Middle-Market Acquisition Program at
$732 Million Bank

Mid-Western Financial Institution
Assets: $732 Million
DDAs: 20,800

In 1998, this 12-branch institution set out to reduce its overall cost of funds by attracting more low-cost deposits. The institution was considering a free checking strategy but feared the approach would cannibalize much of its existing checking fee revenue. Instead, the institution launched a value-added acquisition program through an alliance with Affinion Group.

The two-tiered program offers a basic package of benefits for maintaining a $100 minimum balance, or account holders may select an upgraded "Plus" account for a $5 monthly fee. The institution's goal was to grow market share while offering a value proposition that would generate a stable stream of fee income.

The strategy worked and was used successfully through two small acquisitions, increasing deposits by 40 percent and growing the branch network to 20.