MARLBOROUGH, Mass., June 11, 2007 (PRIME NEWSWIRE) -- Massachusetts bank executives attending the Massachusetts Bankers Association (MBA) conference on Strategies for 2007 and Beyond: Challenges and Opportunities (www.MassBankers.org) were advised Friday of the challenging environment and their need to find new ways to continue to thrive and stay competitive.
With net interest margins at a 17-year low, operating costs increasing and hyper competition, the development of non-interest revenue is crucial in order to succeed, according to Jared Cahill, National Director of Alliances for John M. Floyd & Associates, Inc. (JMFA). Citing the Grant Thornton 2007 14th Annual Survey of Bank Executives, today, barely one fourth (24%) of all bankers are confident in their ability to develop new sources of revenue even though almost nine in 10 banks (87%) recognize doing so is crucial to their success.
Cahill urged conference participants to take the time to grasp the new drivers of return on assets in order to effectively compete and win. He also outlined the new bank business model that is needed in order to survive and thrive in the challenging environment.
Cahill advised that net interest margins have eroded, forcing banks to turn to other sources of earnings. To address the margin erosion, non-interest income has become an essential tool to maintain profitability. The new business model for banks includes a variety of methods to:
* increase non-interest income; * lower operating costs; and * grow customer and product penetration.
"In order to be competitive, executives must understand the bank's operating cost structure. Inefficiencies can't be passed on and operating costs and product pricing are not in separate silos," indicated Cahill. "These new market conditions are not an anomaly -- there is a new paradigm and banks that respond to the new environment will thrive."
Cahill concluded his remarks by encouraging all participants to begin a concerted effort to develop a plan to increase non-interest income, lower operating costs and grow in order to compete effectively in the ever changing financial services marketplace.
"In a low-margin market it is particularly important for executives to consider a variety of solutions to enhance their banks. There are growth opportunities available for those banks that learn to navigate the maze of financial change. Your efforts now will have an immediate, positive impact on your bank's short-term performance and its long-term ability to survive and thrive."
Bank executives interested in receiving a free Net Operating Analysis, a valuable tool to use in this challenging environment, as discussed by Cahill during his presentation should visit www.jmfa.com/noa.aspx. And, for a copy of the presentation contact him directly at Jared.Cahill@JMFA.com.
Cahill joined JMFA in 2003 and is responsible for acquiring and managing alliances with financial institutions. He began his career with MBank Dallas, N.A., as Vice President-Commercial Lending, managing a $300 million commercial loan portfolio and working with large national companies. He was a senior manager with Catterton, Inc. of Dallas, managing the operations and liquidation of RTC/FDIC-controlled savings and loan institutions. Cahill is a former vice president of the Credit Union Association of New Mexico subsidiary and he also organized, chartered and managed the community-based Saguache County Credit Union in Crestone, Colorado.
About Massachusetts Bankers Association:
The Massachusetts Bankers Association (MBA) is a multi-faceted banking trade group that represents more than 200 banks all across Massachusetts. These institutions, large and small, are commercial, savings and co-operative banks and savings and loan institutions, in every corner of the Commonwealth, and a few are in neighboring states. Together, its member banks manage an aggregate $523 billion in assets.
About JMFA:
John M. Floyd & Associates (JMFA) is a profitability and performance improvement consulting firm and a leading provider of overdraft privilege programs serving more than 2,000 financial institutions in 49 states and Central America. JMFA is also recognized for training, account acquisition, executive placement and earnings enhancement programs, as well as product, service, pricing and technology improvement consulting. As a direct result of our programs JMFA has helped thousands of clients dramatically improve their performance and bottom line. To learn more about JMFA please visit www.JMFA.com or call 800-809-2307.