A $238 million Commercial Bank had eleven branches plus Centralized Lending and Investments.  Organizational profitability analysis revealed that three of the branches were unprofitable.  One was very new (just opened).  Analysis showed it would break even in less than two years. 

 One was very unprofitable.  Break even might occur in eight to ten years.  It was losing over $30,000 per month.  The directors made a united business decision to close the branch.  The bank had invested a lot of money in leasehold improvements.  However, the bank was ahead in the first year of closing the branch and writing off the unamortized asset.  No employee was lost. No customers were lost.

 The third branch is using several strategies to become profitable.  Operational analysis shows that the lease is well above market (nothing to be done here).  The productivity of the branch new accounts and tellers is better than the median for the bank (good job).  However, we did find the telephone expense was very high and something could be done about it.  The branch manager was involved and we further learned that the branch was providing daily service for several large accounts that were housed in the Main Office.  All branches are reviewed matching deposit balances with servicing requirements.  Finally, the bank used the Product profitability system to evaluate customer profitability to find ways to improve individual profitability.  Cross selling will be the key here in existing and new accounts.  Also, the marketing department is working on pricing options based on the product profitability system.

 In short, this Bank will experience improvement of over $2,000,000 in before tax earnings over the next five years from these three branches.  It could even be more.  As an example Central Lending just determined what the incremental return would be on a targeted advertising campaign.  What better way to improve than adding new profitable business.