The role of bank branches is changing as traditional cash and check transactions decline. This presentation, from BAI Retail Delivery 2009, includes case studes from Citizens Bank, MidSouth Bank, and Coastal Federal Credit Union.

1. What’s Next for the Branch Network – Rationalize or Revisit? David Kerstein Peak Performance Consulting Group® November 5, 2009

2. ActionCase study Take-away Now! Financial institutions need to more accurately target opportunities for de-novo growth and to optimize performance of existing branch networks “Best practice” banks are making more sophisticated use of segmentation data to target specific growth markets Innovative use of technology can improve service and distribution reach, while significantly reducing cost Peak Performance Consulting Group -- Page 2

3. Bank Branches: Do We Have Too Many? Banks have been building branches faster than population has been growing 21% of branches have been open less than 10 years Source: FDIC, US Census, Peak Performance analysis Peak Performance Consulting Group -- Page 3

4. Branches Losing Role as Transaction Point Fewer checks Deposit activity shifting to direct deposit and remote capture Greater use of online payment and debit point of sale Online bill payment projected to grow at CAGR of 19% through 2012 Peak Performance Consulting Group -- Page 4

5. Branches remain critical driver of deposit growth 41% of all deposit growth comes from 8% of branches open less than 2 years Need physical branch locations to continue to grow consumer and small business relationships Aggressive growth in branches due to competition for deposits Peak Performance Consulting Group -- Page 5

6. Too Many Branches or Still Room to Grow? Differences in branch density driven by: Self service channel usage Cultural preferences for face-to-face Branch formats: smaller, more community oriented vs. hub locations Competitive environment Source: Bank for International Settlements, Peak Performance analysis Peak Performance Consulting Group -- Page 6

7. Industry Best Practices Drive Significant Improvement in Result Pick the right spots: improved market and location analysis Better local market knowledge and relationship management Leveraging new distribution models Source: Peak Performance client data Peak Performance Consulting Group -- Page 7

10. Different staff skills: more utilization of universal staff with fewer specialists

11. Tighter integration with hub branches or call centers to provide specialized expertise

12. Greater emphasis on micro-market knowledge and outside sales calling to improve market penetration Peak Performance Consulting Group -- Page 8

13. Recipes for Success: the “Secret Sauce” John Zugschwert Senior Vice President, Distribution Analysis Citizens Bank john.p.zugschwert@citizensbank.com Alex Calicchia EVP and Chief Marketing Officer MidSouth Bank acalicchia@midsouthbank.com Chuck Purvis Chief Operating Officer Coastal Federal Credit Union cpurvis@coastalfcu.org Page 9

14. Thank you! David Kerstein President Peak Performance Consulting Group 512-607-6332 dkerstein@ppcgroup.com www.peakconsultinggroup.com Peak Performance Consulting Group -- Page 10

15. Identifying Strategic Opportunities in Branch Distribution BAI Retail Delivery John Zugschwert SVP, Distribution Strategy November 5, 2009

16. 12 RBS: Market Leading Customer Franchises UK US #1 Small business banking #1 Corporate and commercial #1 Cash management #1 Private banking #2 Personal checking #1 Auto insurance #2 Household insurance #1 branches in New Hampshire and Rhode Island #2 branches in Pennsylvania #2 deposits in New England #3 deposits in Pennsylvania 12

17. 13 Twelve State Franchise Strong franchise in New England and Pennsylvania with good branch distribution in the Mid-West 492 Branches 644 Branches 372 Branches 12 States 76 Metropolitan Areas 13

18. 14 Our Challenges New England: well situated in terms of deposits and branch share Mid Atlantic: well situated in terms of branch share but lag in deposit share Mid-West: Sub-scale player with low branch share, but markets generally over-branched 14

19. 15 Strategic Market Development Citizens Bank has a very large geographic footprint. The creation of specific strategies for each metropolitan market is critical to overall success. Strategic Market Prioritization and Strategy Which MSA Level Markets have the highest potential? Growth Value Economic Outlook What is the strategy for each market relative to position? Overall convenience or niche opportunities? How can Alternative Delivery Support Growth? - ATM Network Partnerships - Co-Branding Opportunities

20. 16 Organizational Growth – De-Novo Branching Once overall market strategies have been developed tactical plans can be executed. Given the competitive environment, prioritizing submarkets within metropolitan markets for growth and creating strategies is key to success. Tactical Sub-Market Prioritization Where are the highest potential sub-markets within each metro market? Can we create critical mass in the sub-markets? Trade Area Opportunity Assessment What is the long term potential for each individual branch decision? Combination of advanced modeling and market experiential knowledge

