The document discusses strategies for banks to increase revenue in challenging economic environments. It recommends focusing on cross-selling additional products to existing customers, leveraging branch networks as distribution points, expanding small business lending, and using customer credit data to identify other opportunities. The document also suggests that mergers or acquisitions may be necessary for some banks to achieve necessary scale, expand into new markets, and diversify their business lines in order to survive difficult conditions.

1. Financial Survival
Strategies in a Loss Making
or Declining Profits
Environment

3. What do shareholders The only
look at? thing that
matters

4. Banking Trends
• The number of banks in the $1 billion-to-$10
billion range hasn't changed much over the last
two decades, but their share of the assets has
dwindled, to 11% in 2010 from 36% in 1990.
• The industry is now dominated by banks with
more than $10 billion in assets.
• By number they make up just 2% of the
industry, or 107 companies, but they control
78% of the assets, up from just 33% in 1990.

5. Trends
• The number of banks with $100 million to $1
billion in assets did grow over the past 20 years,
accounting for 57% of the industry at year end
2010.
• Their share of industry assets was whittled to
9.7% in 2010 from 22% in 1990.

6. Trends
• In 1990, banks with less than $100 million in
assets made up 70% of the industry by number
and held 9.1% of its assets.
• By 2000, these banks accounted for 55% of the
industry by number and held just 3.5% of its
assets.
• By 2010, it was down to 34% of the industry
and just over 1% of its assets.

7. Caribbean Banks’ Profile
• Retail and Corporate focused
• Some are government owned/run/subsidized
• Markets in which they operate is small
• Simple products and services
• Adequate technology
• Competition from larger international banks
• Exposed to local and international regulatory
regimes

8. What we see
• Fee income is getting killed and difficult to secure
• Weak loan demand and low rates are crushing
interest income
• Compliance costs are climbing
• Regulators are demanding ever higher capital levels
• Low interest rates relieve some pressure on
operating revenue.
• Rising interest rates can cause disaster on operating
revenues

9. Operating Revenue
• It's net interest income + non-interest income;
• It shows how much banks are making on loans,
products and services before deducting
noninterest expenses and loan-loss provisions.
• Operating revenues are directly related to the
customer base
• Today the operating revenue number will
continue to decline and decline until the bank
becomes irrelevant or simply sells

10. FDIC Chairman
• "We're at a tipping point. There is a limit to
how far reductions in loan-loss provisions can
boost industry earnings," FDIC Chairman
Sheila Bair said when she unveiled the
industry's first-quarter results. "At some point,
if banks are to continue to increase their
profitability, they will have to grow their
revenues."

11. Where is the revenue and how do we get
it

12. What can we do to survive
• Banks have to sell more to more people.
• They have to figure out which:
• customers,
• products,
• business lines,
• employees
• branches
make money and focus capital, training,
technology those areas

13. Building success

14. service as a strategy?

15. service partnership

16. know your competition
or they will sink you

17. know you competition
• What • How
– Products – Conferences
– Services – Meetings
– Distribution – Associations
– Strengths – Customers
– Weaknesses – Media
– Pricing • Internet
– Staffing • Press

18. Where is revenue found

19. Branch sales

20. Leverage what you have
• Revamp your branches to make them more
product centric
• View the branch as the distribution focal point.
• Train branch managers to identify different
types of business customer needs and upgrade
the skill sets of branch personnel to enable
them to feel confident when talking to
business owners.

21. Leverage what you have
• Augment branch-based expertise with
dedicated small business credit specialists and,
where appropriate, business development
officers out in the marketplace who work closely
with branch managers.
• Empower branches with information about the
businesses in their local market and invest to
position branch managers in leadership
positions with local chambers of commerce and
influential business organizations

22. Add value to your customers
We are the
best at
what we do

23. Work with your customers
• Non Performing Assets kills your balance
sheet
• Work with your best customers to make sure
they survive – they will never forget it
• Refinance customers that are in a viable
business environment
• Convert non performing to performing by
sharing the lower cost of funds and possibly
longer terms

24. Consider more credit
• Small businesses have long been considered
underserved (or perhaps, more appropriately,
ignored) by much of the banking industry
• Consider the potentially pent-up demand for
credit among small businesses. During the
recession, banks dramatically curtailed the
extension of credit to small business owners.
• According to a January 21, 2010 Bloomberg
Businessweek report, banks originated $73
billion in loans to small businesses in 2009, a
47% decline from 2007.

