Like most banks, Yardville National Bank in Hamilton, N.J., has historically treated branch openings as festive affairs focused on raising awareness, not opening accounts.
After all, people cannot move their money into a branch unless they know it is there, and grand openings featuring everything from celebrity autograph signings to face painting are tried-and-true attention grabbers.
But Yardville, which is aggressively adding branches in the fiercely competitive northern and central New Jersey, is testing a different model designed to be more conducive to cross-selling and business development.
Last December the $3 billion-asset company began turning its new branches into bistros during their grand-opening weeks. At its last three grand openings it invited local business owners to a sit-down lunch, which gave the branch manager and business development officers the opportunity to network and, in many cases, land new accounts.
Previously, “we would have been holding a carnival in the parking lot with lots of free gifts and free food, but we probably would not have spoken to a lot of people,” said Brian K. Gray, Yardville’s director of marketing. “Now we’re saying, ‘Don’t just come and mingle with your friends. Mingle with us. Sit down, have a free sandwich, and open an account.’ ”
The strategy seems to be working. The three branches Yardville has opened in the last nine months attracted an average of $1.8 million of deposits and $1 million of loans in their first month, and the Ewing Township branch that opened in December is already breaking even, Mr. Gray said.
Though he had no comparison statistics for branches opened before last December, he said there has been “a nice lift in core deposit generation.”
Robert E. Kafafian, the president and chief executive of Kafafian Group Inc., a bank consulting firm in Parsippany, N.J., called Yardville’s early returns “pretty impressive.” He added that a typical new branch needs to bring in $10 million of deposits to break even, which can often take a year or even two.
Yardville, which plans to open three more branches this year and four or five each in 2006 and 2007, has not completely abandoned grand-opening traditions. It still holds ribbon-cutting ceremonies for new branches, and it pitches a special 12-month, $1,000 certificate of deposit with an eye-catching 8% interest rate to those who live within a three-mile radius of its just-opened offices.
Because of the interest rate, the CD is limited to one per customer. Mr. Gray said Yardville typically sells 750 of them or more, but it does not regard the deposits as core. Instead, he said, it looks at each sale as an opportunity to cross-sell, and it has sold additional products to about 20% of the introductory-CD investors.
Peter Soraparu, a banking consultant in Chicago, said Yardville’s free lunches, which the company calls “YNBistro,” would help differentiate it. Cocktail receptions for business owners and community leaders are a common event during grand-opening weeks, but Mr. Soraparu said that no bank he was familiar with had invited them to a midday meal.
“And everybody needs to take a lunch. Anything a bank can do that helps it stand out from the pack is beneficial,” Mr. Soraparu said.
Those sticking with tradition include the $426 million-asset Highland Bank of St. Michael, Minn., which plans giveaways of 1,000 $1 bills and, for one lucky customer, $5,000 for its Oct. 13 branch opening in Burnsville, Minn.
“It’s very important to make an initial splash, and we’ve put a great deal of time and effort” into the event, said Alisha J.R. Johnson, a senior vice president at Highland and its marketing director.
