BankRetailandMarketingStrategybytheNumbersLead360Conference2017

JayW.CoakleyCoakleyStrategicSolutionsLLC

Outline• Reviewkeyperformancenumbersanddiscussretailandmarketingstrategiesforimprovement.

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RetailandMarketing

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Retail(Sales)

Marketing(Communication)

BuildProfitable

Relationships

thesaleofgoodstoultimateconsumers,usuallyinsmallquantities

price,place,promotion,product 3

Let’sstartwiththeFDICCallReport• ScheduleRI(IncomeStatement)5b.• ServiceChargesonDepositAccounts• RemembertoAnnualize

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FDICCallReport• ScheduleRCBalanceSheet• Line12TotalAssets• Line13Deposits

• A.Totalindomesticoffices• 1.Noninterest-bearing• 2.Interestbearing

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FDICCallReport• Marketing• ScheduleRI-EExplanations• 2.bAdvertisingandmarketingexpense

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Let’sDoSomeCalculating• SCDA/Assets• $312,000/$257,892,000=.0012%

• AcceptableRange:• .0025%to.0035%• Ifwecanimproveto.0030%wewillgain$464,000ofadditionalrevenue.• OD/NSFRevenuemakesup94%ofSCDAatatypicalbank.

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SampleBankServiceChargesonDepositAccounts2012- Q22017*

$-

$50,000.00

$100,000.00

$150,000.00

$200,000.00

$250,000.00

$300,000.00

$350,000.00

$400,000.00

$450,000.00

2012 2013 2014 2015 2016 Q22017(ann)

SCDAChart2012 2013 2014 2015 2016Q22017(ann)

$426,000.00 $413,000.00 $403,000.00 $368,000.00 $336,000.00 $312,000.00

*OverdraftandNSF=94%

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WhyOpt-inaCustomer?1. Since2000,consumersandbusinesseshave

substantiallychangedtheirpaymentchoices,withcheckpaymentsprimarilybeingreplacedwithcardpaymentsandelectronictransfersviatheautomatedclearinghouse(ACH)system.In2015,checkswrittenaccountedfor13.4percentofnoncashpaymentsand15.4percentoftheirvalue,comparedwith57.8percentofnoncashpaymentsand66.7percentoftheirvaluein2000.

2. In2015,householdswrote7.1checkspermonth,onaverage,36.9percentofthe19.3checkstheywrotepermonthin2000.Duringthesameperiod,totalnoncashpaymentsperhouseholdexpanded.In2015,householdsmade78.6noncashpaymentspermonth,onaverage,about94.7percentmorethanthe40.3noncashpaymentstheymadepermonthin2000.

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CurrentOD/NSFFinancialPerformance1. ThroughJune30,2017thebankhascollected$156kof

serviceschargesondepositaccounts.2. Ofthe$156k,ODandNSFfeesaccountedfor$146kofthe

charges(94%ofSCDA).3. Whatistheaverageannualnumberoftimesanaccount

overdrafts?A. $146Kdividedby$30(OD/NSFFee)=4,867occurrences.

(9,734/annualized.)B. 9,734occurrencesdividedbythenumberofcheckingaccounts

equalsanannualizedaverageofonly1.03occurrencesperaccount.

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BestPracticePerformance1. TherangeofOD/NSFoccurrencesshouldbebetween3.2x

and5.0xperaccount.2. Ifweuse3.2xasourgoal.

A. On9,476(retailandbusiness)accounts,thiswouldbe20,847additionaloccurrences.

B. @$30thiswouldyieldannually$625,416ofadditionalrevenue.

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CurrentOverdraftProgram1. DeMinimisLimit=$10(NoFeeifaccountisoverdrawnby

lessthan$10)2. Opt-inconsentisafeatureofcurrentprogram3. ProgramEligibility:

1. 30dayperiodingoodstanding($300indeposits)2. Nobankloandefault3. Positivebalanceatleastonceper30days4. Nocourtorderorlevy

4. Limit$5005. Limitedto5ODsPerDay6. TotalOverdraftsmustberepaidevery20days7. 4,964accountshaveODP(52%)

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Reg-EOpt-inPerformance1. Ofthenewretailcheckingaccountsopenedbetween

May1,2017andJuly31,2017NO(0) customersoptedintouseODPwithadebitcard.

2. Weexpect45%to60%ofthesecustomerstoopt-inattimeofnewaccountopening.

3. 85totalaccountshaveoptedintoRegE.(Only1%ofcheckingaccounts)

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WhyanOD“Courtesy”Program?

