ASSET/LIABILITY MANAGEMENT

CLIENT Republic Bank, Duluth, MN

TOTAL ASSETS $145,000,000

CHALLENGE The bank requested assistance from PMC to assist with the setup and deployment of Profitstar. The bank's Net Interest Margin was significantly below their peer group and as a result, overall profitability was below acceptable levels.

SOLUTION The project began with review of the adequacy of the bank's general ledger and proper alignment of the Profitstar's chart of accounts. Once that had been completed and we were satisfied with the integrity of the download of data, we began to develop a formal Asset/Liability Committee structure with proper policy and procedures.

RESULTS Within a 6 month time frame we identified significant profitability opportunities through pricing adjustments and changes in the deposit mix. Based on several projections, the Asset/Liability committee identified which strategy would optimize profitablility and yet not limit growth opportunities. Projections indicated an increase in NIM of over 60 bpts. in the following 12 month period. This would equal over $700,000 increase in Net Interest Income annualized over 12 months. The bank actually exceeded these projections due to actively managing the NIM using Profitstar projections on a monthly basis.