Crowe Chizek Study Sheds Light on Financial Institution Branch Performance.

Study Finds Banking Industry Will Continue to Rapidly Expand Its Network of Branches

OAK BROOK, Ill. -- Branch expansion in the banking world will accelerate over the next three years, according to Crowe Chizek and Company LLC's recently released Crowe Report on Branch Performance. The study shows that financial institutions plan to open an average of 21 percent more branches over the next three years. During the previous three years, banks opened an average of 18 percent new branches.

Crowe's branch-performance study examined operating practices and performance of 1,994 branches in 91 financial institutions across 32 states.

Key findings include:

* According to the study, more than half of all institutions give their branch mangers outside sales calling goals. The analysis indicates that such branches generate 200 percent more business money market accounts and nearly 8 percent more business checking accounts per branch than those that have no outside sales calling goals.

* Using incentive compensation for financial institution staff results in an increased number of checking accounts. The analysis found that branches with incentive compensation for desk staff sell 23 percent more personal checking accounts per employee than those without incentives. Nearly 67 percent of institutions indicated they have formal incentive compensation programs for employees.

* Branch performance standards vary widely in the industry. According to Crowe's study, the most common measure of branch performance used today is deposit growth. However, branch profitability has long been seen as a much more accurate way of measuring branch performance. Deposit growth can be skewed by large balance accounts, which may also be low profit accounts. Even with these concerns, fewer than half (43 percent) of the institutions surveyed use branch profitability as a measure of performance.

"We performed this study because retail banking executives across the country have told us they are concerned with how to improve branch productivity, how local demographics affect performance and how to set reasonable performance goals for their branches," said Timothy Reimink, senior consultant at Crowe. "This study sheds light on many areas that are affecting financial institutions today and establishes benchmarks for branch performance."

Crowe's branch-performance study examined branch level performance data such as deposit product sales, loan product sales, investment sales, households, total number of accounts and balances by product. It also looked at fee income and non-interest income, overdraft charges collected and waived, staffing, operating expenses and transaction activity counts. The study examined operating practices, which covered sales practices, compensation and human resources programs, management practices and branching strategy.

For additional information or an in-depth discussion of the results, please contact Angela Andreae, 317-208-2578, [e-mail].

About Crowe Chizek and Crowe Group

Crowe Group LLP, the parent company of Crowe Chizek and Company LLC (www.crowechizek.com), is one of the top 10 public accounting and consulting firms in the United States. Under its core purpose of "Building Value with Values[R]," Crowe assists clients in reaching their goals through services ranging from assurance and financial advisory to performance, risk and tax consulting. Crowe professionals provide public and private companies with thought leadership to clients in the financial services, healthcare, government, private equity sponsored, inventory based and not-for-profit industry sectors, among many others. With 20 offices and more than 2,300 personnel, Crowe has been recognized by a number of organizations as one of the country's best places to work. Crowe serves clients worldwide as the leading independent member of Horwath International global professional services association.