisor with Lancaster-based RKL Wealth Management, said the extra paperwork will come from the provision that will require automatic enrollment in plans starting in 2025.
Secure Act 2.0 states employers with more than 10 workers that start new 401(k) plans after the new law takes effect beginning with the plan years in 2025 will be required to automatically enroll employees and have them set aside 3% to 10% of their earnings every year. Those employees who don’t want to participate would have to opt out.
“Some employers don’t like automatic enrollment. It can be more paperwork and if an employee doesn’t understand and sees money being taken out of the paycheck, it can cause issues,” Lander said.
However, to encourage employers to set up these plans, there will be a 100% tax credit for employers, giving them up to $5,000 for the costs of starting a plan, with a $1,000 per employee cap.
“Payroll systems may have to change,” Lander said, to ensure contributions are handled correctly. “We’ll have to see how this plays out.”
Overall, Lander said the act is a good incentive to encourage retirement savings.
Her colleague William Onorato, RKL’s Family Office Practice Leader, agreed, saying the act, which picks up on Secure Act 1.0 passed in December 2019, will “encourage broader participation in retirement savings by making accounts more user friendly.”
The biggest area of change Onorato sees is the increased age for mandatory distributions. Prior to the changes, people were required to take money out of their retirement accounts at age 70 1/2. Secure Act 1.0 changed that to age 72 and the new provisions increased it to 73 beginning in 2023 and to 75 in 2033. However, anyone who has already started drawing on an account will have to continue to do so.
“In reality, this is not significant,” he said.
He explained that most people who retire by age 70 will draw on their retirement accounts anyway. The biggest benefit, he said, will be for those higher income earners who can let assets grow tax deferred longer.
“But even for higher income earners, from an income tax perspective, it may be better to take money earlier to spread the tax burden out over a longer number of years.”
That is because most retirement accounts are tax deferred. Only Roth IRAs and Roth 401(k) plans are post tax, he said.
“For most people, this will not have a huge impact,” he said noting the House version passed in 2022 by 414-5 votes, showing there was not a lot of controversial stuff in it. “The changes are nice, but the impact will be modest.”
Lander said one provision she sees as a real benefit is the Emergency Savings provisions that can be used for emergencies.
Starting in 2024, Secure Act 2.0 allows emergency withdrawal of up to $1,000 from a company retirement plan or IRA without the standard 10% early penalty of pre-tax money. The second allows creation of an emergency savings account linked to 401(k) plans. Workers could set aside up to $2,500 and their employer may set up to have a 3% automatic enrollment of their salary in these plans with Roth after-tax dollars having a cap of up to $2,500. In an emergency, they could withdraw money tax-free and without paying the standard 10% penalty for money taken out before age 59 1/2.
“The Roth emergency savings is more like a savings account instead of a retirement account. It looks like employees can take this yearly. We’ll have to see as more information comes out,” Landers said, adding it would be a great incentive for people who don’t feel like they have the money to contribute to retirement because they don’t have enough emergency savings.
For younger workers, the provision that allows for employer contributions to be made into Roth accounts can be beneficial, she said.
“Employer contributions were pretax in the past, meaning the taxes had to be paid upon withdrawal. Now, employees can choose all Roth and pay taxes now and let the money grow without worrying what the tax rate will be later,” Lander said.
Another plus for younger employees, Onorato said, is the provision that allows employers to match 401(k) contributions to student loan debt.
“Young workers with student loan debt can’t save for retirement,” he said. Employers who opt to match that debt with contributions can help employees start saving.
“It’s not required so we’ll see how many employers will do this,” Onorato said.
Both agreed the new provisions are extensive and span several years. While both think the new rules are beneficial, they said time will tell how impactful they are.
Chambersburg-based F&M Trust hires former S&T Executive Vice President Chad Carroll as executive vice president and COO.
Carroll will be responsible for planning, organizing, and controlling the day-to-day activities of the bank and collaborating with Tim Henry, president and CEO in the overall administration of the bank.
