Site unseen: what do you do when you need to find a new branch location, but no parcels meeting the minimum requirements are available?

• Author: Reider, Steven
• Position: Fundamentals: Branches

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Consumers value branch convenience. Studies show that institutions that maintain large branch networks are rewarded with a disproportionate share of consumer deposit balances. Driven by this phenomenon, institutions of all sizes are competing to build the most convenient, accessible, widespread branch networks, whether in their own communities or across multistate operating areas. However, finding viable branch sites is more difficult than ever. There are three reasons for this difficulty:

* The rampant expansion of other bank networks.

* Similar expansions by other retailers, such as pharmacies and restaurants.

* A re-emphasis on urban branching in areas where undeveloped shopping center out-parcels are not prevalent.

In order to secure an acceptable banking site in the face of competition from Starbucks, Walgreens and new and emerging bank competitors, financial institutions must approach site identification as a primary strategic function, not just an afterthought in the overall branch planning process. The following steps will help your institution identify branch sites, even in market areas where no available sites are readily apparent.

1. Define strategic goals for the proposed branch, including what the optimal configuration would offer and what the minimum acceptable configuration could offer. Be sure to include your bank's facilities department as well as the bank's architect and commercial real estate broker in this effort. Be specific in defining the optimal and minimum scenarios, for example: Optimal is 4,500-square-foot free-standing facility, four drive-in lanes plus escape lane, with our own exclusive parking; minimum is 3,000 square feet, two drive-in lanes, shared parking acceptable.

2. Identify immediately available sites that meet the optimal configuration described above. This is the easiest situation, and the only situation that bankers should even consider addressing themselves. And while the "management committee rides around in a van looking for for-sale signs" approach may yield the optimal site on rare occasions, it is generally beneficial to enlist the assistance of professional real estate brokers, who can uncover sites when the management tour proves unsuccessful. Note that even when a site appears to meet the optimal requirements, always obtain a survey and other qualifying documents to ensure that there are no site issues that would render the apparently optimal site unfeasible.

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