What’s the Deal With Small Business Banking? January 18, 2018 10:00 AM – 11:00 AM CST

Bob Neuhaus Senior Consultant at J.D. Power Financial Services Practice

Jack Hubbard Chief Experience Officer, St. Meyer & Hubbard

Julie Kleffel Executive Vice President, Small Business Banking at Seacoast Bank

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§  10 Minutes With •  Joe, Mark, David, Tim, Tom, Jack

§  LinkedIn Publishing •  My United States of Sales Series

§  Conversations Quarterly •  Best one ever

§  Public Workshop •  Two open seats for April 24-25

§  Business Finance Basics •  You want deposits?

What’s On Our Plate?

Some Q1 Updates

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§  Senior Director, J.D. Power Financial Services Division §  Senior Positions at Axiom, TNS, Greenwich §  Results generating banker

•  JP Morgan •  M&T

§  Regular Conference Speaker §  Solid Content

Bob Neuhaus

Experienced Financial Services Pro

©2018J.D.Power.AllRightsReserved.CONFIDENTIAL&PROPRIETARY—ForInternalUse.

2017 U.S. Small Business Banking Satisfaction StudySM

BobNeuhausSr.Director–J.D.PowerBankingPractice

January2018

5©2017J.D.Power.AllRightsReserved.CONFIDENTIAL&PROPRIETARY—ForInternalUse.

WhatIwouldliketosharewithyou

• TheWinningFormula(s)• IndustryperformanceonKPI’s–  AccountManagers–  Branchservicequality– Digital

• TrustandNPS

6 www.jdpower.com ©2018J.D.Power.AllRightsReserved.CONFIDENTIALANDPROPRIETARY—ForInternalUse.

TheWinningFormula(s)2017SmallBusinessBankingAwardWinners

West Northeast

South

Midwest

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IndustryperformanceonKPIsisamixedbag

89%80% 79% 76% 76% 75% 68%

Noissueswithbranchappearance

Greeteduponenteringbranch

Experiencednoproblems

Waited5minutesorlessinbranch

Branchrepthankedcustomerandofferedadditionalassistance

CSRhadinformationreadybeforejoiningcall

Accountmanagerdiscussedneedsandprovidedsolution

IndustryAvg.

59% 57% 56%47%

32% 29%

Connectedwithfinancialservicesspecialist

Usedatleast5websitefeatures

Completelyunderstandfeestructure

Branchrepgreetedcustomerbyname

Accountmanagerassignedandcompletelyunderstandsbusiness

Bankproactivelycontactedatleast2times

8 www.jdpower.com ©2018J.D.Power.AllRightsReserved.CONFIDENTIALANDPROPRIETARY—ForInternalUse.

887

743 7529.04

7.42 7.43

FullPartnership LimitedPartnership NoPartnership

OverallSatisfaction OverallLevelofTrust

AccountManagementDonerightmakesallthedifference

|----------------------AccountManagerAssigned--------------------------------------|

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ServingSmallBusinessCustomersintheBranch

79% 71%SmallBusinessBanking RetailBanking

24.8 13.6SmallBusinessBanking RetailBanking

42%25%Nowait

3.95.2Avg.waittime

60%47%Greetedbyname

8.838.58Courtesy

8.568.24Knowledge

Small Businesses

Retail

Incidence

Frequency

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Non-Borrowersareunderserved–thebasics

84%

56%

79%64%

75%76%

37%

73%

48%39%

Welcomedatbranchentrance

Repgreetedcustomerbyname

Repofferedadd'lassistanceand

thanked

Completelyunderstandfee

structure

Usedatleast5featuresonwebsite

AccountManagement

Borrowers Non-borrowers

11 www.jdpower.com ©2018J.D.Power.AllRightsReserved.CONFIDENTIALANDPROPRIETARY—ForInternalUse.

