measuring opportunity and success

©2013 Fiserv, Inc. or its affiliates www.raddon.com / 800.827.3500

Measuring Opportunity and SuccessBest Banking Practices - Looking from the Inside Out


The Key Questions• What is our strategic plan?

• What is our potential?• Existing Retail & Commercial

• How successful have we been reaching that potential?• Customer Development• Employee Accountability/Recognition

• Are our customers willing to give us their future business?

• What is our market potential?


Asset Median National Median

ROA 0.80% 0.76%ROE 7.37% 6.95%Capital to Assets 10.32% 10.54%Efficiency Ratio 70.76% 72.58%

Earning Asset Yield 4.18% 4.15%Average Loan Yield 5.44% 5.55%Total Loan Growth -3.14% -3.77%Loan to Assets 61.54% 59.51%Net Chargeoffs 0.06% 0.04%Total Delinquencies 0.87% 0.92%

Cost of Funds 0.58% 0.56%Core Deposit Growth 7.57% 7.76%

Net Interest Margin 3.55% 3.54%Noninterest Income to Assets 0.62% 0.54%

Key Financial RatiosIn order to market effectively, we must understand the key financial issues, and how they create the framework of our strategic plan


Upscale14%

NB&TGroup Peer Region National

Consumer Segment Definitions¹ Key Issue Consumer Segment 2013 Average Group AverageAge 18-44; Income <$50K 11% 8% 9% 9% 19%Age 18-34; Income $50K or More 15% 6% 6% 7% 9%Age 35-54; Income $50K to $124.9K 21% 16% 16% 18% 16%Age 45 and Over; Income <$50K 18% 30% 29% 28% 32%

22% 25% 26% 27% 13%Age 35 and Over; Income $125K+ 14% 14% 14% 12% 12%

Total 100% 100% 100% 100% 100%¹In 2009, the low-income consumer break was adjusted from $30K to $50K and the high-income break was adjusted from $100K to $125K.

Head of Household Age45 to 54

$125,000

Household Income 18 to 34 35 to 44 55 to 64 65+

11%Low Income Depositor

or More

$50,000 to$124,999

Under$50,000

15%

Middle Market21%

Fee Driven

22%

Credit Driven

18%

Middle Income Depositor

Measuring Potential Through Segmentation

Segmentation backed by national research allows you to quantify the opportunity for products, services, and balances, as well as estimate channel usage


Fee Credit Middle Low Inc. Mid. Inc.Product Usage NB&T Driven Driven Market Depositor Depositor UpscaleLoan ProductsAuto/Truck Loan 34% 79 141 145 64 61 150Mortgage Loan 47% 54 134 144 62 78 146Home Equity Loan 10% 0 74 146 53 124 148Home Equity Line 11% 14 100 110 50 100 224Overall Credit Card 58% 77 122 104 73 107 136

54% 74 121 108 73 107 138Rewards VISA®/MasterCard® 32% 47 168 115 41 88 162

Personal Line of Credit 10% 28 109 77 117 76 190Other Loan 12% 107 167 116 56 67 133Deposit ProductsSavings 77% 96 122 113 82 98 102Checking 98% 102 101 101 99 100 102Money Market 31% 28 72 100 73 132 156CD 36% 30 73 91 84 135 137IRA 43% 35 112 100 90 105 142Investment ProductsMutual Fund 18.1% 16 107 91 61 127 199Annuity -- -- -- -- -- -- --Stocks/Bonds 23.3% 26 117 81 50 125 222Retirement Investments 42.0% 25 131 104 65 117 170Traditional Delivery²Branch Teller Transaction 78% 111 109 104 93 99 100Telephone--Employee 41% 102 75 91 105 115 108Electronic Delivery²Direct Deposit 78% 85 113 107 95 99 102AVR 16% 103 106 108 101 99 86ATM 71% 117 121 108 88 84 110Direct Debit 52% 82 114 112 87 87 121Overall Debit Card 68% 137 124 112 99 73 92

Debit/Check Card 66% 140 124 113 101 72 89Rewards Debit/Check Card 12% 61 193 110 30 76 121

Prepaid Debit Card 7% 64 131 113 113 92 111Online Banking 64% 129 137 112 64 84 115Mobile Banking 25% 188 229 117 33 17 104Online Bill Payment Service 33% 86 149 121 60 78 132Online Acct. Statements 50% 149 153 105 66 68 109¹Index > 120 = Above Average; Index <80 = Below Average ²Delivery channel data is available only for Customer Relationship Survey participants.

Consumer Segments¹Fee Credit Middle Low Inc. Mid. Inc.

