2023 Community Bank Case Study Competition Journal

SECOND PLACE: Iowa State University

from the Federal Home Loan Bank (FHLB). While the bank has traditionally borrowed from the FHLB to manage interest rate risk, it presently has a healthy line available for future advances to address liquidity. Utilizing brokered funds and initiating deposit promotions would be considered secondary sources. While the bank’s low LTD has a negative impact on earnings, it is favorable for liquidity management. Having the aforementioned right side options provides comfort in an interest rate environment that places a prohibitive penalty on utilizing asset (bond) sales. Additionally, PSB’s core deposits from a large geographical area in multiple rural markets allow for stability. Halterman reports the bank utilizes two third party services that track core deposits. This additional tracking provides both affirmation and value in an uncertain market. While PSB is growing assets, its loan growth is not keeping pace, weighing down earnings. The bank has steered clear of credit problems. It has also avoided missteps while establishing a presence in the seven communities it serves. These mitigations have helped ensure consistent profitability to build capital for further growth. Part II: Staffing Recruited and Retained The tight labor market following the COVID-19 pandemic negatively affected the banking industry. Labor turnover spiked to 23.4% in the banking industry, the highest in six years (Dodds). Halterman states that PSB has felt

the impact of high turnover rates for their 80 employees, especially in customer-facing positions, such as tellers and customer service representatives. To stay competitive in retaining employees in their banks, PSB pays Des Moines market wages rather than the wage level in their smaller towns. The difficulty in staffing these positions led PSB to merge the roles of customer service representatives and tellers. Tellers had experienced extended waiting periods during the slow times of the day; the merged position allowed employees to be active in different roles throughout the day. The gained efficiency allowed PSB to increase the teller/customer service representatives’ pay to $20 an hour, more than $3 higher than the average teller wage in the Des Moines area (Teller Salary in Des Moines). PSB has also fine-tuned its benefits package to attract applicants and retain workers. The bank increased the employer match contribution While the bank has traditionally borrowed from the FHLB to manage interest rate risk, it presently has a healthy line available for future advances to address liquidity.

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