9 Tips for boosting profitability: by strengthening your bank's financial performance now, you help protect your institution against acquisition in the current market turmoil.

• Author: Emmerich, Roxanne

THIS YEAR PROMISES TO BE ANOTHER ONE OF UNREST IN THE FINANCIAL SERVICES INDUSTRY. There could be some major shakeouts--with weak banks being closed or acquired. In this worrisome economic environment, a number of bankers are nervously figuring out ways to strengthen their financial position in order to protect themselves against being a purchase target.

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Over the years, my company has worked with a number of banks that were interested in improving their profitability. Some of these banks have upgraded themselves to the point that they are now among the top 5 percent of banks in the country in terms of performance.

We have observed the success of a variety of techniques that revitalize a bank's financial position. These include ways of boosting net interest margin; increasing the number of borrowers who have A+ credit; using unique selling propositions to earn new, premium-priced customers; and re-engineering the internal culture so that every employee is focused on those critical drivers that deliver profits.

Below are nine strategies that can help your bank become stronger, more proactive and more profitable than ever before.

1 Create a System for Attracting Profitable Organic Growth Before Acquiring Another Bank

Acquisition sounds sexy and easy. But when you acquire, you get the bad loans, the people who made them, and the mind-sets and skill sets of the executives who caused that bank to get into the shape it's in--plus the inevitable "us-versus-them" game-playing that typically takes two years to clean up. Now that's costly.

Since culture is the leading predictor of future growth and profitability, it isn't just the impact of having to transform the culture of the new bank that's costly. There's the even-more-costly impact on your own bank's culture--which is already results-driven, upbeat, possibility-oriented and downright rockin'. Plus, there's always the risk that changing the culture of the acquired bank won't work because the employees simply refuse to dance to your tune. It happens.

Although deals are aplenty and it's easy to believe that a good price is irresistible, you'll always want to consider organic growth first and get good at it. Then, and only then, Should you consider picking up one of those banks at bargain pricing.

Before you even think about acquiring, you have to have your own house in order. And, if you have that going for you, why risk it by acquiring a mess? Instead...