STRATEGIC PLANNING

CLIENT Reliabank, Estelline, SD

TOTAL ASSETS $110,000,000

CHALLENGE The bank went through a comprehensive planning process with PMC and identified the need to branch into a growing community to ensure is long-term survival. At that time the bank was approximately $36,000,000 in total assets in three locations. In anticipation of potential growth expectations with the establishment of fourth location, the bank identified it had a need to develop methods of understanding the impact that new growth could have on its profitability. The bank needed to develop several internal systems in order to ensure its success when it established a branch. These systems included: a financial management tool – Profitstar, human resource management system, backroom operations, data processing enhancements, and leadership development.

SOLUTION With the purchase of Profitstar and the help of PMC, the bank’s general ledger was redesigned to give better detail for balance sheet and yield analysis. The bank also developed and implemented an Asset/Liability Committee structure and identified pricing and balance sheet mix opportunities to improve profitability and Net Interest Margin. The projection identified an improvement to Net Interest Margin of more than 25 bpts. or equal to $90,000 increase in Net Interest Income when annualized over a 12 month period.

RESULTS By the end of the 12 month period the bank’s Net Interest Margin actually exceeded expectations. After the bank opened its branch, it began to realize growth that exceeded expectations. Profitstar provided and still does today provide critical information to the management team to ensure that new growth and balance sheet mix meet the criteria to ensure a safe and sound financial institution.