There was a time when the average community bank customer was the same age as the adult general population. Over time, due to the urbanization of America, immigration and lack of targeted marketing, this has changed. Now, the average community bank customer is more than 5 years older than the general population and increasing in age at a faster rate. Rural banks and banks with non-Hispanic customers are aging even faster.
Tag: Bank Performance
Seeing that we are in the heart of bank strategic planning season one major difference between average and high performing banks are the use of “lead measures.” Most banks come out of their planning effort with a series of lagging metrics such as “Achieve 12% ROE,” or “Reduce efficiency below 65%.” These measures are good because they measure achievement of a goal but they are not optimal because they are not instructive in helping you achieve those goals.
Here is our quarterly report on banking industry trends and insights [link expired]. In a nutshell, banking improved by most measures as the average bank became more profitable. In a somewhat rare occurrence, lending got safer, yet loan pricing on new production improved. For the industry, the average return on equity (ROE) increased from 8.1% to 9.2%. Banks in the $5B to $10B asset range put in the largest improvement, followed by banks over $25B. Community banks held their own producing an 8.5% ROE, up from 8.2% last quarter.
Caesar Salad and rice are so common place and so simple that most people think nothing of them. However, for a culinary expert, Caesar Salad and rice is a simple test into the soul of a great chef. It is easy to make an average Caesar Salad, but it is extremely difficult to make an extraordinary Caesar Salad. The average chef can get lucky with a fantastic steak or sublime pasta, they can learn through a recipe how to make salmon, but not so with a Caesar Salad or perfectly cooked grain of rice.
Like a sublime sports performance, you can tell a banker that is in the zone. They hustle, are organized, are focused and they understand the business of banking. They are also authentic and work well alone, as part of a small strike team or as part of a large organization. They are adaptable, positive and designed to please both the customer and the shareholder. Everyone wants these bankers on their side. The problem is - there is just not enough of them.
We could use your help in spending five minutes to complete this quick survey (HERE) so that we can collect your opinion regarding the future of banking. In exchange, we will not only be eternally grateful, but you will be the first to receive the survey results as well as a presentation on the future forces of banking.
Banks stumble on how to create an enduring brand. It’s hard given that one checking account looks much like another. However, if they can brand water, bananas and vodka, we can certainly brand a bank. Just be glad your bank has a product that customers can see and touch, because Intel had a tough job branding its hardware that was never seen. Despite that, Intel was wildly success with its “Intel Inside” branding effort and serves as a case study of why you want to invest in a brand. The payoff to a branding effort is a clear distinction in a crowded market.
There is a common perception that community banks’ performance improves when short-term rates rise. The analysis of this thinking is especially germane now that Federal Reserve Chair Yellen has clearly signaled that the Fed is ready to make a move by year-end. Since we have debated with so many analysts and bankers over the years, we pulled the community bank data for the last 20 years and present balance sheet composition for the industry.
As Amazon celebrates its 20th anniversary today by inventing “Prime Day” and giving their customers deep discounts, we thought we would review how some banks handle anniversaries. It is highly probable that your bank offers an annual bonus to your employees so why not to your customers? Your customers, after all, are almost as important as your employees and are the lifeblood of your bank. Isn’t it worth thanking them for their loyalty and their service?