The Powerful Force Driving Bank Consolidation


margins-8-16-19.pngA decades-old trend that has helped drive consolidation in the banking industry can be summarized in a single chart.

In 1995, the industry’s net interest margin, or NIM, was 4.25%, according to the Federal Reserve Bank of St. Louis. (NIM reflects the difference between a bank’s cost of funds and what it earns on its assets, primarily loans.) Twenty years later, the margin dropped to a historic low of 2.98%, before gradually recovering to 3.30% last year.

NIM-chart.png

The vast majority of banks in this county are spread lenders, making most of their money off the difference between what they pay for deposits and what they charge for loans. When this spread narrows, as it has since the mid-1990s, it pinches their profitability.

The decision by the Federal Reserve’s Federal Open Market Committee to reduce the target range for the federal funds rate by 25 basis points in August will likely exacerbate this by reducing the rates that banks can charge on loans.

“For most banks, net interest income [accounts for] the majority of their revenue,” says Allen Tischler, senior vice president at Moody’s Investor Service. “A reduction in [it] obviously undermines their ability to generate incremental earnings.”

There have been two recessions since the mid-1990s: a brief one in 2001 and the Great Recession in 2007 to 2009. The Federal Reserve cut interest rates in both instances. (Over time, lower rates depress margins, although banks may initially benefit if their deposit costs drop faster that their loan pricing.)

Inflation has also remained low since the mid-1990s — particularly since 2012, when it never rose above 2.4%. This is why the Fed has been able to keep rates so low.

Other factors contributing to the sustained decline in NIMs include intermittent periods of intense competition and rate cutting between banks, as well as the emergence of fintech lenders. Changes over time in a bank’s the mix of loans and securities, and among different loan categories, can impact NIMs, too.

The Dodd-Frank Act has exacerbated the downward trend in NIMs by requiring large banks to carry a higher share of low-yielding liquid assets on their balance sheets, which depresses their margins. This is why large banks have contributed disproportionally to the industry’s declining average margin – though, these institutions can more easily offset the compression because upwards of half their net revenue comes from fees.

Community banks haven’t experienced as much compression because they allocate a larger portion of their balance sheets to loans and do most of their lending in less-competitive markets. But smaller institutions are also less equipped to combat the compression, since fees make up only 11% of the net operating revenue at banks with less than $1 billion in assets, according to the Office of the Comptroller of the Currency.

The industry’s profitability has nevertheless held up, in part, because of improvements to operating efficiency, particularly at large banks. The corporate tax cut that went into effect in 2018 plays into this as well.

“If you recall how banking was done in 1995 versus today … there’s just [greater] efficiency across the board, when you think about what computer technology in particular has done in all service industries, not just banking,” says Norm Williams, deputy comptroller for economic and policy analysis at the OCC.

The Fed’s latest rate cut, combined with concerns about additional cuts if the escalating trade war with China weakens the U.S. economy, raises the specter that the industry’s margin could nosedive yet again.

Tischler at Moody’s believes that sustained margin pressure has been a factor in the industry’s consolidation since the mid-1990s. “That downward trend does undermine its profitability, and is part of the reason why the industry has consolidated as much as it has,” he says.

If the industry’s margin takes another plunge, it could drive further consolidation. “The industry has been consolidating for decades … and there’s no reason why that won’t continue,” says Tischler. “This just adds to the pressure.”

There were 11,971 U.S. banks and thrifts in 1995. Today there are 5,362. Given the direction of NIMs, it seems like we may still have too many.

A Common Trait Shared by Elite Bankers


investment-8-2-19.pngIf you talk to enough executives at top-performing banks, one thing you may notice is that not all of them see themselves as bankers. Many of them identify instead as investors who run banks.

It’s a subtle nuance. But it’s an important one that may help explain the extraordinary success of their institutions.

This came up in a conversation I had last week with the president and chief operating officer of a $2.6 billion asset bank based in New England. (I’d share the bank’s name, but they prefer to keep a low profile.)

His bank is among the most profitable in the country and is a regular fixture atop industry rankings, including our latest Bank Performance Scorecard.

Its profitability and earnings growth are consistently at the top of its peer group each year. More importantly, its total shareholder return (dividends plus share price appreciation) ranks in the top 3% of all publicly traded banks since the current leadership team gained control in 1993.

The distinction between investors and bankers seems to lay in how they prioritize operations and capital allocation.

