Quick! Pick a site: here are the seven basic steps that take your banks's plan for a new facility from initial idea to final site selection--plus an overview of the important dollar calculations that your financial people make as part of the planning process.

• Author: King, Mike
• Position: Fundamentals: Branch Planning, Part II

[ILLUSTRATION OMITTED]

Going to the grocery store, preparing a vacation or hosting a party all require some planning for success.

The same is true with the expansion of your branch network. If you want to position your branches in good locations where they draw large numbers of profitable customers, you need to do some planning.

Let's review the basic steps that you should take and the major factors that you must keep in mind when developing a new branch.

1. Evaluate the overall market area

   Start by analyzing the zip code within a county, or several counties, based on the bank's needs. If the zip boundaries include a large area, you might consider focusing on smaller geographic units, such as census tracts or block groups.

   Using the zip codes or other geographic Units, assess which zones Are better For branch expansion. For instance; what is the existing and future population for each area? What are the average household income levels? What are the age characteristics and employment base? Are there any planned future developments such as retail centers, schools or housing? Are there any specific traffic patterns? Evaluate all of these characteristics and trends and create a prioritized list of the most desirable areas for branch expansion. These areas should be ranked from the "most warranted" to the "least warranted."

2. Evaluate the competitive environment

   You need to determine how many competitors are physically located in the market. Also attempt to ascertain the type of growth achieved during the last few years for each of the competing facilities.

   Determine what absolute increases in deposit dollars have been achieved by various institutions and which one has the largest share of the available dollars. What type of amenities are offered: drive-ups? ATMs? The goal is to assess the competitive environment that exists within each area. Many times there is a direct correlation between the growth of the competitors and the demographic characteristics of the market in which they are located. It's important to know who dominates your field within a given locale.

3. Analyze the existing delivery system and distribution

   Determine where large or small concentrations of your existing customers, deposits and loans are located. Analyze your overall market share. Examine the locations, attributes and future potentials of your existing facilities. This analysis, coupled with the previous market evaluation and the competitive assessment, assists in the determination of where future branches should be located.

   The review may reveal that one of your existing facilities is in the wrong location. Maybe the market surrounding this office has declined or is projected to decline. You may determine that the best course of action would be to either close or relocate this facility.

4. Identify and assess each location

   Based upon the overall evaluations of the above characteristics, the actual locations now can be identified as well as the time frames for establishment of a branch, such as "immediate," or "during the next three to five years" and so forth. It is usually sufficient to identify the location to within only a quarter mile of specified intersections.

   At this stage, don't...