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TCF Bank's newest Colorado Springs branch offers DVD player for new

Colorado Springs Business Journal, Sep 2, 2005 by Rob Larimer

Frank Serna heard on the radio that the first 150 people to open a checking account at TCF Bank's newest Colorado Springs branch would receive a portable DVD player.

The lure of free electronics led him straight through the bank's shiny, new doors at Centennial and Fillmore.

He was one of 120 people to open a new account during the one- day promotion, part of the grand opening celebration of TCF's eighth Colorado Springs-area branch.

It's pretty cool, said Serna, who is in his late 20s. But will he stick with TCF as a long-term account member?

Uh, we'll see how they are, Serna said with a chuckle, admitting he hadn't really made any other plans beyond walking away with his free gift.

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And TCF management said: mission accomplished.

The number of new accounts opened Monday was more than double what's expected for an opening day, said Marketing Director Bernadette Slowey. We're very pleased with the results, she said.

It's becoming more common for larger banks to offer lavish gifts and enticing premiums to lure customers and claim a greater portion of the consumer market.

But how one gauges the effectiveness of promotional premiums depends on what a bank's goal is.

The success of attracting long-term, loyal customers by offering gifts varies, said Larry Martin, a banking consultant of 20 years and owner of Banking Solutions LLC in Denver.

Often a bank is trying to simply tap a certain demographic or beef up its number of consumer accounts, he said.

That could mean TCF's DVD promo accomplished that goal as well as a few others.

They'll probably make their money back in fees, Martin said, adding that TCF has historically had some of the highest non- interest account fee to income ratios in the state.

That's their claim to fame. That's how they make their money, he said.

A bank's non-interest income revenue comes from fees charged on services like accounts, debit cards, checks and non-sufficient fund penalties.

Last year, TCF's non-interest income accounted for 2.4 percent of its total income, according to statistics from the Federal Deposit Insurance Corp.

Other banks in the Colorado Springs area, including smaller community banks, had percentages between 1.3 percent and 1.8 percent.

TCF caters to the consumer market. It has bank branches near residential and retail areas and is open seven day a week.

That consumer niche is why the bank's fee structure is higher, Slowey said.

TCF's fees may have appeared to be higher in the past because of the overdraft fees, she said, but those fees are necessary because of the bank's customers have diverse financial backgrounds. And some of those customers, she said, don't always bank responsibly.

Slowey said the bank did not raise fees to compensate for the cost of the DVD promotion. TCF also is doing more to attract customers who will have regular deposits, like offering $75 to anyone opening an account and signing up for direct deposit of their payroll check, Slowey said

By using direct deposit, customers are less likely to incur overdraft fees, and eventually TCF's fee structure will begin to look more like those of its competitors, Slowey said.

While community banks often target businesses to generate loan revenue, medium- to large-sized banks invest revenue in capturing the consumer market.

Slowey said TCF is trying to attract more 18- to 34-year-olds.

And, DVD player give-away could have done the trick.

Serna went home happy.

TCF Bank's newest Colorado Springs branch offers DVD player for new

Colorado Springs Business Journal, Sep 2, 2005 by Rob Larimer

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