Retail Strategies

Metrics for branches in 2014

By Adam Craig

With a new year around the corner, now is the time to decide how your community bank’s branches will measure performance. Although there are a myriad of metrics from which to choose, there are five that tend to be common among high-performing branches. Could they be right for your community bank?

1. Net Interest Margin.
To increase revenue, monitor margins daily. Since mid-2008, community banks with a daily margin-management routine showed a steady improvement in their net interest margin compared with other financial institutions (14.9 percent versus 1 percent), according to 2013 research by Deluxe.

2. Cost of Funds and Loan Pricing.
Analyze the mix, yield and risk of upcoming maturities, and identify pricing inconsistencies. If the branch can reduce the cost of funds through future mix and intentional pricing, then it will immediately increase its net interest margin. All other things being equal, this increases your bank’s pre-tax income.

3. Branch Performance.
Choose at least one metric that provides insight on customer experience, service, satisfaction, loyalty or employee sales proficiency. Branch managers with this type of qualitative data, as well as quantitative financial data, can knowledgeably adjust staff, policies and procedures to keep their goals on track.

4. Efficiency.
Branches can still improve their efficiency ratio, especially when new technology is involved. Additionally, an emerging idea is to look at staff efficiency by comparing the cost of employee salaries and benefit packages to measures such as deposit dollars, loans and accounts. The goal is to maximize the value and contribution of each employee.

5. Business Generation Metrics.
Branches have to know where their business is coming from so they can do more of what works. At the very least, branches should ask and track, “How did you hear about us?” Successful community banks are finding ways to measure the return on investment of their marketing investments.

 


Expert Byline — Adam Craig (adam.craig@deluxe.com) is director of product management for Deluxe Corp., a company in Shoreview, Minn., that offers community banks programs in checks, customer acquisition, fraud prevention and profitability.

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