Pub 18 2021 Issue 1

Issue 1 • 2021 17 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S — H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S Jay Kenney, SVP and Southwest Regional Manager for PCBB | pcbb.com | jkenney@pcbb.com Dedicated to serving community banks’ needs, PCBB’s comprehensive and robust set of solutions includes cash management, international services, lending solutions, and risk management advisory services. are they interested in different structures? Knowing this increases their value to you as a customer and your ability to compete and close deals. Some helpful and innovative options could include: Ask for the deposit. Some customers are awash in cash these days, while others are cash-strapped. By asking for their operating accounts, you can help your institution reduce its overall cost of funds while increasing the stickiness of the relationship. Look for fee income. Some business owners may need a little extra help these days and would even be willing to pay for it. Consider your natural prepayment rate and prepayment penalties for longer-term obligations or increasing fees for longer fixed-rate terms. Consider different structures. The term may matter. Is it fixed or f loating, and when are rates reset? How are you setting up payments? Could you be creative, meet lifetime income thresholds, and match your borrower’s seasonal cashf lows? Take a holistic view . Once you have solved some of your customers’ problems, be sure to look at the entire customer relationship. It is not just about one product vs. three products, either. Sometimes, you have customers with three loans that don’t add as much value as the customers with one loan. By analyzing the whole customer relationship, including grouping customers by their related accounts, you can provide additional services or discounts based on the total relationship profitability, not just the number of products used. To assess properly and efficiently, a profitability modeling is recommended. You get an objective view and can drill down into the data, making it easy to adjust offerings as needed. If you need assistance with relationship value pricing or customer profitability, please contact Jay Kenney. n Sometimes, you have customers with three loans that don’t add as much value as the customers with one loan. Albuquerque: 505-843-9232 | Las Cruces: 575-524-6830 El Paso: 915-500-1055 | www.ELCDC.com Enchantment Land CDC is a local non-profit that assists in the growth and development of small businesses in New Mexico and El Paso, offering local expertise and local decisions on SBA 504 loans. Empowering the Local Economy