Despite consecutive years of improvements in the U.S. economy, many banks are still struggling with delivering high performance. Some banks are managing to do just that, showing robust returns on equity over the last several years.
For banks to outperform, they must incorporate important themes into their strategic plans.
Outlined below are some of those areas of concentration that are critical to support bank growth, in order to become a high performer.
Revenue growth – Across all bank sizes (community banks, midsize banks, and large banks), high performers show significantly better efficiency ratios than their peers. In 2015, those banks that continue to invest to grow will be successful.
Scale – When it comes to bank performance, size is important. High performing banks have higher median assets than their peers, and were more efficient in terms of median noninterest expense to average assets ratios.
Loan growth – With the ratio of non-interest income as a percentage of average assets continuing to trend downward for banks, growth in interest income becomes more vital.
Core deposit funding – When interest rates rise, core deposits will be more and more important to your bank’s strategy. Banks can benefit from deeper customer relationships and improved product offerings, to grow their core deposits.
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