As a member of the bank’s senior management team, he will participate in the development of strategic plans while managing a portion of the bank’s activities in the best interests of the shareholders, customers, employees, and communities the bank serves.
“As the bank continues to grow, both geographically and in asset size, we are excited to have Chad join us,” said Henry. “He brings a wealth of knowledge and experience to F&M Trust that will help us further execute our strategic plan and drive shareholder value.”
Carroll comes to F&M Trust from S&T Bank, where he was executive vice president, chief administrative officer, and director of consumer banking. During his five years with S&T Bank, he worked in mortgage and consumer lending, oversaw significant loan balance and deposit growth, and increased financial services revenue each year.
He has a bachelor’s degree in economics and history, and attended IESE Leadership College in Madrid, Spain.
Camp Hill-based LINKBANK has named Doug Klinger as regional president for the Upper Dauphin, Northumberland and Schuylkill markets.
In his new role, Klinger will help lead the bank’s growth initiatives in the northern region markets, including Upper Dauphin, Schuylkill and Northumberland counties.
“We are thrilled to have Doug on the team,” said Brent Smith, LINKBANK president. “Doug will complement the talent and leadership we have within the northern region and help us expand our impact. His passion and knowledge of the market makes him a great addition, along with his alignment with our core values.”
Klinger, who has been in banking for 29 years, said he is excited for the opportunity to contribute and impact lives in the communities in which he has deep family roots. He said he is passionate about working for a bank that is dedicated to serving the community and contributing to the well-being of people.
Klinger earned his Bachelor of Science in finance with a minor in economics from Indiana University of Pennsylvania.
Harrisburg-based Mid Penn Bancorp signed a definitive agreement to acquire Brunswick Bancorp of New Brunswick, New Jersey for $53.9 million.
The sale is a combination cash and stock transaction based on Mid Penn’s closing stock price of $30.95 as of Dec. 19, Mid Penn said.
The merger, unanimously approved by both boards of directors, will expand Mid Penn’s footprint into central New Jersey market. Mid Penn will add five total financial centers, four in Middlesex County and one in Monmouth County.
Founded in 1902, Brunswick had $381.6 million in assets, $279.8 million in deposits and $302.5 million in gross loans, as of Sept. 30, 2022.
“We are enthusiastic to partner with Brunswick as our first formal step into the dynamic central New Jersey community,” said Mid Penn Chair, President and CEO Rory G. Ritrievi.
“Brunswick, under the direction of Executive Chair Frank Gumina, President and CEO Nick Frungillo, Jr. and their strong staff of professionals has built a solid reputation as a dependable bank for the numerous businesses and consumers in the communities they serve,” Ritrievi added.
Under Mid Penn’s ownership, Brunswick customers will have access to an expanded product and services offering, he said. The transaction creates a combined community banking franchise with approximately $5 billion in assets, $4.2 billion in deposits and $3.8 billion in gross loans, Mid Penn said.
“Mid Penn is an excellent cultural fit for Brunswick, and the opportunity to join a like-minded, top-tier community bank is one that will provide both organizations with significant growth potential,” said Frungillo. “Together we will continue to provide our clients with valuable opportunities via higher lending limits and a sophisticated technology platform. We are pleased to continue providing service to our valued customers and to the communities in which we live, alongside Rory and his team.”
The merger is expected to close in the second quarter of 2023.
Nine southcentral Pennsylvania farms are among 30 preserved by the state Thursday.
Pennsylvania protected 2,478 acres on 30 farms in 18 counties from future residential, or commercial development, investing more than $8.9 million in state, county, local and nonprofit dollars in protecting prime farmland for the future. Pennsylvania ends 2022 continuing to lead the nation, having protected 170 farms and 13,069 acres this year.