25. Cross Sell
• Use the credit process to identify cross-sell/up-
sell opportunities.
• A lot of great information about business
finances and operating results are shared with
banks as part of the credit underwriting
process.
• Few banks, however, really leverage this wealth
of information to advise their business clients
on strategies to improve the health of their
businesses.

26. Cross Sell
• Loan officers can develop recommendations for
strategies, products and partners (such as trust and
wealth management) that enable customers to improve
business performance and manage life cycle events.
• Tools can be developed that use data captured in the
credit process to help loan officers provide advice,
analyses, checklists to help customers fund growth,
better manage cash flow, lower financing costs, plan
for succession, and identify personal wealth
management needs

27. Leverage technology
• Provide robust online information and
transaction capabilities.
• Online banking platforms should minimize the
time spent performing basic banking
transactions and enable business owners
conduct a variety of more sophisticated
transactions, access detailed account histories,
manage payments and move funds across
accounts and to other financial providers.

28. Leverage technology
• Recent surveys show that small business
customers are increasing their rate of online
banking logins and decreasing the number of
visits to their local branches.
• Provide mobile banking opportunities.
• Leverage the mobile network and the fact that
more people have mobile devices than PCs
• Find ways to increase Straight Through
Processing – less branch time and investigations

29. Product variety
• If you have reached out to every market possible,
you may need to change what you sell.
• One small business growth strategy is to simply
modify what you already have.
• Keep the existing services/product, but create a
new style by adding something else.
• The simple fact of the matter may be that you
need more products – develop or copy what is
already successful in other markets

30. Also consider
• Avoiding regulatory pitfalls
– Don’t ignore Compliance, AML
• A regulatory fine may be the end
• Improving image from outside
• Rebrand and be relevant to customers
• Be open for business 24x7 if possible
• Convenience and customer centric business wins

31. Sometimes bigger is better
• Your growth strategy may be too tough to
complete by yourself.
• By joining forces with another company, or
finding new partners, you can gain the
additional help you needed to push on to the
next stage – try co branding and co selling
• The simple fact of the matter may be the only
way to survive is to merge with others to
increase scale and gain market.

32. Sometimes bigger is better
• Merge
– Consolidate and realize cost savings
– Increase scale of operations
– Increase market penetration and product diversity
– Invest in better technologies and simplify
platforms and maintenance costs
– Diversify your businesses lines and geographies
– Work under a stronger brand
– Broaden talent pool

33. Sometimes bigger is better
• Margaret Irvine Weir, president, NexTier Bank: ―We’ve
acquired a few insurance agencies, and we’re always looking to
add more in that line, and we always have feelers out for wealth
management.‖
• Charlotte Zuschlag, president and CEO, ESB Bank ―We’ve
acquired (small banks) since 1994, and we’re hoping to do some
more deals. And we’d look at branches anyone was selling in
our area. If, for example, PNC were to get rid of some National
City branches or some of their own, we’d love an opportunity
(to buy).‖

34. Sometimes bigger is better
• Todd Brice, president and CEO, S&T Bancorp: ―We would
certainly have an interest in partnering up with the right
institution if the opportunity should arise. Historically, we like
contingent markets. You’ll see some people buying in Florida, but
we’re not going to do that.‖
• Richard Spencer, president and CEO, Fidelity Bancorp Inc.
―We’re not actively looking, but if the right opportunity came up,
we’ll look at it. We’re expecting organic growth over the next
couple of years.‖

35. Sometimes bigger is better
• William Wagner, president and CEO, Northwest Bancshares
Inc.: ―If we don’t find (bank) acquisition properties, there are
still opportunities for us to grow through di novo branching.
We have a history of acquiring other lines of business —
insurance, trust and investment management — and we’re
always open to growing them.‖

36. To Summarize
• Improve existing products and get new ones
• Focus on service and build customer partnerships
• Know your competition well
• Leverage the Branch as a product centric
distribution point
• Target small business lending and mine credit
data
• Work with customers to ensure they survive too --
-- reduce NPA

37. To Summarize
• Cross Sell, Cross Sell, Cross Sell
• Rebrand and be relevant to customers
• Extended operating hours 24x7 if possible
• Leverage Technology – mobile banking
• Make sure Compliance and AML are up to Snuff
• Merge and or Acquire
– To survive
– To access other markets
– To gain business line diversity