In the quest for deposits, one successful tactic at top performing banks is to target the right customers. While banking everyone in your community is egalitarian, it is also a poor use of resources. Some customers offer better returns because they use more banking services and have more deposit balances. Not to say you want to ignore some parts of your community, but why not focus more of your resources on those customers that are going to make your bank more profitable?
Banker To Banker
Over this past year, one of our borrowers, Burger King, taught us something about marketing. It rolled out a 15-second TV advertisement where a Burger King employee said, “OK Google, what is the Whopper burger?” If you had a Google Home unit within range, the phrase prompted the speaker to read the Wikipedia entry for the Whopper. The Wikipedia page was edited to describe the Whopper in the most mouthwatering words possible.
Many executives at community banks fulfill many functions and wear numerous hats. However, we are advocates of separating the Chief Lending Officer (CLO) and Chief Credit Officer (CCO) functions at community banks from both an operational and strategic perspective. We still see some community banks that either do not have an official CLO role or combine the CCO and CLO roles. We feel that CCOs cannot be effective fulfilling the true strategic objective of drive lo
We recently heard of a regulatory team that during a safety and soundness exam played “Management Bingo.” They took senior executive’s business cards, put them in a bowl and picked one. The CEO (if he was not picked) had to quickly tell or show an action plan for the succession of the executive that was chosen. If the CEO were chosen (and they put two cards in if the CEO was also President), then the Board would have to show a plan.
Everyone loves content. It is likely that you clicked on this article because you were curious about what content we have to offer. Content builds credibility, engagement, brand and amplifies your voice. Content also drives bank sales. Part of the challenge is that few banks train their relationship managers and marketing staff on how to create an effective portfolio of content. In this short article, we highlight a couple of important points on contact and then provide the recording of our recent training video on the topic.
If your ATMs are getting old and you are thinking about replacing them or if you have a branch transformation strategy that entails restructuring to a more cost-effective physical delivery platform, going to an interactive/video teller machine (ITMs) must be a consideration. This isn’t an easy decision, especially when there are few banks that can make a clear case for an ITM, but in this article, we take a look at the strategy and economics of what a successful execution looks like.
One of the most common structures in commercial lending is that ten-year commercial loan that is structured as a five-year fixed rate loan with a rate reset at the end of five years. There are two main problems with this loan structure, one having to do with credit and the other having to do with interest rate risk that makes this one of the worst performing loan structures in a rising rate environment for community banks. In this article, we delve into the data to compare two popular loan structures.
No matter what size bank you are or what your experience level is, there are simple things you can do to improve performance. Today, we will look at an example of how data, marketing, and deposit building can work together to build shareholder value and improve customer engagement at the same time. To pull this off, all it takes is about two hours of time, an Excel spreadsheet and some email marketing to create long-term franchise value. In this article, we explore a technique that can be used for almost any product to drive profitability.
Top performing banks use prepayment protection (PP) on commercial loans to deliver superior value and gain a competitive advantage against their competition. The connection between PP and bank value is not always apparent, but we can measure this relationship and quantify when it makes sense to remove or insist on PP. Some banks mistakenly avoid including PP in commercial loans as a competitive strategy. We feel that eliminating PP on commercial loans materially detracts from profitability, degrades credit quality and attracts the wrong commercial customers.
Net interest margin (NIM) is one of the most over-utilized metrics in banking. As we have pointed out in the past, if you include all the failed banks over the last ten years, the statistic is about 20% predictive of underperformance. Thus, if you manage your bank trying to get the largest NIM possible, you are likely to produce less profit, not more. Of course, all things being equal you want wider NIM loans than not, but all things are rarely equal.