“Protecting prime farmland from development is one of the most important investments we make in our economy, our environment, and our quality of life,” Agriculture Secretary Russell Redding said. “These farm families, together with every level of government, are investing in guarding their legacies and ensuring that other Pennsylvania families will have food, green spaces, income and jobs in the future.”
The state Agricultural Land Preservation Board said three standardbred horse farms in Adams County are federally funded, which will leverage additional funds for future easement purchases.
Farms preserved and dollars invested include:
Adams County–Total investment – $1,466,393, state only
Hanover Shoe Farms, Inc. #33, Union Township, a 149-acre horse farm
Hanover Shoe Farms, Inc. #27, Conewago Township,162-acre horse farm
Hanover Shoe Farms, Inc. #31, Union Township, 185-acre horse farm
Cumberland County –Total investment – $274,613, state – $4,063, county – $69,991, township – $200,559
The Thomas D. Moyer Farm #2, Silver Spring Township, a 70-acre crop farm
Lancaster County –Total investment – $568,292, state only
Hope Valley Farms, LLC, East Drumore Township, a 77-acre crop farm
The Ben F. and Annie K. Zook Farm, Rapho Township, a 97-acre crop and livestock farm
York County – Total investment – $905,202, state only
The Timothy Jordan #1 Farm, Chanceford Township, a 50-acre crop farm
The Dennis Myers #1 Farm, Codorus Township, a 91-acre crop farm
The George O. Phillips Jr. & Kimberly A. Swam #1 Farm, Shrewsbury Township, a 172-acre crop & livestock farm
By selling their land’s development rights, landowners ensure that their farms will remain farms and never be sold to developers. Farm families often sell their land at below market value, donate additional land, or agree to conservation practices on their farms in order to leverage additional federal and state money to preserve more family farms.
Gov. Tom Wolf increased funding for preserving farms by $5 million in his 2016-17 budget, and since January 2015, the Wolf Administration has invested $273,065,874 in preserving 116,527 acres on 1,416 farms across the state.
Pennsylvania’s Farmland Preservation Program recently secured a $7.85 million grant from the USDA’s Regional Conservation Partnership Program to support climate-smart conservation on preserved Pennsylvania farms, the Wolf administration said.
The dollars will further multiply Wolf Administration investments in conservation in the 2022-’23 budget, which devotes $220 million to the new Clean Streams Fund. The fund includes $154 million to establish a new Agricultural Conservation Assistance Program supporting farmers’ efforts to reduce water pollution and improve soil quality, and $22 million to increase funding for the existing Nutrient Management Fund, which supports technical assistance to farms to reduce run-off, the administration said.
Harsco Environmental signed a 5-year $28 million renewal contract with Compañía Siderúrgica Huachipato (CSH), Chile’s largest steelmaker.
Harsco Environmental, a division of Camp Hill-based Harsco Corp., said it will focus on maintaining operational excellence, integrating key performance indicators (KPIs), and reinforcing vital operational activities at CSH’s Chile site.
The scope of work will remain the same as the previous contract between Harsco Environmental and CSH, with melt shop cleaning, wrecking, scrap chute loading, scrap handling, oxy cutting, scrap shearing, metallic recovery, and slag sales services, Harsco Environmental said.
Harsco Environmental has serviced CSH, the only integrated steel company in Chile, at its Talcahuano mill for more than 40 years. The steel mill currently produces 850 thousand tons of long steel products annually.
“Harsco Environmental is pleased to continue to provide services toCSH, a key steel producer and one of our valued customers in Chile,” said Russ Mitchell, vice president and COO of Harsco Environmental. “This contract renewal demonstrates the strength of our long-standing relationship with CSH.”
Robert Whalen, president and CEO of HB Global, Harrisburg, said his company is has seen tremendous growth since becoming employee-owned 12 years ago.
His company is one of the many that make Pennsylvania second in the nation for employee-owned companies, with Harrisburg and York cities ranking in the top 25.