For many bankers, capital allocation plays a supporting role to operations. It’s a pressure release valve that purges a bank’s balance sheet of the excess capital generated by operations. As capital builds up on the balance sheet, it impairs return on equity, which can foster the illusion that a bank isn’t earning its cost of capital.

To investors, the relationship between operating a bank and allocating its capital is inverted: The operations are the source of capital, while the efficient allocation of that capital is the ultimate objective.

Bankers who identify as investors also tend to be agnostic about banking. If a different industry offered better returns on their capital, they’d go elsewhere. They’ve gravitated to banking only because it’s a peculiarly profitable endeavor. In no other industry are businesses leveraged by a factor of 10 to 1 and financed with government-insured funds.

There are plenty of other bankers that fall into this categorization. The recently retired chairman of Citigroup, Michael O’Neill, is one of them. He said this when I interviewed him recently for a profile to be published in the upcoming issue of Bank Director magazine.

O’Neill’s time as chairman and CEO of Bank of Hawaii bears this out. A major objective of his, after refocusing its geographic footprint, was reducing the bank’s outstanding share count.

Bank of Hawaii had 80 million shares outstanding when O’Neill became CEO in 2000. When he left 4 years later, that had declined by 38% to only 55 million outstanding shares. This helped the bank’s stock price more than triple over the same stretch.

Another example is the Turner family, which has run Great Southern Bancorp for almost half a century. Since going public in 1991, Great Southern has repurchased nearly 40% of its original outstanding share count. A $2 million investment during the initial public offering would have been worth $140 million last year.

The Turners never said this when I talked with them last year, but it seems safe to infer that they view banking in a similar way. They’re not trying to build a banking empire for the sake of running a big bank. Instead, they’re focused on creating superior long-term value.

This philosophical approach coupled with meaningful skin in the game insulates a bank’s executives from external pressures to chase short-term growth and profitability at the expense of long-term solvency and performance.

“Having a big investment in the company … gives you credibility with institutional investors,” Great Southern CEO Joe Turner told me last year. “When we tell them we’re thinking long term, they believe us. We never meet with an investor that our family doesn’t own at least twice as much stock in the bank as they do.”

M&T Bank Corp. offers yet another textbook example of this. Of the largest 100 banks operating in 1983, when its current leadership team took over, only 23 remain today. Among those, M&T ranks first when it comes to stock price growth

I once asked its chairman and CEO René Jones what has enabled the bank to create so much value. One of the main reasons, he told me, was that they could gather 60% of the voting interests in the bank around the coffee table in his predecessor’s office.

And the bank in New England that I mentioned at the top of this article is the same way. The family that runs it, along with its directors, collectively hold 40% of the bank’s stock.

The moral of the story is that it’s tempting to think that capital allocation should play second fiddle to a bank’s operations. But many of the country’s best bankers see things the other way around.

Getting a Return on Relationship Profitability


profitability-7-8-19.pngHow profitable are your bank’s commercial relationships?

That may seem like a strange question, given that banks are in the relationship business. But relationship profitability is a complex issue that many banks struggle to master. A bank’s ability to accurately measure the profitability of its relationships may determine whether it’s a market leader or a stagnant institution just trying to survive. In my experience, the market leaders use the right profitability metrics, measure it at the right time and distribute that information to the right people.

Should Your Bank Use ROE or ROA? Yes.
Many banks use return on assets, or ROA, to measure their portfolio’s overall profitability. It’s a great way to compare a bank’s performance relative to others, but it can disguise credit issues hidden within the portfolio. To address that concern, the best-performing banks combine an ROA review with a more precise discussion on return on equity, or ROE. While ROA gives executives a view from above, ROE helps banks understand the value, and risk, associated with each deal.

ROA and ROE both begin with the same numerator: net income. But the denominator for ROA is the average balance; ROE considers the equity, or capital that is employed by the loan.

If your bank applies an average equity position to every booked loan, then this approach may not be for you. But banks that strive to apply a true risk-based approach that allocates more capital for riskier deals and less capital for stronger credits should consider how they could use this approach to help them calculate relationship profitability.

Take a $500,000 interest-only loan that will generate $5,000 of net income. The ROA on this deal will be 1 percent [$5,000 of net income divided by the $500,000 average balance]. The interest-only repayment helps simplify the outstanding balance discussion and replicates the same principles in amortizing deals.

