Case Study: Market Expansion Analysis

This document analyzed the potential impact of Hillsdale Bank's proposed branch expansion in fictional “Riverbend Metro Area”. The analysis focused on the demographics of the area within 1, 3, and 5-mile radii of the proposed location at 555 Park Avenue. Key metrics examined include population, household income, education levels, and minority concentration. The study also evaluated lending patterns within these radii, comparing them to County averages, using both HMDA and CRA data to assess the community impact of the new branch. Finally, the analysis supported the expansion by demonstrating its potential benefit to both the bank and the community.

The information in this case study is intended to illustrate Premier Insights, Inc.'s analytical capabilities. The names of the financial institution and market areas have been changed for confidentiality purposes.

Project Overview:

This case study examines a market expansion analysis conducted by Premier Insights, Inc. for a financial institution looking to expand its presence in the fictional "Riverbend Metro Area". The analysis focused on the proposed location of a new branch for "Hillsdale Bank," at 555 Park Avenue. The study aimed to provide valuable insights into the area's demographics, lending environment, and the potential impact of the proposed branch. This information was used to assess the suitability of the location, market share potential and enhance the bank's community commitments.

Methodology:

Premier Insights, Inc. analyzed various factors to provide a thorough assessment, including:

• Overall, Area Demographics: The analysis examined population, household, education, and income data within 1, 3, and 5-mile radii of the proposed branch.
• Low-to-Moderate Income (LMI) Census Tracts: This section identified and examined census tracts with a high percentage of LMI residents within the proposed branch's radius.
• Minority-Majority Census Tracts: The analysis also identified and analyzed census tracts with a majority of minority residents.
• Area Home Mortgage Disclosure Act (HMDA) Reportable Lending: The study reviewed lending patterns and key regulatory metrics within the area.
• Area Community Reinvestment Act (CRA) Reportable Lending: The report explored small business lending within the area.

Key Findings:

1. Overall Area Demographics

• 1-Mile Radius: Population was 14,661, with a minority population of 20%, with Black population being the dominant minority group. Average household income was $72,077, with 32% of households classified as low-to-moderate income.
• 3-Mile Radius: Population was 113,082, with a minority population of 70%, with the Black population being the dominant minority group. Average household income was $49,136, and 65% of households were low-to-moderate income.
• 5-Mile Radius: Population was 233,973, with a minority population of 69% with the Black population being the dominant minority group. The average household income was $51,748, with 64% of households classified as low-to-moderate income.

2. LMI Census Tracts

• 1-Mile Radius: Within a 1-mile radius, there was one LMI census tract with a total population of 2,018. The Bank originated $590,000 in loans and $924,979 in deposits in this tract.
• 3-Mile Radius: Within a 3-mile radius, there were 39 LMI census tracts with a total population of 96,074. The Bank originated $14 million in loans and $15 million in deposits in these tracts.
• 5-Mile Radius: Within a 5-mile radius, there were 61 LMI census tracts with a total population of 175,623. The Bank originated $15 million in loans and $15 million in deposits in these tracts.

3. Minority-Majority Census Tracts

• 1-Mile Radius: Within a 1-mile radius, there was one minority-majority census tract with a total population of 2,018. The Bank originated $590,000 in loans and had $924,979 in total deposits in this tract.
• 3-Mile Radius: Within a 3-mile radius, there were 43 minority-majority census tracts with a total population of 105,568. The Bank originated $16 million in loans and $15 million in total deposits in these tracts.
• 5-Mile Radius: Within a 5-mile radius, there were 66 minority-majority census tracts with a total population of 192,835. The Bank originated $17 million in loans and had $17 million in total deposits in these tracts.

4. Area HMDA Reportable Lending

• 1-Mile Radius: Within a 1-mile radius, Hillsdale Bank was ranked 15th in total loan originations, with 2.8% of total HMDA originations within LMI tracts, 2.8% in minority-majority tracts, and 3.9% to Black borrowers.
• 3-Mile Radius: Within a 3-mile radius, Hillsdale Bank was ranked 16th in total loan originations, with 17.9% of total HMDA originations within LMI tracts, 26.7% in minority-majority tracts, and 10.6% to Black borrowers.
• 5-Mile Radius: Within a 5-mile radius, Hillsdale Bank was ranked 16th in total loan originations, with 21.0% of total HMDA originations within LMI tracts, 26.8% in minority-majority tracts, and 14.0% to Black borrowers.

5. Area CRA Reportable Lending

• 1-Mile Radius: Within a 1-mile radius, 11% of CRA loans were in both minority-majority and LMI tracts in terms of loans, with nearly 17% in minority-majority tracts as well as LMI in terms of dollars.
• 3-Mile Radius: Within a 3-mile radius, 59% of CRA loans were in minority-majority tracts and 55% were in LMI tracts in terms of loans. In terms of dollars, 69% were in minority-majority tracts and 66% in LMI tracts.
• 5-Mile Radius: Within a 5-mile radius, nearly 50% of CRA loans were in minority-majority tracts and 40% were in LMI tracts in terms of loans. In terms of dollars, nearly 54% were in minority-majority tracts and 41% in LMI tracts.

Conclusion

The analysis by Premier Insights, Inc. provided Hillsdale Bank with a detailed understanding of the demographics, lending landscape, and community needs within the Riverbend Metro Area. The findings suggested that the proposed location at 555 Park Avenue offered a strategic opportunity for the Bank to expand its market share and fulfill its commitment to CRA and fair lending regulations. This case study exemplifies Premier Insights, Inc.'s ability to deliver thorough, insightful market analysis to inform strategic business decisions.