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Echo Partners Community Bank Blog

    Can deposit profitability help you reach your ambitious profit growth targets?

    [fa icon="clock-o"]} [fa icon="user"] Howard Lothrop [fa icon="folder-open'] deposit profitability, analytics

    Orange Improve Your Performance Button on Computer Keyboard. Business Concept..jpegCan deposit profitability help you reach your ambitious profit growth targets?

    There are only 4 ways to grow profits:

    • Increase interest income
    • Decrease interest expense
    • Increase non-interest income
    • Decrease non-interest expense

    The top 2 items form net interest income, and community banks already lead in NIM. Sure, work hard on NIM, but further big gains are unlikely. You’re competing with yourself on NIM.

    That leaves non-interest income and expense.

    Unlike NIM, community banks lag on both non-interest measures. That’s not great but it does show where you can realistically achieve greater profit growth.

    So how can #DepositProfitability help you grow noninterest profits?

    The obvious answer (deposit fees) is just part of the solution, and perhaps a small part.

    Often the bigger impact comes from identifying and reducing excess transactions in expensive delivery channels that feed into noninterest expense.

    The complete answer usually includes both fees and changing customer behavior patterns. That’s the easy part.

    The hard part is how do you know which to use to grow your deposit profits?

    Insist on behavior changes from the wrong customers and you won’t get traction. Push blanket fee increases and expect to lose deposits. You must use data to decide.

    Do you want to grow your bank profits with little to no risk? Click Here to  Discover How
    Howard Lothrop

    Written by Howard Lothrop

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