You can assume there is a personal guarantee that can be added. It’s not enough to change the risk rating of the deal, but that additional coverage is always desirable. The addition of the guarantee does not reduce the outstanding balance, so the ROA calculation remains unchanged. The math says there is no value that comes from adding the additional protection.

That changes when a bank uses ROE.

Let’s say a bank initially allocated $50,000 of capital to support this deal, generating a 10 percent ROE [$5,000 of net income divided by the $50,000 capital].

The new guarantee changes the potential loss given default. A $1,000 reduction in the capital required to support this deal, because of the guarantee, increases ROE 20 basis points, to 10.20 percent [$5,000 of net income divided by the $49,000 of capital]. The additional guarantee reduced risk and improved returns on equity.

The ROA calculation is unchanged by a reduction in risk; ROE paints a more accurate picture of the deal’s profitability.

The Case for Strategic Value
Assume your bank won that deal and three years have now passed. When calculating that relationship’s profitability, knowing what you’ve earned to-date has a purpose; however, your competitors care only about what that deal looks like today and if they can win away that customer and all those future payments.

That’s why the best-performing banks consider what’s in front of them to lose, not what has been earned up to this point. This is called the relationship’s “strategic value.” It’s the value your competition understands.

When assessing a relationship’s strategic value, banks may identify vulnerable deals that they preemptively reprice on terms that are more favorable to the customer. That sounds heretical, but if your bank’s not making that offer, rest assured your competitors will.

The Right Information, to the Right People, at the Right Time
Once your bank has decided how it will measure profitability, you then need to consider who should get that information—and when. Banks often have good discussions about pricing tactics during exception request reviews, but by then the terms of the deal are usually set. It can be difficult to go back to ask for more.

The best-positioned banks use technology systems that can provide easily digestible profitability data to their relationship managers in a timely fashion. Relationship managers receive these insights as they negotiate the terms of the deal, not after they’ve asked for an exception.

Arming relationship managers with a clear understanding of both the loan and relationship profitability allows them to better price, and win, a deal that provides genuine value for the bank.

Then you can start answering other questions, like “What’s the secret to your bank’s success?”

The Secret to a Low Efficiency Ratio


efficiency-5-31-19.pngOne of the most important metrics in banking is the efficiency ratio, which is generally viewed as a measurement of how carefully a bank spends money. Following this definition to its logical conclusion, the more parsimonious the bank, the lower its efficiency ratio should be.

But this common understanding fails to capture the true nature of what the efficiency ratio actually measures. It is in reality a fraction that expresses the interrelationship between the two most dynamic forces within any business organization: the growth of revenue and expenses.

Looked at this way, the efficiency ratio is actually a measurement of effective spending—how much revenue does every dollar of spending produce. And embedded within the efficiency ratio is a simple but extraordinarily important concept that is the key to high profitability—positive operating leverage.

But first, let’s look at how the efficiency ratio works. It’s an easy calculation. The numerator, which is the top half of the fraction, is expenses. And the denominator, which sits below it, is revenue. A bank that reports $50 of expenses and $100 of revenue in a quarter has an efficiency ratio of 50 percent, which is the benchmark for most banks (although most fall short).

However, not all 50 percent efficiency ratios are created equal.

Consider two examples. Bank Cheapskate reports $40 of expenses and $100 of revenue in its most recent quarter, for an efficiency ratio of 40 percent. Coming in 10 percentage points under the benchmark rate of 50 percent, Bank Cheapskate performs admirably.

Bank Topline reports $50 in expenses and $125 in revenue in its most recent quarter. This performance also results in an efficiency ratio of 40 percent, equivalent to Bank Cheapskate’s ratio. Again, an impressive performance.

While the two ratios are the same, it is unlikely that most institutional investors will value them equally. The important distinction is how they got there.

The argument in favor of Bank Cheapskate’s approach is simple and compelling. Being a low-cost producer is a tremendous competitive advantage in an industry like banking, which has seen a long-term decline in its net interest margin. It allows to a bank to keep deposits costs low in a tight funding market, or back away from an underpriced and poorly structured credit in a competitive loan market. It gives the bank’s management team optionality.

The case for Bank Topline’s approach is probably more appealing. Investors appreciate the efficiency of a low-cost producer, but I think they would place greater value on the business development skills of a growth bank. In my experience, most investors prefer a growth story over an expense story. Bank Topline spends more money than Bank Cheapskate, but it delivers more of what investors value most—revenue growth.