Product Usage NB&T Driven Driven Market Depositor Depositor UpscaleLoan ProductsAuto/Truck Loan 34% 79 141 145 64 61 150Mortgage Loan 47% 54 134 144 62 78 146Home Equity Loan 10% 0 74 146 53 124 148Home Equity Line 11% 14 100 110 50 100 224Overall Credit Card 58% 77 122 104 73 107 136

VISA®/MasterCard® 54% 74 121 108 73 107 138Rewards VISA®/MasterCard® 32% 47 168 115 41 88 162

Personal Line of Credit 10% 28 109 77 117 76 190Other Loan 12% 107 167 116 56 67 133Deposit ProductsSavings 77% 96 122 113 82 98 102Checking 98% 102 101 101 99 100 102Money Market 31% 28 72 100 73 132 156CD 36% 30 73 91 84 135 137IRA 43% 35 112 100 90 105 142Investment ProductsMutual Fund 18.1% 16 107 91 61 127 199Annuity -- -- -- -- -- -- --Stocks/Bonds 23.3% 26 117 81 50 125 222Retirement Investments 42.0% 25 131 104 65 117 170Traditional Delivery²Branch Teller Transaction 78% 111 109 104 93 99 100Telephone--Employee 41% 102 75 91 105 115 108Electronic Delivery²Direct Deposit 78% 85 113 107 95 99 102AVR 16% 103 106 108 101 99 86ATM 71% 117 121 108 88 84 110Direct Debit 52% 82 114 112 87 87 121Overall Debit Card 68% 137 124 112 99 73 92

Debit/Check Card 66% 140 124 113 101 72 89Rewards Debit/Check Card 12% 61 193 110 30 76 121

Prepaid Debit Card 7% 64 131 113 113 92 111Online Banking 64% 129 137 112 64 84 115Mobile Banking 25% 188 229 117 33 17 104Online Bill Payment Service 33% 86 149 121 60 78 132Online Acct. Statements 50% 149 153 105 66 68 109¹Index > 120 = Above Average; Index <80 = Below Average ²Delivery channel data is available only for Customer Relationship Survey participants.

Product Potential in Segments


Retail/ Wholesale Trade Firms Service-Related Firms Other Business FirmsAvg. Checking Bal. Avg. Checking Bal. Avg. Checking Bal.

$5,926 $8,078 $9,923Avg. Dep. Bal. Avg. Dep. Bal. Avg. Dep. Bal.

$26,347 $27,117 $36,675Avg. Loan Bal. - 32% with Loan Avg. Loan Bal. - 30% with Loan Avg. Loan Bal. - 31% with Loan

$34,418 $54,596 $43,500Entrepreneur Entrepreneur OtherTrade Firms Service Firms Entrepreneur Firms

Avg. Checking Bal. Avg. Checking Bal. Avg. Checking Bal.$15,277 $21,050 $19,331

Avg. Dep. Bal. Avg. Dep. Bal. Avg. Dep. Bal.$46,810 $109,628 $55,840

Avg. Loan Bal. - 53% with Loan Avg. Loan Bal. - 38% with Loan Avg. Loan Bal. - 52% with Loan$48,086 $95,887 $89,956Micro- Micro- Other

Trade Firms Service Firms Micro-FirmsAvg. Checking Bal. Avg. Checking Bal. Avg. Checking Bal.



$94,308 $148,078 $329,966Small Business Small Business Other

Trade Firms Service Firms Small Business FirmsAvg. Checking Bal. Avg. Checking Bal. Avg. Checking Bal.



$275,978 $359,975 $429,233Emerging Middle Emerging Middle Other Emerging

MarketTrade Firms Market Service Firms Middle Market Firms

Micro-Firms

$500K to $1.99M

Small Business

$2M and Above

Emerging Middle Market

$100K - $499.9K

Small Business Segment Account Balances1

Annual Sales Size

Type of Business (NAICS Code)

