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- W101406092 abstract "Community banks have many resources at their disposal to improve profitability. However, those resources are often not used to their fullest potential-a shortcoming that is becoming increasingly critical. Here are ways you can better use what you've got. Shareholders. Many community banks miss a good marketing opportunity by treating stockholders as if they've forgotten that stockholders are owners. They don't feel obligated to keep shareholders well informed about the bank. Indeed, many typically provide shareholders with only a condensed statement-a half-page that mainly contains basic balance sheet data-twice a year. Such minimal efforts are insufficient to interest shareholders in promoting the bank to business associates and friends. Banks could do several things to stimulate interest. These include providing shareholders with quarterly financial reports, sending them announcements about new bank products, and notifying them about personnel changes. In addition, they could offer special services for shareholders, such as lower credit rates. Increasing value. Another way of building more shareholder interest is boosting the value of their shares or increasing the number of shares they own. In the past most community banks have tended to pay more attention to depositors. There are several ways banks could increase their stock price. For example, they could form holding companies or employee stock ownership plans, which in turn would acquire shares. This would reduce the number of outstanding shares; demand for the reduced pool of shares could lead to higher per-share prices. The banks could also develop a dividend reinvestment program. So, for example, if a bank has an annual dividend of $100 and had shares trading at $25, a shareholder could get his choice of $100 or 4 shares. Shareholders could approve a program that would provide for either automatic reinvestment or give them a choice of cash or reinvestment when the dividend is declared. Many top corporations already have these programs. We don't know of any community bank, however, that has such a program. They are behind the times in equity management. Directors. Community bank directors are another good marketing tool. They often have a network of business associates and friends who could likely use the bank's services. Many of their acquaintances are affluent-good prospects for the bank. Yet directors are often one of a community bank's most underutilized resources. Even if they've served on the board for years, you should not assume they know how to promote the bank. Here are two ways banks could make better use of their directors: (1) Ask them to provide three or four names of potential customers at each board meeting. They should be willing to sign letters sent to those persons by the bank. (2) Ask the directors to bring business associates to a catered lunch in the bank's boardroom, which are often very impressive rooms, where they would be introduced to the bank's top officers. Alternatively, the directors could take business associates out to lunch and later them bring them back to the bank to meet with its top officers. …" @default.
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- W101406092 date "1989-08-01" @default.
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- W101406092 title "How to Better Use Your Bank's Resources" @default.
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