ABA Banking Journal - November 2007 - (Page 24)

Community Banking Finding the middle way for your bank’s retirement program What keeps veteran and higher-level employees happy doesn’t get young newcomers excited. But you can control plan costs without breaking the bank hink of your head of commercial lending. More than likely, this senior banker knows your market inside and out, and can smell good business before the also-rans in your market can see it. As CEO, you’d hate to lose this banker to a competitor, and you’ve done what you could over the years to make sure that he or she stays happy, and productive. Now think of one of your newest, youngest employees. This might be a teller, perhaps a customer service representative, or perhaps some smart young computer whiz who’s giving your experienced operations people a run for their money. They may regard their position as a good start in business life, but the likelihood that they think of themselves as “lifers” is pretty remote. This colors their perspective on many aspects of your bank’s benefits package. Younger singles may worry less about medical, for instance, than married middle-agers with families. But it’s likely that no other facet of your benefits expense represents so wide a gulf in generational perspective as the retirement program. T By Steve Cocheo, executive editor Torn between generations Many community banks are grappling with the costs of meeting the preferences pricing for divisional performance. This should help bring a better focus to our market presidents and our branch managers. The Headache: What are you doing about return of deposit insurance premiums? Remedy 2 W ith the return of deposit insurance premiums, banks in coming months will be paying for coverage for which most haven’t had to pay for some time. Actual charges will hit different institutions at different points, depending on their age and past payment history. But in time all banks will once again be writing FDIC a check. A Pass the Aspirin prescriber asked how other banks are preparing themselves, and this is how three responded. Do you have ideas too? Send them to scocheo@sbpub.com, and we’ll post them, along with these, on www.passtheaspirinplus.com Pass the Aspirin Remedy 1 Robert R. Jones III, president and CEO, United Bank, $403.5 million-assets, Atmore, Ala. We have taken several measures to mitigate the impact. First is a thorough understanding of the new calculations. Second, and in a related vein, is our effort at evaluating our balance sheet management. This we are doing to avoid unnecessary ballooning of deposits at the end of each quarter, which would increase premiums. Third, while it is always important, now credit quality has an additional element. Because past dues are included in the calculations, we are incorporating some of the costs into our internal Mark T. Wild, executive vicepresident and chief financial officer, United Bank of Michigan, $423.7 million-assets, Grand Rapids, Mich. We have taken immediate steps to increase our availability at our Federal Home Loan Bank. This gives us the option of replacing brokered deposits with home-loan-bank advances. We will be looking to revise service-charge routines in our operating systems, in order to reflect the increased cost of insuring deposits. Internally, the incremental costs will be used in our account profitability analyses. Incrementally, the added burden will not be specifically used in individual deposit rate-setting, but overall pricing decisions on both sides of the balance sheet will certainly be influenced by one more significant hit to earnings. Remedy 3 Blair A. Hillyer, president and CEO, First National Bank, $165.2 million-assets, Dennison, Ohio. Our out-of-pocket costs will kick in during the fourth quarter of 2008. It looks like our annual cost increase will be close to $85,000. Frankly, we don’t have a “neutral revenue” plan in place at this point, but I think some bankwide cost-cutting, along with some deposit pricing reductions over time, will help ease the strain. 24 NOVEMBER 2007/ABA BANKING JOURNAL www.ababj.com/subscribe.html http://www.unitedbankofmichigan.com http://www.unitedbankofmichigan.com http://www.passtheaspirinplus.com http://www.ubankal.com http://www.fnbdennison.com http://www.fnbdennison.com http://www.ababj.com/subscribe.html

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

ABA Banking Journal - November 2007 Contents Editor’s Column Briefing: Good News for Mortgages Sleight of Mind N.Y. Hiring Bonanza May Be Bane Snapshot: A Look at Held-For-Investment Loan Growth ABA Resources ABA Chairman’s Position “The Moose Bank” Thrives on Manufactured Housing Loans Finding the Middle Way for Your Bank’s Retirement Program Pass the Aspirin Cover Story: Self-Service Steps Up DIY U.K. Style Marketing to Millennials Getting Real With “Gen Wired” Ethnic Marketing: Disinterested Banking Getting Good at Global Sourcing Case in Point Turn Compliance on It's Head Banker’s Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - November 2007

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