ABA Banking Journal - September 2007 - (Page 22)

Community Banking found these people really don’t care whether they’re paying the fee or not,” says Lenz. Tom Leetch has put ATMs in unusual locations such as a building that houses both a TV station and a large manufacturing company’s headquarters and has put others in convenience stores. These all generate high fee volumes, which have been helpful to the bank. A number of bankers have sited ATMs in high-traffic locations to build fee income, but none with so unusual a “strategy” as Ivo Tjan’s CommerceWest. His institution is about as “un-retail” as a bank can get, so much so that examiners sometimes give him some heat about it. But Tjan sees his niche as strictly business. Hence his ATM success is a radical departure. “We had a hole in the wall of one of our new branches,” explains Tjan. “Well, we had to fill it with something. It turned out that the cost of buying a used ATM was the same as the price of reconstruction.” The bank didn’t expect its own clients to use the machine much, except for occasional convenience. But the branch is surrounded by busy office towers and a new café. The bank priced transactions at $3.25 a pop, and the machine is making $1,500 to $2,000 a month, quickly paying for itself. The bank, meanwhile, obtained extensive free ATM access for its clients continued from page 20 by taking advantage of a U.S. Bancorp deal. In exchange for having the larger bank service the single ATM, at only $400 a month, CommerceWest customers become eligible to use ATMs at any U.S. Bank location, nationwide. “It’s kind of a crazy deal, but it’s pretty good for our clients because there’s no fee to the U.S. Bank machines, nor PayPass machines at 7-11 convenience stores,” says Tjan. Ed Gutzmann’s bank has a similar arrangement with Wells Fargo. Savings in branching Facilities represent one of the biggest expenses of running a bank. Finding the right place to put them becomes a greater challenge as the best locations get gobbled up. But running them and owning them is also a challenge. “Our bank was founded in the mid1950s and of course that was when real estate was king,” says Mary Lenz of Slades Ferry Trust. “So the board bought all of the facilities. Within the last year we’ve been looking at sale/leaseback of our nine different facilities. And there are some pretty good gains in the properties.” Rather than profiting directly from the sales, the bank has plowed the gains back into its business. The bank has spent a great deal refurbishing its facilities and has offset that expense ABA BANKING JOURNAL ROUNDTABLE PARTICIPANTS with the amortized gains. As a result, what might have been a major expense “is pretty much a wash,” says Lenz. Bill Carr and Bill Sones found a doit-yourself tool to aid them in siting new branches. “We had hired consulting companies in the past to try to tell us where we ought to be and it never worked,” says Carr president and CEO of Liberty National Bank, Kenton, Ohio. “So I went in on the FDIC website and looked at counties that we were in and surrounding counties, researching deposit growth trends over the previous five years.” What Carr found was sobering, but also inspiring. Liberty’s home office and three branches, it turned out, sat in a market with an overall 2% drop in deposits. But then Carr hit gold, a county with 24% profit growth, and that’s where the bank is expanding. “We’re pretty excited about that,” he says. And he’s identified other areas of potential as well. Bank of Brookhaven, Brookhaven, Miss., is a recent de novo and hasn’t branched yet, but Sones, president and CEO, is studying potential additional locations based on FDIC’s database as well. The annual deposit summaries, which come out in late June, are very helpful. Once he starts branching, Sones plans to build single full-service branches in any given market, bulking out the network in each market for customer service sake with smaller paying and receiving branches. The first branch will serve as the hub. Mary Lynn D. Lenz, president and CEO, Slades Ferry Trust Co., Somerset, Mass., $600 million-assets William D. Sones, president and CEO, Bank of Brookhaven, Brookhaven, Miss., $100 million-assets Ivo Tjan , chairman and CEO, CommerceWest Bank, N.A., Irvine, Calif. , $260 million-assets Outsourcing and people practices The big costs in banking, as always, are employees, and this has become even more so as banks find themselves seeking expertise in narrower and narrower specialties. But the panelists increasingly find that even highly specialized functions can be quite handily farmed out or shared. Sones’ bank, for instance, handles internal audit by sharing one expert with 22 SEPTEMBER 2007/ABA BANKING JOURNAL www.ababj.com/subscribe.html http://www.lnbbank.com http://www.lnbbank.com http://www.bankofbrookhaven.com http://www.bankofbrookhaven.com http://www.cwbk.com https://www.sladesbank.com http://www.bankofbrookhaven.com http://www.cwbk.com http://www.ababj.com/subscribe.html

Table of Contents Feed for the Digital Edition of ABA Banking Journal - September 2007

Contents Editor's Column Briefing: Why Money Sense is a Top Priority Briefing: Sleight of Mind Briefing: Snapshot: What the First Half Tells Us About the Second Half Briefing: ABA Resources ABA Chairman’s Position Briefing: Get Away and Get Ahead: ABA's Banking Leaders Forum Community Banking: Trim the Fat: Winning the "Battle of the Buck" Community Banking: Pass the Aspirin Cover Story: Meeting the Challenge of the "Unbanked" Bank Marketing: Don't Miss the Boom! On the Job: Time to Power Up Your Presentations? Insurance Sales: The Art & Craft of Cross Selling Tech Topics: The Price is Right? Tech Topics: Security: Protect Information First Tech Topics: Hackers for Hire? You Bet'cha Tech Topics: Case in Point: Tellers Scan, Too, at First Federal Compliance Clinic: Adverse Action Clarified The Economy Banker’s Mart To Advertise/Index of Advertisers

ABA Banking Journal - September 2007

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