Club directors, give us input

Northwestern Financial Review, Sep 1, 2001 by Aker, George

The opportunities that lie before us are growing in scope and complexities and offer the chance for each club director to rethink the purpose and direction for their club. As new banks come for training, we are always interested in their reasons for undertaking this segmented marketing program for senior bank customers. Many see this as the chance to redefine the purpose and objective for their retail-banking program to enhance the level of commitment to deposit providers and service users.

Deposit attraction is a first order of business for every community bank. The temptation has arisen in recent days to fund bank growth with borrowings from The Federal Home Loan bank in each region, as they have become substantially more accommodating in a redefined purpose for the former central bank to the savings and loan business. Net yields from our loan and investment portfolios can be enhanced by matched borrowing at "government wholesale rates". Yet, each of us know in our hearts that we are better off with core deposits from our defined market place received from the customers that we know best. We all work to raise the level of FDIC insured deposits so that our best customers can increase the levels covered by insurance. Our deposit gathering possibilities are increased even more by the loyalty and trust which is so present in the club relationship.

Cross selling the myriad of bank services that we all keep inventing or adopting requires that we make known those services to our customers most likely to benefit from their use. Fee income is a greater need for each bank as we strive for yield to drive our return on assets or return on capital. Identification of profit contribution from each service requires sophisticated insight into the relationship of expenses with each stream of income. Double counting income causes delusion for management, which is not reflected in the "actual bottom line" for the entire bank. To the extent that we can set pointers to link expense and revenue, we can be very helpful in understanding profit generation.

Running a club today requires skills of many orders from the humane to the economic. Each club director appreciates the opportunity to learn from other experienced directors or specialists in the fields encountered in the club management. Peer Group provides that locus for exploration and exchange. We call all club directors to make plans with their senior management for the availability of time and coverage of the modest expense for this vital participation. The Advisory Board, comprised of experienced club directors that you have selected, has agreed to provide leadership for our gathering next year in Grand Rapids. Assist them with your most thought provoking ideas for mutual exploration. Participate with them in the presentation and recording of discussion so that HCI may collect information for future publications that are of use to all. Let us together create a forum for exchange, which will benefit everyone in the movement.