Bank Board Letter January 2016 : Page 3

industry standards for processing business, the bank has generated more noninterest income than at any point with its former broker-dealer. Bank-customer relationships are ever-growing, the sales culture within the bank is strong, and the bank’s and advisers’ relationship with IPI is robust. Similarly, in the South Central region, a community bank with a network of 12 branches and approximately $750 mil-lion in total assets that had never before offered investment or brokerage services to its customers partnered with IPI to After this $900 million institution converted its existing investment pro-launch a program. gram, it recorded first-year revenues of $568,127 to the Northeast bank’s Though clearly a successful institution, prior to working bottom line. with IPI the bank struggled in its pursuit of new customers. It needed a solution that would help capitalize on the bank’s Program Profitability: Case study 2 strong market share to attract prospects through new service lines and product offerings. Instituting an on-site retail bro-kerage program resulted in first-year revenues of more than $350,000 to the bank. With no previous experience in investment programs or related products and services, the bank naturally had little to no knowledge of how or where to begin, pro-gram best practices to maximize results, or compliance and regulation requirements, among other things. This Southeastern community bank with a network of 12 branches and Understandably, banks that lack experience with brokerage approximately $750 million in total assets had never before offered are hesitant for many reasons: perceived associated risks and investment or brokerage services to its customers. Instituting an on-site regulatory burdens, as well as supervisory responsibilities, to retail brokerage program resulted in first-year revenues of more than name a few. However, by partnering with a broker-dealer well-$350,000 to the bank versed in managing successful investment programs, the institu-institutions saw substantial income from their third-party tion received the guidance necessary to hit the ground running. broker-dealer as a result of their retail brokerage program. The bank relied heavily on IPI to launch its program, en-As part of the study, a $900 million institution in the Northeast suring the proper structure was in place to maximize results and minimize risk. The firm’s compliance team led the effort Metropolitan Statistical Area, with 12 branches, converted its to indemnify the bank and create a secure setup and standard existing investment program from one of the industry’s largest operating procedures. Achieving maximum revenue results, brokerage firms, to Investment Professionals Inc., one of the was, in part, supported by IPI’s bank-dedicated recruiting team few remaining broker-dealers dedicated to the community bank that assisted the bank in securing two skillful advisors. With channel. A transition to IPI resulted in first-year revenues of the support of IPI’s results-driven sales department, these two nearly $600,000 to the bank’s bottom line. top-producing advisors have generated more than $1.5 million Today, this Northeastern community bank and its investment in gross revenue to the bank’s bottom line. program are booming. But, prior to IPI, the bank faced a much Largely, the bank’s decision to partner with a community different scenario. bank-focused broker-dealer to implement new products and A long-standing relationship with their broker-dealer had services for customers helped expand its value proposition, deteriorated, and the investment program had become stagnant. which in turn helped meet client-acquisition goals. As an added The underperforming program had fallen short of the bank’s advantage, these new products and services also have helped noninterest income expectations and goals. secure a higher retention rate for established bank customers. With the help of the firm’s dedicated marketing, compliance Today, IPI maintains a close relationship with the bank and and recruiting teams, the bank’s on-site investment program financial advisors to ensure the program remains profitable and was relaunched in their community. Through turnkey market-its unique goals are continuously outperforming expectations. ing, including private labeling and a well-designed advertising In a particularly competitive industry, community banks are hav-strategy, as well as extensive recruiting efforts that brought on ing to utilize non-traditional means to grow their businesses. Case two well-matched, high-performing financial advisers from a after case proves that increasing noninterest income strategically candidate pool of nearly 750, IPI created a tailored, successful through an investment program can be impactful to a bank’s bottom program that truly fit the bank’s specific needs. line. The concept innovate or die cannot be any more applicable. Now, the bank and its financial advisors are armed with a home office dedicated to their program’s success. With the help David Doerflinger serves as Midwest regional director for of the firm’s sales team, which includes a local regional director Investment Professionals Inc., based in San Antonio, Texas. living in the Northeast region and an operations team exceeding Program Profitability: Case study 1

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