Leveraging the ARC Program for Competitive Advantage
THE SITUATION
How to find a competitive advantage?
A bank with assets totaling $500 million in Northeast Texas is facing significant competition — from both local community banks and national/regional banks. In addition to stiff competition for deposits and loans, they recently completed an acquisition and are looking to drive their capital back up.
THE SOLUTION
Differentiate their bank by offering 15 and 20 year fixed-rate lending products via the ARC Program.
By adopting the ARC Program, the bank can now compete head-to-head for many of the same clients as the national banks. At the same time, there are very few community banks in their markets that have a long-term (10+ years) fixed rate offering. With ARC, they are now equipped to compete and win against both segments of competitors.
THE RESULTS
Within a few years of adopting ARC, the bank produced over $80M in new loan production, and approximately $1.2 million in new fee income from ARC loans.
They acquired a number of national clients they previously could have never even had a conversation with, because they were not on their sophisticated level. With ARC, they now have the ability to offer “big bank” type products, while still offering local community bank service. Finally, the ARC Program has allowed the bank to mitigate the risk of changes in interest rates. By having more floating rate loans on their books (while their customers get fixed), the bank is better equipped to stabilize their NIM.