To be clear, the choice between revenue and expenses isn’t binary—this is where positive operating leverage comes in.

Positive operating leverage occurs when revenue growth exceeds expense growth. Costs increase, but revenue increases at a faster rate. This is the secret to profitability in banking, and the best management teams practice it.

A real-life example is Phoenix-based Western Alliance Bancorp. The bank’s operating efficiency ratio in 2018 was an exemplary 41.9 percent. The management team there places great importance on efficiency, although the bank’s expenses did rise last year. But this increase was more than offset by strong revenue growth, which exceeded expense growth by approximately 250 percent. This is a good example of positive operating leverage and it’s the real story behind the bank’s low efficiency ratio.

The greater the operating leverage, the lower the efficiency ratio because the ratio is relational. It is not solely a cost-driven metric. At Western Alliance and other banks that focus on creating positive operating leverage, it’s not just how much you spend—it’s how many dollars of revenue each dollar of expense creates.

To understand the real significance of a bank’s efficiency ratio, you have to look at the story behind the numbers.

Are These the Best of Times for Bank Directors?


strategy-5-13-19.pngFor someone who has covered the banking industry as long as I have (hint: I wrote my first banking story in 1986), these are among the best days to be a banker—or director of a bank—that I can remember. Profitability is high, as is capitalization, and the industry is gliding on the updraft of a strong economy and lower taxes.

The current health of the industry was apparent from what we did not talk about at Bank Director’s Bank Board Training Forum, which took place on May 9-10 in Nashville. There were no sessions about deteriorating loan quality, or the best way to structure a loan workout program, or the need to raise capital. Indeed, our managing editor, Kiah Lau Haslett, wrote a story that published Friday on this website warning against the perils of complacency.

When your biggest challenge is guarding against complacency, you’ve definitely found yourself in tall cotton.

It’s worth drilling down a little bit into the industry’s strong fundamentals. In addition to the continuation of a strong U.S. economy, which will be a record expansion if it continues much longer, banks have also benefited—more than any other industry—from last year’s steep cut in corporate tax rates, as well as a modest rollback of regulations in the Dodd-Frank Act.

Joseph Fenech, managing principal and head of research at the investment banking firm Hovde Group, explained during a presentation that thanks to the tax cut, both return on average assets and return on average tangible common equity jumped to levels last seen prior to the Great Recession. And not only has deregulation had a measurably positive impact on the industry’s profitability, according to Fenech, it has also brought new investors into the sector.

“It’s really driving change in how investors think about banks,” he says.

The only bad news Fenech offered was his assessment that bank M&A pricing has peaked. From 2008 to 2016, stocks of the most active acquirers traded at a premium to book value while many distressed targets traded at a discount, which translated to favorable “deal math” for buyers, according to Fenech. Deal pricing began to edge up from 2016 to 2018 as more acquirers came into the market. Many transactions had to be priced at a premium to book value, which began to make the deal math less favorable for the buyer.

Generally, the higher the deal premium, the longer it takes for it to be accretive. Since the beginning of this year, says Fenech, many investors have become wary of deals with high premiums unless they are clearly accretive to earnings in a reasonable period of time. Undisciplined acquirers that overpay for deals will see their stocks shunned by many investors.

This new dynamic in bank M&A also impacts sellers, who now may receive a lower premium for their franchise.

“I think the peak pricing in bank M&A was last year,” says Fenech.

An important theme during the entire conference was the increased attention that board diversity is getting throughout the industry. Bank Director President Mika Moser moderated a general session panel discussion on board diversity, but the topic popped up in various breakout sessions as well. This is not always a comfortable discussion for bank boards since—let’s face it—most bank boards are comprised overwhelming of older white males.

For many proponents, the push for greater board diversity is not simply to accomplish a progressive social policy. Diverse groups usually offer a diversity of thought—and that makes good business sense. Academic research shows that diverse groups or teams make better business decisions than more homogenious groups, where the members are more inclined to affirm each other’s biases and perspectives than challenge them. Larry Fink, the chairman and CEO of Blackrock—the world’s largest asset manager—believes that diverse boards are less likely to succumb to groupthink or miss emerging threats to a company’s business model, and are better able to identify opportunities that promote long-term growth.

