By Robert H. Halleck
The Branches you Don't Open Do Not Hurt Nearly as Much as the Ones you Do
In my first two posts I covered bad loans and balance sheet blunders. Today, bad branches.
And, man, I had some honkers. In one case, we were the fourth institution to occupy the branch site. In less than a year, I knew for sure why the other guys weren't there. Stupid? Maybe. Perhaps I was too optimistic. During the savings and loan crisis, we paid $100 for a $15 million branch in a Resolution Trust auction. A decade later I was still trying to get the branch to grow. Our profitability model said it made money but what a drain on time and talent.
Another time when I slipped in my own drool was when I found what I thought was the perfect location and moved so fast my general counsel didn't see the lease for review. I had two cost of living increases before I ever got the branch open. He never let me forget he would have caught that landlord friendly wording. The sad thing is I know he was right.
The common factors of success: visibility, accessibility, favorable rental or purchase terms, growing markets, and member concentration. Prudently applied, they go a long way toward improving your chances of success. It pays to wait for the right location.
Robert H. Halleck, who retired in 2002 from a 35-year financial services career, remains vicariously involved in the industry through his wife, a credit union CEO.
Read Lesson 4.
