high performance in the true local community bank
TRANSCRIPT
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High Performance in the “True Local Community Bank”
L.T. “Tom” HallPresident & CEOResurgent Performance, Inc.Alpharetta, GA
• Banks with assets less than $300 million
• Primarily focused on banking needs of local community – well integrated into their markets
• Often overlooked and underappreciated
• Excelling in customer service, but often under-serving when it comes to technology and meeting the changes of the new banking environment
WHAT IS A TRUE LOCAL COMMUNITY BANK (“TLC BANK”)?
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Today there are approximately 6,256 FDIC Insured banks.
Roughly two-thirds of these banks are True Local Community banks (< $300 million in assets).
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Even though often challenged from an operating perspective, approximately one fifth of the counties in America are served primarily, or solely, by TLC Banks.
Clearly, TLC Banks are an integral contributor to the American economy.
One in four banks have
failed or been acquired since
2008.
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* Institute for Local Self-Reliance
WHAT ABOUT THE NEXT SEVEN YEARS?
Is there a Future for the True Local
Community
Bank??
• Due to regulatory needs and economic factors, a significant amount of TLC banks have disappeared in recent years.
• TLC banks will continue to be acquired, hopefully
at a decreased rate, by larger banks. Some TLC banks will also be merging to stay competitive.
• However, TLC banks make up the largest segment, making it statistically and realistically unlikely that this important group will become extinct.
• Not to mention, they are a pivotal part of many communities. America needs TLC Banks.
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BUT...TLC Banks that want to THRIVE, not only survive, will have to create a culture of Continuous Change and
Constant Improvement.
Customer relevance and shareholder returns are at stake today.
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How have the TLC Banks been performing in the last few years?
How has their performance compared to other banks?
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RETURN ON EQUITY
$1 billion to $3 billion
< $300 million (TLC BANKS)
$300 million to $1 billion
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RETURN ON ASSETS
$1 billion to $3 billion
< $300 million (TLC BANKS)
$300 million to $1 billion
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EFFICIENCY RATIO
$1 billion to $3 billion
$300 million to $1 billion
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< $300 million (TLC BANKS)
NON INTEREST INCOME / AVERAGE ASSETS
$1 billion to $3 billion
$300 million to $1 billion
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< $300 million (TLC BANKS)
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NET INTERST MARGIN
$1 billion to $3 billion
$300 million to $1 billion
< $300 million (TLC BANKS)
OTHER INTERSTING TRENDS IN TLC BANKS, COMMUNITY BANKS & BIG BANKS….
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Banks less than $10 billion, greater than $1 billion
Banks less than $1 billion
Banks greater than $10 Billion (excluding five largest banks)
Top 5 Largest Banks
*FDIC Statistics on Depository Institutions
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Banks less than $10 billion, greater than $1 billion
Banks less than $1 billion
Banks greater than $10 Billion (excluding five largest banks)
Top 5 Largest Banks
*FDIC Statistics on Depository Institutions
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*FDIC Statistics on Depository Institutions
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*FDIC Statistics on Depository Institutions
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*FDIC Statistics on Depository Institutions
“Community Banks”
= < 10 Billion
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TLC and Community Bankers will have to address the fact that…
The five largest banks’ share of U.S. commercial banking assets has more than doubled in the last twenty years.
PRESCRIPTON
EMBRACE CHANGE, BECAUSE IT IS THE ONLY OPTION
• With the industry changing as rapidly as it is, only those banks who adapt to a culture of CONTINUOUS IMPROVEMENT will prosper.
• Leaders must lead change and ensure their staff knows their improvement ideas are crucial to improving processes, policies, procedures, and products – most importantly: Customer Service.
• Those who fail to embrace the banking revolution / reinvention / consolidation, and change accordingly, will ultimately fail to exist.
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PRESCRIPTON22
AIM HIGH AND SHOOT FOR ACCOUNTABILITY
• Seek High Performance in every aspect and area of your bank. You may need to define “Your High Performance.”
• Setting incremental goals is surely the most effective
way to attain truly great performance. Always measure and verify.
• Even if you are not looking to be acquired, High Performance prepares you to weather the storms ahead.
• Download High Performance briefings off RPI website to track performance and set goals.
PRESCRIPTON
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HAVE A STRATEGY, BUT CHANGE THINKING TOO
• Stay Independent, Be Acquired, or Position for the Future?
• Provide the best current, and long term, returns with constantly improving High Performance – EXPECT MORE.
• Hire creative product and process team members that have a different vision for your offerings and service.
• Having a dynamic business plan and market driven strategies will enable more agility and speed.
PRESCRIPTION24
REVIEW OFFERINGS FOR BETTER ALIGNMENT WITH MARKETS
• Better align bank’s product service offerings with customer demands.
• Branch Traffic is diminishing and will decline more. Time to react!
• Often when customers do enter a branch, they are looking for advice; Become the TRUSTED ADVISOR – Business and Personal.
• They are looking for advice on saving for retirement, investment options, life insurance, alternative loan products etc.
• Advice-related community classes, personal financial planning, and targeted marketing will enable service differentiation.
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UPDATE TECHNOLOGY FOR GREATER PAYBACK
• Customers (not just Millennials) demand online banking, engaging banking apps, money transfer, remote / mobile capture, etc.
• To stay in the game, banks must make technology a priority. And, “big bank” technology is now much more affordable for all.
• First step: Invest in an easy-to-use, appealing website and app, as many bank websites are still outdated and difficult to navigate.
• Update technology relative to your customer specific needs.
• Use technology to market and communicate, which includes embracing social media.
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Always provide AWESOME Service like a True Local Community Bank… but THINK like a Big Bank and Reimagine, Reinvent, Reinvigorate, and Reengineer.
Final Thoughts…
