Lots of banks try to create a customer experience that is unique. While many succeed, more fail.
Banker To Banker
A look at 134 commercial real estate loans that were just sold last month with recent appraisals reveals some interesting data points for banks. The sale price was higher by about 10% than the appraised value. In looking at the details, appraisers placed a heavier weight on current capitalization rates versus investors that tend to look more forward. This begs the question – how accurate are commercial real estate appraisals and should banks be basing loan amounts on them?
In banking, it takes six to twelve “touches” to a potential customer before you can convert them to a full blown customer. One of the best ways we have found of segmenting and qualifying a customer is to hold a webinar. The webinar is an efficient way to start discussing a topic with a wide number of customers that are just entering the sales funnel. While most webinars from community banks are product related, we have found success, and encourage other community banks, to hold webinars on topics where the bank can become a local thought leader.
As loan growth picks up at banks, we see more attention turning to gathering low cost, high duration deposits. One of the best ways to do this is through grabbing the operating account at businesses. One of the best ways to get the operating account is to offer an online, low cost set of payroll services. This is why the offering of online payroll services is picking up for community banks.
In this age of enterprise risk management, a new product or process risk assessment is mandatory. A good risk assessment looks at any new effort from a variety of angles and tries to quantify the unmitigated risk. While a risk assessment is an important step in protecting current operations, it is also the place to understand the opportunity cost of not offering the product and the potential revenue that the new effort or procedure will bring to the Bank.
Last week we had a healthy internal debate over the value of municipal customers. When it comes to profitability, municipal customers are either very profitable or not very profitable – there is really not much in the middle. In other words, municipal profitability does not follow a normal distribution and as such, you have to choose your municipal customers wisely.
Well, it finally happened - On the verge of being a $4 billion asset-sized bank when yesterday we got the memo that everyone in the bank is now required to use a standard email signature. While some employees might look at this as a corporate intrusion into their lives because they can no longer have the witty quote at the bottom, it is the right thing to do. Corporate email signatures are so easy to do well, yet they are often done poorly.
Your floating rate loan portfolio may be ready to hurt you, and your bank might not be aware. Unlike fixed rate loans, floating rate loans tend not to have prepayment provisions. This part is well understood. What is far less understood is the fact that ANY material rate movement ends up hurting performance. While we have written about how interest rate risk and credit are interrelated, today we focus how rate movement causes unaware community banks to be adversely selected, thereby hurting performance.
Our 2014 Bank Management Conference is coming up on July 10 – 13, 2014, in Amelia Island, Florida and we will have detailed information coming soon. We can tell you that you don’t want to miss it for 5 very important reasons:
5. Due diligence – You get to meet our whole team in person and see what we are about. This is just good risk management – forget the fact that it just happens to be on the beach at one of the best hotel’s in the world.
To amend an old saying, if you give a man a fish he will have food for a meal. If you teach a man to fish he will eat for a lifetime. However, if you convince the world that they need more Omega 3s in their diet, you and that man catching all the fish can be eating steak at Ruth Chris for the rest of your lives – this is the power of marketing.