Community banks, while uniquely positioned to serve their customers, share many issues and challenges in common. The ability to bring an objective outside banking consultant to the table offers valuable insight and benefits that the bank may not have considered before. Community banks are uniquely positioned to serve their customers and often benefit from a fresh perspective and the best-practice experiences across the banking industry that a banking consultancy like Profit Resources Inc. brings to the table.

Thinking Outside the Box: Processes and Procedures

One of the positive attributes of community banks is that they can be great places to work. Many times, executive teams have been in place for decades, and they are highly engaged in the community. While they have led the bank to considerable growth, they can also become set in their ways. Processes and procedures the team implemented 15 years ago when the bank had $200 million in assets may not be as effective as the bank experiences considerable growth.

Recently, PRI was engaged by a $1 billion bank that had grown both organically and by a recent acquisition. The management team recognized that they could benefit from an outside perspective on comprehensive efficiency and profit initiatives from an experienced bank consulting firm.

PRI worked collaboratively with the bank team to redesign their product set, including deposit, loan, card and Treasury management. PRI conducted a vendor review, branch study and staffing analysis within specific functional areas and developed more than 250 detailed recommendations to generate more than $1.2 million in annual net interest income improvement, $300,000 in interest increase and $725,000 in expense savings. Process improvements helped expand capacity and reduce staffing expenses by more than $1 million annually.

“As much as the financial impact, the bank valued the discussion and recommendations on organizational structuring, making sure the right people were in the right places,” said Mikelle Brady, a partner at PRI. “They also benefitted from discussions on effective loan and overall growth strategies, including advancing a digital transformation while also shifting responsibilities of certain branch personnel.”

Considering the heavy day-to-day responsibilities of the executive team’s role, the development of these initiatives would have been difficult and time-consuming without the laser focus of the PRI consultants. The collaborative approach, which encouraged employee buy-in, helped ensure the recommendations were effective and fit the organization’s culture.

Leveraging Expertise in Payments

Hiring an experienced banking consultant also offers a bank increased expertise in payments, a cloudy and constantly evolving space that most community banks do not fully understand. Many community banks do not have a payments expert on staff devoted to putting the right pieces in place, managing vendors and monitoring performance, which makes the space a good fit for an experienced banking consultant.

PRI recently conducted a debit card performance analysis of a high-performing, $900 million bank. While the bank was receiving significant incentives from its debit card brand and it had competitive electronic funds transfer processing terms, PRI identified it did not have an optimal network for its debit card PIN processing transactions.

“Using the bank’s debit card data, PRI identified several PIN networks that would be more profitable and then conducted negotiations and further analysis to determine the optimal network,” said Mike Holt, a partner at PRI. “After modeling the comparison, PRI and the bank moved forward with a multi-year agreement with the better network.”

Expense savings and interchange improvement with the new PIN network are on track to produce an approximate average annual improvement of more than $325,000 during the multi-year agreement, even after the buyout of the contract with the old network.

In addition to the financial improvement, the bank tapped into PRI’s expertise during discussions on card limits, fraud and new debit card PIN requirements to help it manage a high-performing card program going forward.

Leveraging the expertise of an experienced banking consultant allows a community bank to dig into previously unseen places and mine the hidden profits there. Having a laser-focused partner like PRI, whose only aim is to improve the bank’s profitability, allows the improvement areas to be uncovered more quickly and thoroughly.

Profit Resources specializes in identifying profitability improvement areas for community banks through revenue growth, cost control, streamlining processes and effective use of technology. Contact us to learn more about our personalized approach to propel growth and improve profitability.