Non-Borrowersareunderserved–accountmanagement

46%

76%

47%

71%

19%

54%

19%36%

AMassigned&understandsbusiness

AMdiscussedbusinessneeds&provided

solution

Contacted2ormoretimestodiscussbusinessneeds

Connectedwithatleastonetypeofspecialist

Borrowers Non-borrowers

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822757

Borrower Non-Borrower

Non-Borrowersareunderserved–trustfactors

7.98 8.19 8.22 8.35

6.85 7.26 7.42 7.68

Putscustomerfirst

Providesusefulguidance/advice

Takesresponsibiltyformistakesandresolves

effectively

Fulfillsserviceexpectations

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Differentiatingondigital

751

813840

Branchcentric;limitedornodigital

Heavyonlineuserwithnomobile

Heavyonlineuserwithmobile

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Digitalexcellencestartswitheducation

SmallBusinessMobileSatisfactionIndex

762

892

Understandmobileproductpartially/notatall

Understandmobileproductcompletely

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BuildingTrustwithcustomersatscale

TrustModel

28%

27%

26%

20%

FulfillsServiceExpectations

TakesResponsibilityforMistakesandResolves

Effectively

PutsCustomersFirst

ProvidesUsefulGuidance/Advice

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2% 8% 10%

43%

86%

11%

29%

56%

50%

12%

87%64%

34%

7%2%

4orbelow 5 6-7 8-9 10

Promoters Passives Detractors

CreatingSmallBusinessBankingAdvocates

NetPromoter,®NetPromoterSystem,®NetPromoterScore,®NPS®andtheNPS-relatedemoticonsareregisteredtrademarksofBain&Company,Inc.,FredReichheldandSatmetrixSystems,Inc.

45

39

27

26

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2017Full-ServiceInvestor

2017SmallBusinessBanking-AccountManagerAssigned

2018RetailBankingWave1

2017SelfDirectedInvestor

2017SmallBusinessBanking-NoAccountManagerAssigned

NetPromoterScore® TrustandNPS®

OverallTrustRating(10-pointScale)

%ofCustomers: 7% 9% 15% 44% 25%

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§  Executive Vice President, Community Banking Executive, Seacoast Bank •  $5.4billion 58 offices, Stuart, Florida

§  Amsouth, BankFIRST §  Commercial Lending School and Stonier Honors Grad

•  Capstone Project – “Implementing a Performance Culture” published by ABA

§  Named Orlando Business Journal’s 2017 Business Executive of the Year

Julie Kleffel

Award Winning Banker

DigitalInnovation–What’sTheDealwithSmallBusinessBanking?JulieKleffel

2018VirtualLearningLabSeries–St.Meyer&Hubbard

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Agenda

Number of Banks Headquartered in Florida per Year

Banks Have Not Been Immune to Change N

umbe

r of F

L H

eadq

uart

ered

Ban

ks(1

)

Pre-Crisis

M&A related consolidation is more or less offset by de novo bank creation

Post-Crisis

M&A and bank failures pick up steam with no de novo bank creation

49.7% Consolidation Since 2008

316 310 307 309 300 308 313 322 308

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q3 Source: SNL Financial and FDIC.gov. Note: Includes Commercial Banks, Savings Banks, and Savings & Loan Associations. Number of banks measured at year end with the exception of 2016Q3 (latest regulatory data available). A bank is included if the charter is still outstanding as of 12/31 of that year with the exception of 2016Q3.

288 248

228 212

201 183

164 155

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Disrupted Industries

January 26, 2016

French taxi drivers clash with police in anti-Uber strike

December 31, 2012

Tribune Co. emerges from bankruptcy

November 6, 2013

Blockbuster Video-Rental Chain Will Shut All U.S. Stores

Bloomberg

January 17, 2017

Sears Clings to Catalog Thinking in an Online World

DealB%k

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It took Hilton Hotels 93 years to build an inventory of over 600,000 rooms

Airbnb got there in just 4 years and now has close to 900,000 rooms

Source: TechCrunch

FIVE CUSTOMER

NEEDS

PAY FOR THINGS FINANCE THINGS GROW THEIR MONEY MANAGE THEIR MONEY PROTECT THEIR MONEY

Customer Financial Needs Have Not Changed in 1000 Years

23 Source: Ignite Corp. and Roger Goldman

FIVE CUSTOMER

NEEDS

PAY FOR THINGS FINANCE THINGS GROW THEIR MONEY MANAGE THEIR MONEY PROTECT THEIR MONEY

Its How They are Met that Have Changed Drastically

24 Source: Ignite Corp. and Roger Goldman

The Community Banking Perception Gap

“Community banks cannot serve the broad financial needs of a business or consumer”

“Community banks can only nibble around the edges of a much bigger relationship, and must take on more risk in order to grow”

