Transcript Slide 1

Best Practices
of
Profitable Banks
Presented by:
Tim Holt
“It is what you learn after you know it all that counts.”
Total Quality Management
Reengineering the Corporation
WOW
In Search of Excellence
Discount Brokerage
Wealth Management
Good to Great
Six Sigma
Insurance
“He who begins many things finishes few.”
Italian proverb
• Peer comparisons aren’t that helpful
• 7% of Michigan banks had a 1.5% or higher ROA
versus 15% of banks in FDIC region
• Analyzed top performing banks key indicators –
ROA, ROE, ER, NIE/Assets, SC/Assets
• Most profitable banks have low NIE; specifically
salaries/assets of 1.5% or lower
“The secret to success is doing what you do well.”
Focus on the basics of banking
• Know your profitable customers.
• Don’t let the search for new distract from
profitability basics.
• The best way to make money is still good
quality loans.
“The secret to success is to start from scratch and keep on scratching.”
Focus on the basics of banking
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Simplify products and product development
Charge adequately priced fees
Identify obstacles and eliminate them
The real product is people in a service
business
“Stopping at third base adds no more to the score than striking out.”
Key people are working in the business
…versus working on the business
• Minimize time spent in meetings
• A limited number of projects
• Doing what they do best
“Work only half a day.
It makes no difference which half, the first 12 hours or the last.”
Key people are working in the business
• Expect more from your resources--good
people want to be busy
• Don’t “grind the points off your stars”
• Offer time off as an incentive
“It is what we think we know already that often prevents us from learning.”
Know the difference between
busyness and business
• Know how much is done toward servicing
customers
• No such thing as busy work
• Activity does not mean achievement
“...lifelong education doesn’t answer questions; it provokes them.”
Associates know why they do what they do
• Most want to do a good job and will when
given the knowledge
• Focus on shareholder value
• Understand the value added to the customer
experience
• Know how adults learn
“Bank Robbery”
“Do not let what you cannot do interfere with what you can do.”
Know when to outsource
• Functions like Audit and Loan Review
• Realize some tasks are too technical and
dynamic to realistically manage
• Understand the intangible value of outsourcing
“Sell the benefit, not the feature.
People don’t buy a newspaper, they buy news.”
Every basis point is worth the effort
• Sell the benefit of the relationship with a
community bank – the ease of approval
• Avoid pitfalls such as letting transaction
history with customer dictate this “deal”
• Scrap and fight for every basis point
“Beware of small expenses. A small leak will sink a great ship.”
Every purchase has a business case
• Large purchases actual ROI
• Small and everyday purchases have
“conceptual ROI”
• Supply costs s/b < $10,000/year/office
• Cost control is a living process
“The difficult we do immediately. The impossible takes a little longer.”
Technology is a tool and resource
• Not a project or conversion
• Use more than 30% of feature/functionality
• No projects are managed by IT
“When you are through changing, you’re through.”
Technology is a tool and resource
• Manage efficiency – small things will improve
customer service and reduce costs
• Minimize the use of paper
• Find and eliminate “Justin Case”
“To improve a company fast, develop people fast.”
Do not confuse title with function
• Know which titles or positions are not full
time jobs
• Retail Lender is no longer a necessary position
• The experience gained with a title helps
develop leaders
“Even if you are on the right track, you’ll get run over if you just sit there.”
Compliance just complies
• Expect to comply only, the minimum effort
• It is rarely a full time job
• Regulatory compliance and auditing are
outsourced
“In golf and in life, it’s the follow through that makes the difference.”
• The “better practices” of profitable institutions
center around the human resource
• Pursue new income ideas cautiously
• Profitability means steady performance at the basics
of banking:
– Managing the net interest margin
– Managing customer service and efficiency
– Charging a fair price for your product - service
“It is never too late to be what you might have been.”
Contact:
Tim Holt
Profit Resources, Inc.
240 N. Washington Blvd. Suite 420
Sarasota, Florida 34236
1-800-576-2374
www.profitresources.com