Published in Wisconsin Banker
March 2010

On a Cost-Cutting Crusade
Banks save money and resources in ways that benefit customers and staff

By Becky Nelson

Wisconsin banks are finding ways both small and large to trim facilities and operations costs, often saving energy and reducing waste in the process.

For one bank, controlling costs means handling maintenance and repairs internally rather than outsourcing. For another, it means investing upfront in more efficient fixtures that will significantly reduce electric bills in the future. Yet another focuses on renegotiating service contracts. Some rely upon a dedicated facilities manager; some on operations officers; and some even get the entire staff involved.

But no matter the bank’s assets, number of locations or staff size, there are ways to reduce spending that don’t require a great deal of additional effort.

Lydia Bessert has shared many of her ideas with fellow members of the WBA Retail Section Board. (See “Saving Money While Managing Your Facility” in the December 2009 Wisconsin Banker.) As vice president, facilities and building, at Sturgeon Bay-based Baylake Bank since 2005, Bessert has learned through experience as the bank expanded from nine to 28 locations and grew to $1 billion in assets.

She keeps careful records and prepares a quarterly report for her supervisor that details the projects she is working on and how much they have saved.

The savings are not always reflected on the bottom line, Bessert points out. “Often, the savings is money that is not spent in the first place,” she said.

It may require making an initial investment that will be repaid incrementally, as was the case with a project to install LED lighting in the outdoor signs at nine of Baylake’s locations. Focus on Energy provided rebates to cover between up to 18 percent off the cost of the project. The energy savings began immediately, totaling more than $6,000 in the first partial year.

“It’s the right thing to do, but it will take a few years to get the payback,” Bessert said. The lights have an expected lifespan of 75,000 hours, or about 17 years.

Emphasis on Efficiency

Black River Falls-based Jackson County Bank, a $212 million institution with five locations, installed new energy-efficient interior lighting. Although the payback time on the investment is four years, employees and customers noticed a difference immediately in the brighter, more natural light, said President John Drace.

The bank also replaced the water-cooled compressor on the air conditioning system with three smaller units that turn on as needed. The new system reduces water and energy usage – and results in a lower sewer tax, explained Fred Goettl, executive vice president, who is in charge of the bank’s facilities management.

But perhaps what saves the bank the most money is the “can-do” spirit of its 50-plus employees.

“We have an employee who’s pretty handy. She has the attitude, ‘We aren’t going to pay anybody to have that done; I can do that,’ ” Goettl said. Using parts from an old machine that another bank no longer wanted, she has repaired the bank’s three single-pocket proof machines to keep them running.

To reward employees, the bank has offered incentives such as a $25 gift card presented at a staff meeting for an idea that saves the bank $100 or more in a year.

“For us, it’s a culture. Our folks don’t spend or use what they don’t need,” Drace said. “There is an emphasis on always taking a look at how we can be more efficient and more cost-effective, which allows us to give better pricing to our customers.”

Less Outsourcing

Park Bank in Madison has also relied more on internal resources over the past decade. Rick Jowett, facilities manager, handles the day-to-day operations. He and Sandra Schettl, senior vice president of operations, share long-range planning responsibilities and meet weekly to discuss their role in meeting the bank’s strategic goals.

A facilities staff of one full-time and one part-time employee do much of the work at the $803 million bank’s 12 locations. They take care of most of the landscaping, lawn service, and daily garbage removal from parking lots, minor snow removal, painting, and small repairs to buildings and equipment. The software program Track-It! helps the maintenance staff prioritize their day.

“In general, our bank’s philosophy is doing things ourselves when we can versus outsourcing the service,” Schettl explained. When a branch has an immediate need, “it’s nice to have somebody on your staff to attend to it who is not wearing a business suit,” she said.

Both Schettl and Bessert, of Baylake Bank, said they participate in networking groups to generate new ideas to save on operations and facilities costs. Bessert is a member of the International Facilities Management Association, which has a Banking Institutions and Credit Unions Council and an online discussion forum. Schettl has met other operations managers through her data processor’s quarterly meetings.

More Money Savers

Reviewing contracts carefully is a must, Bessert said. As an example, her floor mat vendor raised rates by 18 percent recently, when the contract specified that rates could increase by just 6 percent annually.

Jody Moore, assistant vice president — administration for Layton State Bank, a $130 million bank based in Milwaukee, pays close attention to the bank’s snow removal contract. Rather than a contract that sets rates by the job or the hour, negotiate to pay for a set number of inches. (Moore suggests 70.)

“If snowfall for the season exceeds the stated amount in inches per your contract, you only pay for the additional inches. If snowfall is under, then smile and pay nothing extra,” she said. “The seasonal contract gives you the ability of knowing in advance what your initial costs will be, which is great for budget planning.”

“Always ask questions and request discounts,” Moore added. “Most service providers are agreeable to negotiating the cost of their services.

Other ideas that Wisconsin banks have implemented include:

• Reducing cleaning services from five days a week to fewer, longer sessions;
• Washing windows twice annually rather than monthly in the summer;
• Reviewing phone bills and disconnecting unused phone lines;
• Asking for trade-in allowances when purchasing new equipment;
• Replacing annuals with perennials in outdoor landscaping;
• Requesting a discount for prepayment (such as for fertilizer/lawn services);
• Organizing a supply swap among locations to redistribute everyday items such as file folders, binders and paper clips;
• Purchasing supplies internally rather than using a service;
• Programming thermostats to reduce heating and cooling costs at night;
• Eliminating personal heaters;
• Adding light timers;
• Reviewing and changing automated sprinklers; and
• Scaling back on interoffice deliveries.

Getting employees to help make the changes usually isn’t a hard sell, said Bessert, who has become an invaluable resource to staff not just for their everyday needs but when disaster strikes as well. She has dealt with a fire, flood, lightning strikes, and a car driving into one of the branches in just four years. “My motto is to manage buildings so managers can manage people. That’s what I keep drilling into them,” she said.

“It really comes from the top down,” Schettl said. “We try to instill the culture, ‘If you owned this company, what would you do?’ ”

Focus on Energy

Focus on Energy evaluates businesses’ energy use; offers financial assistance for energy efficiency projects and renewable energy systems; and provides technical expertise. There is no cost to participate, but to qualify for incentives the business must be served by a participating utility. Go to www.focusonenergy.com or call 1-800-762-7077 to get started.

Nelson is a freelance writer for the Wisconsin Bankers Association.