The banking industry still has a lot of work to do in terms of embracing diversity in the boardroom and among the senior management team, but I get the sense that directors are more sensitive—and more open to making substantive changes—than just a few years ago.

The Bank Board Training Forum is, at its core, a corporate governance conference. While we cover a variety of issues, it’s always through the perspective of the outside director. James McAlpin, Jr., a partner and leader of the financial services client services group at the law firm Bryan Cave, gave an insightful presentation on corporate governance. But sometimes the simplest truth can be the most galvanizing.

“The responsibilities of directors can be boiled down to one simple goal—the creation of sustainable long-term value for shareholders,” he says. There are many decisions that bank boards must make over the course of a year, but all of them must be made through that prism.

Drafting a Data Strategy


data-4-29-19.pngBanks need to be aware of trends in data analytics that are driving decision-making and customer experience so they can draft an effective data plan. Doing so will allow them to compete with the biggest banks and non-bank technology competitors that are already using internal customer data to predict behavior and prescribe actions to grow those relationships. These approaches leverage concepts like machine learning and artificial intelligence — buzzwords that may seem intimidating but are processes and approaches that can leverage existing information to grow and deepen customer relationship and profitability.


analytics-4-29-19-tb.png10 Data and Analytics Trends Banks Should Consider
Current trends in analytics include focusing on the customer’s experience, using artificial intelligence and machine learning in analysis, and storing and organizing information in ways that reduce risk. Banks also need to know about threats like cybersecurity, long-term developments like leveraging blockchain, and how to build a governance program around the process. Knowing the trends can help companies make educated choices when implementing a data strategy.

datat-trends-4-29-19-tb.pngHow Banks Can Make Use of Data-Driven Customer Insight
Banks can use machine learning and artificial intelligence to gain insights into customer behavior and inform their decisions. These data-driven approaches can efficiently analyze the likeliness of future events, as well as suggest actions that would increase or decrease that likeliness. Many institutions recognize the need for new technical capabilities to improve their customer insight, but a significant percentage struggle to embrace or prioritize the technology among other priorities at their bank. These institutions have an opportunity to establish a data strategy, map out their internal information and establish appropriate governance that surrounds the process.

Retail Checking Realities



Forty percent of retail checking relationships are unprofitable, so crafting retail checking accounts that deepen customer relationships, drive deposit growth and enhance the bottom line is a challenge faced by most financial institutions. How can bank leaders tackle this issue? In this video, StrategyCorps’ Mike Branton shares two common mistakes banks make regarding their retail checking products. He also shares his thoughts on enhancing the appeal of checking products and explains technology’s role as a deposit driver.

  • Driving Deposit Growth
  • Why Big Banks are Winning Customers
  • Making Checking More Profitable

 

Preserving Franchise Value



The factors that help banks maximize value—including growth and profitability—are relatively timeless, though the importance of each value driver tend to change with the operating environment. But the way a bank pursues a sale impacts its valuation. In this video, Christopher Olsen of Olsen Palmer outlines the three ways a bank can pursue a sale. He also explains why discretion is key to preserving franchise value.

  • Factors Driving Today’s Valuations
  • The “Goldilocks” Process for Selling Banks
  • The Importance of Discretion

 

Exclusive: How U.S. Bancorp Views Expansion


bancorp-3-14-19.pngGreat leaders are eager to learn from others, even their competitors. That’s why Bank Director is making available—exclusively to our members—the unabridged transcripts of the in-depth conversations our writers have with the executives of top-performing banks.

Few banks fit this description as well as U.S. Bancorp, the fifth-largest retail bank in the United States. It has generated one of the most consistently superior performances in the banking industry over the past decade. It’s the most profitable and efficient bank among superregional and national banks. It’s the highest-rated bank by Moody’s. It’s also been named one of the world’s most ethical companies for five years in a row by the Ethisphere Institute. And it has emerged as a leader of the digital banking revolution.

Bank Director’s executive editor, John J. Maxfield, interviewed U.S. Bancorp Chairman and CEO Andy Cecere for the first quarter 2019 issue of Bank Director magazine. (You can read that story, “Growth Through Digital Banking, Not M&A,” by clicking here.)

