Coastal Heritage Bank
“Pricing a loan so that it is profitable and competitive in the market is not easy to do. This is especially true when your customer has shopped other offers and wants a better deal.
We recently expanded a relationship with a local private school. For a baseline profitability, we first looked at the customer’s total relationship using ProfitMagnifier. We then added the two new loans with our standard pricing to see the change in the profitability profile. However, the price of the new loans was too high to get the deal. We saw that they didn’t have any deposits with us but we knew from their financial statements that they had deposits in other financial institutions. So, when we added these deposits into ProfitMagnifier we determined the additional profit their deposits could bring us.
After we had added all of these loans and deposit accounts into ProfitMagnifier, we saw that we were able to lower the loan rate by 50 basis points, which was lower than the competition’s price; and, because of the added deposits, the profit was higher than the original deal with just the loans. Because we priced our loan lower than the competition’s price, we got their loan; and, we were able to convince them to bring in all their deposits from their other financial institutions!
We could not have done this complex deal without ProfitMagnifier.
ProfitMagnifier helps you price your loans profitability and competitively. Don’t price a loan without it!”
Scott Ambroceo, SVP Administration & Operations