Earning With Efficiency
When you’re trying to price a commercial loan, sometimes it can feel like you’re flying blind. Is this deal profitable? Is it too risky? It’s an unsettling feeling, and it’s one Dave Paulson, Head of Wholesale Banking at United Bank, understands.
“You just don’t know how much money you’re leaving on the table or, quite frankly, how many deals you’re losing because you’re not locked into the market,” said Paulson.
Finding a Solution
So, Paulson and his team at United, a $6.6 billion bank headquartered in Connecticut, set out to find a pricing solution that could give them the information they needed. United chose PrecisionLender, because they wanted something that was live to the market, was iterative, and allowed for scenario analysis. United needed to stay on top of market trends, on top of their portfolio, and have a good view of profitability.
They also wanted to make their relationship managers’ lives easier.
“It really came down to, ‘How do we make the banker most efficient with their time?’ And that comes with integrating across a multitude of different systems,” Paulson said.
Assembling an Ecosystem
Paulson knew that would be achieved by assembling a sales ecosystem. Initially, United started looking at loan origination systems (LOS), but because an LOS typically has a lengthy implementation time, they decided to start the process with PrecisionLender. Paulson also knew that the sooner PrecisionLender was in place, the sooner United would be able to reap a return on their investment.
Since implementing PrecisionLender, and integrating the solution with CRM and LOS systems, United Bank has improved their ability to steer their portfolio, to determine if the deals they’re pricing are profitable, and the way their RMs approach pricing deals.
That’s had a dramatic effect on United’s results.
“We’ve probably enjoyed a 200 or 300 basis point increase in our ROE,” Paulson said.
With the growth spurred by PrecisionLender, and the ability to structure deals with clearer visibility, Paulson has been able to restructure the incentive plan used for his RMs. They’ve moved from a plan based on production, to one based on ROE targets.
“What that’s done is put the bankers in a position where they grind it out for every extra basis point. We find that it creates the right alignment, because we’re not in a position where they’re producing for production’s sake. They’re doing it for the benefit of the shareholders.”
The positives don’t end there. When it comes to deals, United is also doing more with less.
“We’ve actually booked fewer transactions and made more money, and not consumed as much time and energy in the channels that are our production areas,” Paulson said. “Using PrecisionLender early and up front affords us the luxury, before we consume a lot of resources internally, to say, “Can we get the pricing that we need to meet our shareholder objectives?” If not, we’ll gracefully exit the situation.”
Where once United was flying blind, they now have a clear vision of the way forward. It’s a future that includes smarter decisions, better deals, empowered RMs, and happy shareholders.
Learn more about United Bank.
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