In the interview, Cecere sheds light on U.S. Bancorp’s:

  • Strategy for expanding into new markets
  • Progress on the digital banking front
  • Perspective on the changes underway in banking
  • Experience through the financial crisis

The interview has been edited for brevity, clarity and flow.

download.png Download transcript for the full exclusive interview

It’s ‘Game On’ in the Battle for Bank Deposits


deposits-2-13-19.pngAs both interest rates and loan demand rise, the battle for deposits among community financial institutions is only getting tougher.

Following the financial crisis, consumers generally parked their money in banks across the U.S. Despite the little or no interest these institutions offered, deposits grew steadily—to historic levels, in fact.

After multiple interest rate hikes and a burgeoning economy, depositors now more often shop for higher yields. According to third quarter 2018 Federal Deposit Insurance Corp. data, noninterest-bearing deposits declined by $72.9 billion (2.3 percent), the largest quarterly dollar decline since the first quarter of 2013.

This shift is concerning for community banks because deposits help fund loans and serve as a key factor in determining overall profitability. As a result, community bank management teams must develop strong deposit strategies that ensure future growth and institutional stability.

Loan Funding and Deposits
Community institutions must seek more expensive funding—which shrinks profitability—or even decrease lending. The latter strategy is not what most banks want to do, especially since loan demand has generally been improving.

Fifty-five percent of bankers reported an increase in loan demand over the past 12 months, up two percentage points from the previous quarter, according to Promontory Interfinancial Network’s Bank Executive Business Survey, published in the third quarter of 2018. A recent survey conducted by JPMorgan Chase & Co. found about 91 percent of small and midsize companies expect to maintain or increase capital expenditures in 2019.

This scenario brings new attention and importance to loan-to-deposit ratio (LDR), a ratio of total outstanding loans to its total deposit balance. Traditionally, banks try to maintain an LDR around 80–90 percent, to maintain adequate liquidity.

Beating the Competition
Promontory’s study states that 90 percent of 389 bank CEOs, presidents and CFOs that were surveyed across all asset sizes and regions expect to see an increase in deposit competition over the next 12 months.

Growing deposits is especially important for regional and community banks that lack the branch networks, digital footprints and marketing budgets of the nation’s largest institutions, which have experienced above-average deposit growth.

Promontory also asked what strategies they are using to increase deposits. The majority said offering higher interest rates is the best strategy.

While many institutions hold off on interest rate increases as long as possible, it may be time to consider this strategy. But with so many banks also raising rates, other efforts to create differentiation in the marketplace is essential, including:

Target growth in specific deposit products, including commercial deposits, treasury management activities and retail time deposits.

  • Consider employing time deposit sales strategies, including training frontline staff to negotiate tailored CD rates and terms.

Employ client-focused approaches not dependent on rate, like enhanced customer service and establishing stronger relationships with depositors.

  • Capitalize on the bank’s data to personalize the consumer journey across all channels and touchpoints, including account onboarding. McKinsey estimates personalization can deliver 5 to 8 times the return on investment in marketing expenditures, and can lift sales by 10 percent or more. 
  • Emulate the service standards set by Amazon and Google, which personalize, predict and suggest a next purchase.
  • Provide tailored financial education based on individual goals and cross-sell based on current product penetration. 

Invest in a digital referral program. Your current customers are your best source for profitable checking account growth. Using digital word-of-mouth referral programs on phones, tablets, computers and social media is key to brand awareness and recommendations.

  • According to the EY’s Global Consumer Banking Survey, 71 percent of global consumers consult friends, families and colleagues first about banking products and relationships.

Improve marketing and advertising efforts

  • Banks can use automated marketing platforms, local search engine optimization (SEO), geo-targeting, social media, mobile technology, etc. 

Capitalize on reciprocal deposits, which are no longer considered brokered deposits thanks to the Economic Growth, Regulatory Relief, and Consumer Protection Act, signed into law in May 2018. In a nutshell, the new law can make it possible for qualifying banks to more readily tap stable, mostly local funds while reducing the risk for customers to deposit more than $250,000.

Invest in cost-effective digital and cloud-computing technology that delivers faster, more transparent and smoother access to services.

  • These technologies include digital lending for consumers and small businesses, online account opening and onboarding, user-friendly apps, mobile payments, biometrics, contactless ATMs, etc.

Today’s bank customers want to maximize return on their deposits and banking relationship. For community banks, collecting and keeping these deposits is a strategic objective that may not be achieved with a lone “silver bullet” tactic. Absent a merger/acquisition proposition, these institutions are wise to adopt a proactive, multi-pronged approach.