What is the impact of your low transaction volume branches? One often overlooked opportunity is increasing productivity rates of labor in Low Volume Branches (LVBs) – those branches where teller transactions average less than 3,000 each month. On average, LVBs represent 22% of most retail branch networks, yet only 6% of the total transaction volume, resulting in an average paid labor cost per transaction being 106% higher for LVBs.

1. Low Transaction Volume Branches

2. Agenda
• Welcome and Introductions
• State of the Financial Institution Industry
• Low Volume Branch Teller Transaction Analysis
• Review Cost Impact
• What Can We Do with Low Volume Branches
• Next Steps
• Open Discussion including Q&A Session

3. Today’s Speakers
• Gordon A. Williams IV, FMSI - Senior Vice President
• Deonne Edwards, Kitsap Credit Union – KCU Regional
Manager Branch Operations
• W. Michael Scott, FMSI – President/CEO
• Chad Davis, FMSI – Marketing Manager

4. State of the Financial Institution Industry
In 2011 community banks and credit unions face many external
Low Transaction Volume Branches
conditions, which affect their bottom lines, including:
• Regulation E – a reduction in NSF fees
• Continued loan losses from unemployment, an ailing housing
market, and a sluggish economy
• Reduced revenues from loans and associated fees due
to the economy
• Rising labor and overhead costs

5. Industry Branch Teller Transactions (Thousands)
Low Transaction Volume Branches

6. Industry Pay Rate (Hourly: S+B)
Low Transaction Volume Branches

7. Low Transaction Volume Branches
Industry Teller Labor Cost

8. How Are Low Transaction Volume Branches (LVB)
Affecting the Industry?
• A November 2010 Teller Transaction Analysis study shows
Low Transaction Volume Branches
the current environment of LVBs compared to larger
volume branches.
• Comprised of both community banks and credit unions.
• Includes 100 financial institutions nationwide.

9. LVB Branch Teller Transaction Analysis:
November 2010 Data
Low Transaction Volume Branches

10. Low Transaction Volume Branches
Teller Productivity

11. What is the Business Intelligence from
These Numbers?
Low Transaction Volume Branches

12. LVBs Are Costly to Operate
The combined cost of labor, utilities, technology, maintenance,
Low Transaction Volume Branches
and property taxes adds up
• A minimum of $150,000 to $250,000 per LVB

13. What Is The Breakeven on Operating Expenses?
Branch would have to generate and maintain a collectable loan
Low Transaction Volume Branches
portfolio, with a net 3% interest rate margin spread, totaling
$5,000,000.

14. Why Does This Environment Exist?
• LVBs were inherited from an acquisition.
Low Transaction Volume Branches
• LVBs were new branches that never grew as expected.
• LVBs are in a community that would otherwise not be served.

15. Why Does This Environment Exist? (cont.)
• The focus was on the larger branches.
Low Transaction Volume Branches
• The magnitude of the low volume transactions and the costs
associated with them was simply never realized.

16. What Can We Do with Low Volume Branches?
Reduce the weekly hours of operation.
Low Transaction Volume Branches
• Actual hours of reduction will vary based on your particular branch
network environment.
• The average weekly hours of operation could be reduced as much
as 25-35% from the current study’s 45.9 hours per week to a more
modest number of
• 30 (M-F 9 to 3)
• 35 (M-F 9 to 4).

17. What Can We Do with Low Volume Branches?
Kitsap Credit Union (KCU) Case Study
Low Transaction Volume Branches
• Deonne Edwards, Kitsap Credit Union – KCU Regional Manager
KCU is an 18 location $820,000,000 Credit Union located in Washington State
2007 – Implemented FMSI Staff Scheduling Software
2008 – Evaluated and analyzed information provided on a monthly basis
2009 – Began making changes to the way that we were hiring, scheduling and utilizing
staff in an effort to:
–Increase Productivity (Teller Transactions per Hour)
–Increase the % of Part Time Employees
–Decrease Excess Waiting for Work Time and
–Lower Excess Labor Costs

18. What Can We Do with Low Volume Branches?
Kitsap Credit Union Case Study (continued)
 Results from 2009 efforts were positive!
Low Transaction Volume Branches
–Productivity and Part Time Utilization increased while Excess Waiting for Work time decreased significantly.
Sharp decline in excess labor costs was also realized!
 2010 Organization-wide Initiative (Reduce Expenses & Increase Efficiencies)
 Full Optimization of Branch Network
 Goals and Plan of Action
–Analyze Hours of Operation at each location with a focus on the Low Transaction Volume Branches
–Reduce Hours of Operation with no employee layoffs and minimal member impact

19. What Can We Do with Low Volume Branches?
Kitsap Credit Union Case Study (continued)
Low Transaction Volume Branches
 KCU’s Low Transaction Volume Branches
– 3 Branches on Military Base Installations that would not otherwise be served
– Reduced weekly Hours of Operation (from 107 hours to 90 hours at these 3 LVB’s)
– Resulted in reductions in labor costs and excess waiting for work
 Employee Morale
 Member Reaction - increase in member satisfaction ratings
 Ongoing Plans

20. What Can We Do with Low Volume Branches? (cont.)
Close LVB Saturday operations.
Low Transaction Volume Branches
• Result in a minimum impact on branch network transaction volume
(given these branches average only 50 transactions on a Saturday).
• Actual institution impact will vary.
• Should closely mirror the FMSI study results.

21. What Can We Do with Low Volume Branches? (cont.)
Minimize labor intensive dual control with the use of technology.
Low Transaction Volume Branches
• The use of a cash recycler would take the place of dual
control and the cash vault.
• The teller image capture will eliminate the need for
branch capture and provide a good audit trail.
• These technologies can reduce the teller labor
costs by 50%.

22. What Can We Do with Low Volume Branches? (cont.)
Remote Video Teller Screens
Low Transaction Volume Branches
• Video Chat
• Approach eliminates the staffing need at remote locations,
while still providing the branch services for the account
holders in the area.

23. What Can We Do with Low Volume Branches? (cont.)
• Branch consolidation, absorbing these LVBs into other
Low Transaction Volume Branches
nearby branches.
• Close some of the LVBs and leave that particular market.

24. What Can We Do with Low Volume Branches? (cont.)
Offer free checking in LVBs to increase market share and better
Low Transaction Volume Branches
utilize those facilities.
• Larger banks moving to tiered checking account fees.

25. Next Steps
Take the right steps to analyze your LVBs and take appropriate
Low Transaction Volume Branches
actions. Knowing your particular numbers is the first step.
• How many LVBs do you have?
• What are your costs per LVB?
• What is your decision criteria to keep a LVB open?
• Have you conducted an Hours of Operation Analysis?

26. Conclusion
Financial institutions that implement an initiative that
Low Transaction Volume Branches
ultimately decides how they handle low volume branches –
will achieve great indefinite cost savings.

27. FMSI
FMSI has assisted over 600 financial institutions nationwide
in optimizing their branch networks, through applying
Low Transaction Volume Branches
Actionable business intelligence from the analysis of transaction data.
– Learn more at www.fmsi.com or call 770.619.3443