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“Community banks cannot compete in a digital world”

Digital Defined

Lower Technology Costs Have Leveled the Playing Field Digital Capabilities and Software Enable Smaller Banks to Compete in Ways Previously Unimagined

Digital Customer Servicing Capabilities Mean Lower Costs

Marketing and Analytics Software to Drive Sales Growth

Level Playing Field is Now a Reality

IMPLICATION: Customers choosing lower cost channels for service ‒ good for customer and bank

IMPLICATION: Banks can now drive additional sales

IMPLICATION: Small banks can now compete in ways previously unimagined… and drive results today

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Confidential&ProprietaryInformation

Central to Any Bank’s Future Success Will Be their Ability to Use Data to Drive Greater Value for Customers and Shareholders

Analytics Capability is a Strategic Advantage

It Starts with Customer Lifetime Value

“Knowing each customer’s profitability is the first step to managing them”

“If you can’t sort out your customers — if you can’t look at them and know who is good and who is bad — then you can’t be customer centric”

Peter Fader Professor of Marketing

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Power has Shifted from Supplier to Customer in Every Industry

•  Proactively identify customer pain points

•  Constantly audit your business model

•  Organize resources around opportunities

Yesterday Today

Positioning digital innovation at the heart of our business

Source: Cap Gemini Technology Consulting 28

Customer/Industry InsightBuild knowledge. Challenge customers with insight to help them grow and prosper

Bringing Together Marketing Analysis and Business Banker Knowledge

Analytics Leverage data from multiple internal and external sources to better understand customer needs

CollaborationClose relationship between Business Banking and Marketing to refine GTM strategies

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Data Management and Effective Utilization is Key

“Because we are more aware of the customer groups we create value with, we can fine-tune our customer treatment strategies as well as our customer acquisition efforts to generate very high returns.” “Our size is an advantage because our data isn’t

trapped in a bunch of different silos. We have one core banking provider, everything flows through it, and the data is readily available.”

-Jeff Lee, Chief Marketing Officer Seacoast Bank

Source: “Finding your best customers with analytics” and “Small Banks Using Big Data”

Unlike Other Community Banks, Seacoast Uses its Vast Data Set to Recognize and Meet Customer Needs

Auto

mat

ed O

ffer

s

Inbound Call

Outbound Call

In Branch

Email

ATMs

Online Banking

Direct Mail

Mobile Banking

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Unique Approach to Serving Our Customers (Patent Pending)

Behavioral Data

FIVE CUSTOMER

NEEDS

PAY FOR THINGS FINANCE THINGS GROW THEIR MONEY MANAGE THEIR MONEY PROTECT THEIR MONEY

Source: Ignite Corp. and Roger Goldman

500

1,000

1,500

2,000

2,500

3,000

2013 2014 2015 2016

Original Sales Rate New Sales Rate

Meeting Customer Needs Vastly Expands Sales Opportunity

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Deepening Relationships

CONSUMER and SMALL BUSINESS

LOANS

Deepening Relationships

DEPOSIT ACCOUNTS

Deepening Relationships

DEBIT CARDS

135%

(UnitsSold)

5,000

10,000

15,000

20,000

2013 2014 2015 2016

Original Sales Rate New Sales Rate

33

Deepening Relationships

CONSUMER and SMALL BUSINESS

LOANS

Deepening Relationships

DEPOSIT ACCOUNTS

Deepening Relationships

DEBIT CARDS

43% (UnitsSold)

Meeting Customer Needs Vastly Expands Sales Opportunity

5,000

10,000

15,000

20,000

2013 2014 2015 2016

Original Sales Rate New Sales Rate

34

Deepening Relationships

CONSUMER and SMALL BUSINESS

LOANS

Deepening Relationships

DEPOSIT ACCOUNTS

Deepening Relationships

DEBIT CARDS

45% (UnitsSold)

Meeting Customer Needs Vastly Expands Sales Opportunity

“ContentisKing,butengagementisQueen…andtheladyrulesthehouse.“

–MariSmith

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What Book Am I Reading Right Now?

What’s the Deal With Small Business Banking? Thank you for joining us!

Bob Neuhaus bob.neuhaus@jdpa.com

Jack Hubbard jhubbard@smandh.com

Julie Kleffel Julie.Kleffel@seacoastbank.com