Certified Employee-Owned, an organization launched in 2017 to accelerate the creation of an employee-owned economy by providing certification for employee-owned businesses, said Harrisburg, which ranked third city in the nation, is home to 17 employee-owned companies, including HB Global, D&H Distributing, and Schaedler Yesco Distribution.
With a population of 58,000, Harrisburg has one employee-owned company for every 3,400 residents, the company said.
Kevin McPhillips, CEO of the Pennsylvania Center for Employee Ownership, said the picture is even brighter than that. Pennsylvania falls only behind California, which is 3.5 times larger, he said.
McPhillips, who heads the volunteer organization to raise awareness about the benefits of employee ownership, said these companies change lives, offering people a real future. “When employees own stock, it makes the company more profitable,” he said.
Thomas Dudley, Certified Employee-Owned’s CEO, said, “We set out to create a list of the top cities for employee ownership because we want to shine a light on the cities that have fostered an environment where employee ownership thrives. We want to help people see which cities have clusters of employee-owned companies so that we can understand what’s driving their success.”
While York ranked 24 on the list of cities in Certified Employee-Owned’s ranking, McPhillips said the picture is brighter than that. York County, he said, has some of the highest employee-owned companies per capita in the nation. “A lot of that is from the support of the York County Economic Alliance,” he said.
Studies show that employees who have ownership in their company are eight to 12% more productive and they earn two to three times more retirement wealth, McPhillips said.
Employee ownership changes the relationship between the company and employee, Dudley said. When every employee has an ownership stake, companies become rooted in place.
“In 2010, we had a single location in Harrisburg. Now we have 10 divisions along the east coast, the Carribean and Phoenix, Arizona,” HB Global’s Whalen said.
That computes to 20 times the revenue and 10 times the employees HB Global had when it changed to employee owned, Whalen said.
“The ownership culture contributes to efficiency,” he said because employees take value in ownership.
The company has grown through acquisitions and Whalen said all new employees are offered ownership on day one. “We recognize length of service with their former owners and offer shares accordingly,” he said.
“We believe employees should share in what we create,” Whalen said. “We believe over time they produce more, and we are a better company with better service because of it.”
According to Certified Employee-Owned, the wealth these companies build flows through the local economy, the jobs they create are more stable, and they become more involved in service.
Because of these connections, employee ownership is a win for workers, businesses, and communities, the company said. Common examples include Employee Stock Ownership Plans (ESOPs), Worker Cooperatives, Employee Ownership Trusts (EOTs), and broad-based equity compensation plans such as stock options, Dudley said.
McPhillips said an ESOP is a federal program where an owner can sell all or part of the company to employees. “The business takes a loan to pay the owner and then doesn’t pay taxes on the profits equal to the percentage of employees involved,” he said.
“If you aren’t paying taxes, it creates cash flow which translates to organic growth,” McPhillips said. “The more cash, the more investment so the share value goes up and all employees have more investment.”
While wages may not increase immediately, McPhillips said employee-owned workers average 30% more in pay as the business grows. More importantly, he said, they have a retirement they can count on.
A relatively new model in the U.S. that has been used in the United Kingdom for some time, he said, is the Employee Ownership Trust. “The owner comes to an agreement with employees on the price of the business and the shares are then held in a trust,” he said.
The trust protects the workers from a buyout and, at the same time, ensures profits are divided among the employees, he said.
McPhillips said no matter what the model, employee-ownership brings a rationale to the workplace. “You spend all day at your job and now you are able to have a future,” he said. “The wealth gap is killing us; it affects all of us. This is not the answer to it all, but we have a low hanging fruit that is available, and we need people to know about it.”
McPhillips added, “Pennsylvania is doing great. Companies are making the investment. The only reason there aren’t more employee-owned companies is people don’t know about it. That’s why we do what we do.”
Two southcentral Pennsylvania small businesses are now employee-owned after being sold to a Brooklyn, New York-based outfit that is on a mission to put $10 billion stock into the hands of workers.
