In the ever-evolving landscape of banking, where strategic expansion can make or break long-term success, one community bank faced a pivotal decision: where to grow next amid shifting demographics, economic uncertainties, and fierce competition. This case study delves into our real-world collaboration with Liberty Community Bank (names fictionalized for confidentiality, but all data, analyses, and strategies drawn from an actual engagement).
We conducted a rigorous market evaluation to pinpoint high-potential expansion opportunities, aligning perfectly with the bank's unique business model. By blending demographic insights, economic trends, competitive intelligence, and advanced regression modeling, we uncovered actionable pathways to sustainable growth—proving that informed decisions aren't just smart; they're essential for thriving in today's financial world.
The analysis aimed to evaluate the potential for bank expansion into several markets with the intention of identifying the optimal growth market(s) based on the bank’s business model.
“Liberty Community Bank sought to expand its footprint and required a comprehensive analysis to identify promising markets. Premier Insights was retained to conduct an evaluation of potential markets, considering demographic, economic, and competitive factors.
Premier Insights employed a multifaceted approach, combining:
The size of any given market in terms of total deposits was largely a function of area population. On average, in Florida, an increase in population of 1 person added roughly $20,000 to the overall deposit market. Area income also played a role in the total market size. On the average in Florida, an increase of $1 in total area income added $0.95 to total deposits. A one percentage point increase in population growth added on the average 1.83 percentage points to annual deposit growth in Florida. A one percentage point increase in income growth added on the average 1.85 percentage points to annual deposit growth in Florida.
The regression model indicated significant potential in most areas, with the exception of Lackey and Greenleaf counties. Gateway and Metro Counties represented the greatest potential due to their size. Other markets that represented significant opportunity included Horizon, Capital, and Tidewater.
Liberty Community Bank Performance:
Liberty Community Bank averaged an annual growth in assets of 9.3% during specific time periods in the markets in which it currently operates. The largest growth during this period was in the Riverbend and Meridian markets with 112% and 110% increases in assets respectively. The weakest growth was in the Sundale and Amand markets with -32% and -5.9% changes in total assets during this time period. The average ROA was .49%, with the highest in any given year reaching 1.89%. These performance numbers and demographics were used to estimate potential in counties evaluated in this report.
Specific County Examples:
Through Premier analysis, the bank identified suitable markets for targeting future growth opportunities. Quantification provided specific metrics, including pro forma forecasts and revenue projections, which were used to determine the appropriate level of investment in each market, facilitating strategic decision-making.
Premier Insights specializes in advanced analytics, providing strategic solutions to financial institutions. As demonstrated in this case study, as a trusted partner, Premier Insights can assist banks in:
By leveraging the expertise of Premier Insights, financial institutions can navigate the complex regulatory environment, optimize their lending practices, and achieve sustainable growth. Premier Insights brings the knowledge level, skill set, experience, specialized financial, and technical expertise needed to effectively manage and ultimately mitigate exposure to fair lending risk.