Banker To Banker

Hey - Land of the Free and Home of the Brave – Happy Birthday! Your present is in the mail. Sorry it is running late, but you are not easy to buy for and work has been so hectic. Have a great 238th and you don't look a day past the time you tried to prohibit alcohol (you were so young and naïve back then). Send us a selfie when you can. We love you! 

 

Bank Marketing

Last week we brought up the fact that it takes five to 20 calls on a prospect to get a relationship established with a commercial account, yet most bank calling officers give up after three. In addition to perseverance, it helps to improve your prospecting metrics. Yesterday, we discussed the math between how many mass emails you need to send out to equal one customized email to a loan or deposit customer. Today, we give you some best practice tips on how you can make your emails get opened, get read and get acted upon.

 

Bank Email Prospecting

We like to have every business development officer spending at least 1.5 hours per day prospecting - sometimes making cold calls, sometimes warm calls and oftentimes emails. The physical calling we will discuss in a future segment, but when it comes to emails you have two choices, send mass emails or send personalized emails. Both work, it is just a question of percentages.

Minority Business Lending

Readers of this blog know we often teach what we learn at our bank or at other banks throughout the U.S. However, this time we need more help. Specifically, for those banks that are trying to serve under banked or minority-owned commercial customer there is an inherit set of economics that are difficult to overcome. Very few banks in history have succeeded in this area and those who have did so prior to the 90’s. Given compliance costs and transactional friction, it is almost impossible to turn a profit.

When Your Loan Will Go Bad

 If a loan is going to go bad when will it go bad? Understanding the answer to this question will not only make you a better banker, but will keep your bank out of trouble in the next five years. To answer this question, we downloaded a large time series of data from Trepp and Associates for all commercial real estate loans originated between 2001 and 2007. These loans were fixed and floating and had maturities from three years to ten years. What we found will enlighten you.

 

Bank Mortgage Business Economics

It is hard to find a better time not to be in mortgages. If you are a bank, you have some advantages given a lower cost of funds and the ability to cross-sell. However, if you are an independent lender, current signals mean you need to further take capacity out of your system to reduce costs. No matter what your organization, current mortgage economics are eye-opening. Recent data released by the Mortgage Bankers Association (MBA) showed that the average independent lender spent 8 cents for every $100 of principal originated - the worst performance quarter since 2008.

Loan Underwriting

If you want to win more loan business here is a tactic that experienced bankers know that many loan officers don’t. This should be part of every loan officers training (we work it in) and is handy to have in your back pocket for those rate-focused borrowers.

 

D&O Policy Coverage For Banks

The risk of being an officer or a director at a bank is huge compared to other industries. How well does your D&O (director and officer insurance) protect you against the FDIC? If there ever was a time to perform a risk check the time would be now, as case law and legal actions are now rich in current precedence. While insurance policies have improved, not all of them have and many banks are still exposed.

Ditch the Peer Group Analysis

It is likely every quarter you look at a set of peer group metrics and compare your bank. “Bank ABC produced a 16% ROE. How are they doing it,” you ask. Your CFO responds that they are doing it by booking more C&I loans. You then commit the organization to booking more C&I loans. Do you see what happened there? Your strategy is to copy a competitor. It is done thousands of times per day by banks, as we tend to mimic deposit/loan pricing, branches, marketing and positioning.

 

Branch Design

Surpassing Commerce Bank (NJ) almost a decade ago, Umpqua is now recognized as a leader in providing one of the best branch banking experiences in the world. Customers and employees delight in delivering a superior financially-oriented experience that is unsurpassed by most retail outlets let alone banks. In fact, bankers come from all over (we recently met one from Russia that last time we stopped into a branch) just to see the experience firsthand.

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