Runkles, a York-based notary, tag and title company, and Commercial Refrigeration of Harrisburg have both been bought by Teamshares, which buys small businesses from retiring owners, grants 10% ownership of the business’s stock to employees after closing, and progressively increases employee ownership to 80% within 20 years, said Teamshares Co-founder Alex Eu.
“We do this because we believe employee ownership is a win-win, with better financial outcomes for the employee owners and the business,” he said.
Teamshares believes the result is a network of financially durable companies that never have to be sold again. Retiring owners, employee owners, companies, and local economies are all better off, the company said.
“The profits from the business are used for dividends and stock buybacks, which benefit employee owners in short-term and long-term ways respectively. When a dividend is paid, all owners receive a cash distribution based on their ownership percentage,” Eu explained. “When stock is bought back from Teamshares and retired, the employee owners’ percentage ownership stake and share value increases. Over time this results in the business becoming 80% employee-owned, while paying dividends to the employee owners, and creating new wealth for countless hard-working Americans.”
The three-year-old company has bought 62 small businesses across the country, five of which are in Pennsylvania. Eu said 1,600 new employee owners have resulted from the purchases.
Chase Austin, president of Runkles, which became employee-owned Feb. 1, said the company is more profitable now that its 25 employee owners own 14% of the company.
“Everyone is part of this,” he said. “There is more satisfaction with work which creates a stronger business.”
Austin, who was hired and trained by Teamshares, said he holds regular meetings with all the employee owners on financial training.
“We talk about the bigger picture, so everyone understands what we do and why. It leads to bigger profits for the company,” he said, adding that everyone is talking about efficiency which is an asset to everyone involved.
Growth this year is expected to be about 15%, he said. Growth to date has led to $700 in dividends to each employee owner since March.
“Now that we’re employee owned, there’s been a positive shift in our company culture and employee morale. Employees are more engaged in the success of our business. We can see firsthand how the business is doing financially.” said Jenny Bisker, operations manager, who has been with Runkles for more than 20 years.
Mike Williams, president of Commercial Refrigeration agrees that enabling a small business to become employee owned is a benefit to all.
Williams joined Commercial Refrigeration in June 2021 after the company was bought by Teamshares in January 2020. “We have 18 employee owners who all work for a common purpose of serving clients and growing the business,” Williams, who also was hired and trained by Teamshares, said.
Every two weeks, Williams holds meetings to talk about monthly finances and performance. “Everyone gets involved right down to hiring, planning for long-term and short-term goals and improvements.”
The employee owners currently hold 18% of the company. “We are a customer-based service company and grow by word of mouth,” he said. “We are seeing an increase in business at the time of year when business typically slows down.”
Williams said he attributes the growth to the fact that everyone is involved in the day-to-day operation and are accountable for their jobs. “Everyone is more engaged because they know how their job adds value to the company.”
In addition to the 8% stock ownership, the long-term benefit, the employee owners have received $1,286 in dividends so far this year.
“The culture has been great since he’s been president, and people have yet to have problems that cannot be fixed said Ray Intriago, service technician for Commercial Refrigeration for seven years. “He’s a very honest man; his goal is to get us to be the number one company, and I hold him to it.”
The transition to employee ownership under Teamshares comes at no cost to employees, Eu said. “This is a free benefit.”
A company spokesperson explained that the profits are split in two parts with 50% going to dividends and stock buybacks and 50% to grow the business.
“The idea behind the company is to create wealth among more Americans,” the spokesperson said.
The model allows for each company to become 80% employee owned. Teamshares, then has more money to buy new companies and do it all again, creating more employee owners, the spokesperson explained.
“We hold 20% permanently so this is a win-win for everyone,” the spokesperson said. “This is a new business model, and everyone wins,” she said. “The retiring owner gets money, employees keep their jobs, benefits and get stock, and we solve equality and equity issues for workers in small business.”
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