1. 12%ofthepopulationneedsa“short-term”loantomakeittopayday.

2. Overdraftprogramsprovidearealservicetothisgroup.

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ProgramChanges- Strategy

1. AnnualOD/NSFProgramLetter(CustomerandComplianceFocused)

2. ReconsiderandvoteNOtothe$10DeMinimis Amount.

3. IncreaseLevelto$800afterreviewofaccounts.

4. IncreaseDailyMaximumto6from5

5. Newaccountswillqualifyfor$100dayone.(Makingiteasiertogetopt-in)

6. Collectionprocessreview–centralized.

7. Training

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FundingLoans- Deposits• Non-InterestDeposits/TotalDeposits• $40,806/$226,807=18%• AcceptableRangeis25%to35%

• Valueofmovingto30%• $28Millionmovementadds$182,000ofadditionalRevenue

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DDAStrategy• FreetoFee• NoninterestValueCheckingAccountswithFee.

• IncreaseSCDAandNon-InterestFunding• Here’stheNumbers

• 4,500toValue@$3.95willproducemorethan$400,000ofadditionalincomeover5years

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RetailSalesandServicebytheNumbers• Whatshouldwetrack?• Tellertransactions• CheckingSales(bestbyWeek)• AdditionalSales(bestbyWeek)

• Yes,thecorrectwordissales!

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TellerTransactions

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2016 A B C D E Avg USAverageWeeklyAverageTellerTransactions 2,923 704 1,341 601 360MonthlyAverageTransactions 11,692 2,816 5,364 2,404 1,440 4,743 7,700AnnualAverageTransactions 151,996 36,608 69,732 31,252 18,720AnnualHoursOpen 2,736 2,256 2,736 2,592 2,592AverageTransactionsPerHour 55.55 16.23 25.49 12.06 7.22

ITMReview• NCRInteractiveTellerenablesbankstooffertheir

customersthebenefitsofbothself-servicevideobankingandthebranchexperienceinonesolution,closingtheintimacygap.NCRInteractiveTellercombinesvideobankingcollaborationandremotetransactionprocessingbankingtechnologyembeddedwithintheATMtogiveyourcustomerthechoiceofself-serviceorconnectingwitharemotetellerinahighlypersonalized,two-wayaudio/videointeraction.

• Bymigratingroutinetransactionsawayfromthetellercounter,NCRInteractiveTellerprovidesthecombinedbenefitsoflowerprocessingcosts,fastertransactionsandincreasedproductsalesandrevenuegrowth.Thisinnovativetechnologyisidealforbankslookingforacosteffectivewaytoexpandservicetoruralareas.

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CurrentDDASales• FromMay1,2017toJuly31,2017thebanksold307checkingaccounts.1. BasicInterest 14 5% Regularwithinterest2. Free 215 70% Free3. FreeRewards 37 12% Free4. SaverRewards 35 11% Free5. MoneyMarket 6 2% MMRegularwithinterest

1. AllAccountshaveoptionforFreepaperStatement.

93%Free

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AdditionalSalesonNewAccounts• OnCheckingSalesMay1,2017toJuly31,2017:• Opportunity Level AcceptableRange• DebitCardSales 88% Range:85%to96%• Opt-in 00% Range:48%to65%• EmailAddresses 81% Range:85%to96%• EStatement 26% Range:35%to50%• InternetBanking 52% Range:70+%

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MarketingBudget• Traditionallywesee1/10of1%ofassetsasthebenchmarkforamarketingbudget.

• Foroursamplebank$257,892,000*1/10of1%=$257,892budget.• Whyhigherorwhylower?

• Higher:Newmarket,competition• Lower:Maturemarket,lowcompetition

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Summary• Knowyournumbersandthestrategiestobuildabestpracticebank.• Inoursamplebankwehaveanopportunitytoincreaserevenueby:• SCDA: $464KOD/NSF• SCDA: $400KConvertFreeCheckingAccounts• NID: $182KBuildNIDDeposits• NIE: ReducetellerFTE

• Total:$1,000,000?

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Conclusion• Thenumberswillalwaysleadyou!• Asanaccountfriendofminealwayspointsout:• I’manaccountant,Idon’thaveasenseofhumor!

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ThankYou!

• JayW.Coakley• CoakleyStrategicSolutionsLLC• jc@coakleystrategicsolutions.com• 573-462-6260(phone/text)

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