$33 Million in Potential Earnings Gains for Banks Identified in New Cornerstone Performance Report

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Sep 08, 2016, 08:30 ET

SCOTTSDALE, Ariz., Sept. 8, 2016 /PRNewswire/ -- The Cornerstone Performance Report for Mid-Size Banks, a new study released by consulting firm Cornerstone Advisors, illustrates the potential for a bank to realize up to $20 million in additional revenue and nearly $13 million in expense reductions for each $1 billion in assets.

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The Cornerstone Performance Report for Mid-Size Banks is a comprehensive analysis of 55 banks with assets of $1 billion to $40 billion, and includes more than 200 benchmark metrics across channels (digital, branch, call center), product lines (deposit, credit, consumer and commercial lending, mortgage, wealth management), and operational areas (information technology, human resources, finance, operations).

Study findings include:

Non-interest income is increasingly important to earnings and is driven more and more by debit card activation and activity. Improving from the median level of performance on ATM/debit income per card to the 75th percentile is worth nearly $2 million annually for each billion dollars of assets.
The median bank generates more than twice the fees per commercial loan as banks at the 25th percentile, while those at the 75th percentile generate twice the median. Becoming a top performer translates to nearly $1.4 million in additional revenue per billion of assets.
Managing IT expenses is a huge lever of earnings improvement. Moving from the 25th percentile to the median can save a bank more than $3 million per year, and moving from the median to the 75th percentile another $3 million.
Marketing spending on online channels more than doubled from 3% to 7% in just two years, but the marketing mix still leans highly traditional.

The newly published study is the ninth edition in the Cornerstone Performance Report series. "The study illustrates in real dollars how banks can improve with top performance. Whether for re-investments or returns straight to shareholders, $33 million annually is real money," said Ron Shevlin, research director at Cornerstone Advisors. "The Cornerstone Scorecard™, with its more than 200 comparison metrics, is a key component of the report and serves to help banks implement their performance improvement initiatives."

"Every year our exclusive study results are being put to use by financial institutions that want to increase their efficiency levels and uncover improvement opportunities," said Scott Sommer, president and chief executive officer of Cornerstone Advisors." Kip Albertson, senior vice president, chief financial officer and strategy officer at Bankers Trust Company in Des Moines, Iowa, concurred. "Bankers Trust has integrated Cornerstone Performance Report benchmarks into our strategic reporting processes to ensure all our business areas work toward clear, high performance benchmarks," Albertson said.

First Tennessee Bank in Memphis, Tenn., also uses the Cornerstone Performance Report to define top performance. "The benchmarks are both revenue and productivity based," said David Popwell, president and chief operating officer at First Tennessee. "The Cornerstone Performance Report has been and continues to be an extremely useful resource."

Founded in 2002, Cornerstone Advisors, a management consulting firm focused exclusively on mid-size banks and larger credit unions, provides customized solutions designed to assist financial institutions with their Performance, Strategy, Technology, Contracts, Payments and Channels initiatives. Cornerstone publishes GonzoBanker, an industry blog; the Cornerstone Performance Report, an annual benchmarking study; and a variety of other research. Cornerstone also hosts GonzoBanker Roundtables for financial institution executives.