Less Than $100K

Entrepreneurs

1Combined SBNR database from fall 2011, spring 2012 and fall 2012


DatabaseBus. Product Wtd. - Service Use Total Trade Svc. Other Trade Svc. Other Trade Svc. Other Trade Svc. OtherDeposit ProductsFree Bus. Checking 52% 55% 49% 57% 56% 56% 51% 51% 49% 55% 48% 39% 47%Business Checking 37% 25% 22% 24% 35% 35% 39% 43% 47% 39% 50% 51% 58%Bus. Debit Card 38% 48% 37% 41% 37% 40% 37% 33% 34% 48% 28% 32% 35%Business Savings 28% 15% 18% 17% 22% 25% 31% 28% 39% 30% 37% 42% 45%Money Market Acct. 18% 8% 8% 6% 14% 16% 12% 22% 26% 23% 38% 38% 40%CD 14% 5% 5% 8% 13% 12% 14% 12% 20% 20% 28% 26% 34%Loan ProductsBus. Credit Card 65% 42% 37% 42% 71% 64% 66% 77% 79% 70% 88% 88% 88%LOC-With Balance 23% 12% 10% 14% 23% 17% 23% 35% 28% 30% 47% 39% 45%LOC-With Zero Bal. 17% 4% 8% 8% 12% 14% 14% 18% 25% 30% 21% 36% 37%Vehicle Loan-Lease 15% 4% 5% 8% 9% 11% 17% 19% 14% 36% 31% 23% 39%Equip. Loan/Lease 14% 4% 2% 4% 7% 7% 18% 13% 14% 38% 28% 30% 48%SBA Loan 9% 2% 2% 2% 6% 5% 8% 11% 11% 30% 16% 13% 26%Term Loan 8% 1% 2% 3% 4% 4% 7% 7% 8% 29% 15% 15% 27%Comm'l. RE Fin. 7% 2% 2% 2% 4% 4% 8% 6% 11% 8% 20% 20% 28%Construction Fin. 4% --- 1% 4% 1% 1% 5% 3% 4% 6% 6% 11% 17%Business ServicesMerchant Crd. Svcs. 38% 44% 20% 22% 60% 38% 30% 70% 46% 31% 59% 57% 45%Direct Deposit 32% 23% 20% 22% 22% 30% 27% 32% 47% 31% 47% 61% 59%Cash & Coin 29% 23% 21% 24% 39% 25% 28% 48% 29% 31% 55% 37% 46%Payroll Services 24% 5% 6% 6% 14% 19% 23% 35% 39% 33% 43% 54% 53%ACH-Wire Transfer 20% 12% 10% 12% 12% 21% 16% 35% 27% 16% 33% 42% 35%Remote Capture 18% 13% 16% 12% 14% 18% 9% 15% 26% 23% 23% 30% 16%Courier Svcs. 17% 6% 7% 4% 19% 12% 18% 19% 23% 31% 40% 29% 43%Cash Mgt. Services 11% 4% 4% 1% 7% 6% 12% 9% 18% 21% 30% 26% 34%Broker-Ins. Svcs. 10% 3% 4% 4% 5% 7% 9% 10% 16% 12% 18% 30% 29%Bus. Invest. Sweep 7% --- 1% 1% 4% 4% 6% 4% 10% 13% 16% 19% 26%Base 3,637 191 535 147 187 518 218 139 508 306 127 447 314

Less Than $100K $100K - $499.9K $500K - $1.99M $2M and Above

Business Product and Service Use by Segments1

SBNR Small Business Segmentation ModelEntrepreneurs Micro-Firms Small Business Firms Emerging Middle Mkt.

1Combined SBNR database from fall 2011, spring 2012 and fall 2012


Depth of Relationship – Retail HH’sRealizing Potential

Do we still have opportunity for organic growth?

Total Retail HHs

Services Per Household – Retail HHs (Services w/balance)

Services Per Household – Retail HHs (All Services)

Sales Activity

Sales Activity Excluding CD’s

Checking Penetration

Loan Penetration

Avg Loan Balance- Retail

Avg Deposit Balance - Retail

Share of Wallet – Loans (No 1st Mtges)

Share of Wallet - Deposits

Revenue /HH - Retail

Expense/HH - Retail

Increase A HHs

Re-engage E HHs


Depth of Relationship – Commercial HH’sRealizing Potential

Do we still have opportunity for organic growth?

Total Commercial HHs

Services Per Household – Commercial HHs

Commercial Loan Penetration

Average Loan Balance – Commercial HH’s

Non Performing Loan Ratio

Commercial Checking Penetration

Avg Commercial Deposit Balance

Revenue /HH – Business HHs

Expense/HH – Business HHs

Increase A HHs

Re-engage E HHs

Retail Loan Penetration – Commercial HHsRetail Deposit Penetration –Commercial HHsAvg Retail Loan Balance –Commercial HHsAvg Retail Deposit Balance –Commercial HHs


Create Accountability and Recognize Success

Banks that provided bonus incentives to their commercial lenders for loan growth achieved higher levels of profitable, commercial loan growth. (Incentives also factored credit quality and document exceptions)

A culture of recognition creates higher levels of customer satisfaction and higher cross sales


Measure Customer Sentiment• Loyalty

• Primary Financial Institution• Overall Satisfaction• Willingness to give us their future business

• Barriers to future business• Willingness to refer us to their friends and family

• Engagement – Emotional Connection to the bank• Leads to higher loyalty, higher SOW, and higher

financial performance

• Service Performance• What attributes are most important to your customers• How are we performing on different service attributes


Measure Market Potential Existing and Proposed

• Segmentation• Market Size• Market Share• Number of Competitors• HH growth, balance growth• Market Deposits• Deposit Share• Market Loans• Loans Share• Fair Share

• HH’s• Loans• Deposits


Answering the Key Questions• What is our strategic plan? – Understanding the financials

• What is our potential?• Existing Retail & Commercial – Through Segmentation

• How successful have we been reaching that potential?• Customer Development• Employee Accountability/Recognition-Measuring through Household Metrics

• Are our customers willing to give us their future business? -Measuring Customer Loyalty, Engagement, and Service

Performance

• What is our market potential? – Studying the Market


Thank You

Raddon Financial Group701 East 22nd Street, Suite 400Lombard, IL 60148

Office: 800.827.3500

www.raddon.comwww.theraddonreport.com

Contact Information Kory KunzeBank Strategic [email protected]

measuring opportunity and success

Documents

commercial loan growth

existing retail commercial

total loan growth

commercial lenders

total commercial hhsservices

loan ratiocommercial

segments2013 fiserv

total retail hhsservices