21. 17 Staff Customer Satisfaction Relationship Building Execution Engagement Branch Characteristics Suitability Accessibility Visibility Type Hours Market Opportunity Competitive Environment Deposit Growth Average Branch Size Proximity to other CFG Branches Brand Equity Branch Performance Hierarchy Branch Performance can be explained with the following factors Each factor builds from the lower factors in the pyramid. The staffing of the branch is critical to its ultimate success. Poor performing staff can undermine the branch’s performance. However staff performance alone cannot compensate for weak market conditions or poor branch design. Features of the branch directly effect the performance of the location. In-Stores typically generate 33% of traditional free standing branch deposits and In-lines generate 70%. There is a trade off between expense and performance. Statistically 65% to 70% of the variability in branch performance can be attributed to the geographic market in which the branch is located. Primary attributes are competitive strength of the market and proximity of other CFG locations.

22. 18 Organizational Growth - Existing Network Optimization Maintaining the value of the Existing Citizens branch network has significant upside potential given the size of the overall network. Key focus areas include: Branch and Customer Segmentation – Focus on best opportunity Branch segmentation will lead to strategy development and prioritization of investment Customer segmentation will lead to effective opportunity development at customer and branch level Technology – Focus on High Quality Service Efficiency CRM Customer Level and Market Level Transaction Automation Branch Characteristics – Focus on the optimal branch features Layout Visual Appeal Features – Drive-Thru/ATM/etc. Branch Placement – Are we in the right locations? Trade area potential Visibility Accessibility

24. Marketing/ Merchandising

25. HR Allocations

26. Partner Support

27. Sales Activities/ CampaignsStrategy Service & Sales Strategy Service Branch Size Segment 3 Smaller Branches With Additional Opportunity Segment 4 Smaller Branches Currently Exceeding Their Market Opportunity Strategy Performance Maximization Strategy Sales Additional Market Opportunity Segmenting the Branch Network Create 4 distinct branch segments with specific short and long term tactics for each

28. 20 Recap Strong franchise Different strategic advantages in different markets Refocusing resources to capitalize on opportunities 20

29. Cranking Up the Offense: Building Deeper Customer Relationships __________________________________________________________________________________________________________ BAI Retail Delivery November 5, 2009 Alexander Calicchia Executive Vice President & Chief Marketing Officer

32. Experienced leadership

33. Entrepreneurial management style

34. Organic growth

35. Quality relationships and dedication to customer service22

37. 170+ ATMs23

38. Strategic Vision 8 24

39. “Staying True to Our Tradition”- Rusty Cloutier, CEO & President, MidSouth Bank We are going to place even greater emphasis to develop deeper more personal relationships with our commercial and retail customers to better meet their needs. Provide a greater emphasis on: decentralized decision-making, employee empowerment increased knowledge about our customer, improved processes 25

40. Success Strategies Our challenge Thin distribution over a large footprint Shift from acquisitions to organic growth How we’ll succeed: Better tools: Oracle On-Demand CRM Better products: market and customer segmentation Clarity of Focus: better support infrastructure Changing the game on distribution 26

41. Better Tools: CRM On-Demand 27

42. We Understand Our Customers Consumer and small business segmentation in each market Product usage, preferences, and potential Sales & marketing strategies Product development & pricing Example: High Level Consumer Segmentation in MidSouth Markets $ Lifestage 28

43. Improve Effectiveness Integrated brand communication: Web, Point of Sale, Newspaper Intranet for employee communication and training Video conferencing for remote training and management coordination 29

44. Cranking Up the Offense Town Hall meetings: Lending in the New Economy Integrated marketing Aggressive PR 30 Rusty Cloutier Has Money to Spare JIM RENDON Rusty Cloutier wants to lend money. If you live in Lafayette, La., you already know this. In large black letters hovering above a pile of bundled green bills, billboards all over town announce, “We have $200 million to lend.”

45. Let’s Wrap It Up! Questions & AnswerContact Info:Alex Calicchiaacalicchia@midsouthbank.com(337)593-3008or find me on:www.linkedin.com 31

46. Express Tellers: A New Model for Improving Distribution Effectiveness Chuck Purvis Chief Operations Officer Coastal Federal Credit Union Raleigh, NC

48. Chartered in 1967 to serve employees of IBM

49. Today we serve 1,200+ employers & associations

50. 201,000 members

51. $2.2 billion in assets33

53. Access to 3,797 shared branches nationwide

54. Access to 55,000 surcharge-free ATM’s nationwide

55. CO-OP Network

56. Allpoint Network

57. Coastal24.com Online Banking34

59. On-campus locations ideal for members from large employers, but economics do not support free standing branch

60. Need solutions that allow physical expansion at low cost to serve35

63. Leads to expense reduction – FTE may be reduced by as much as 50%*.

64. Enables the ability to offer extended teller hours.

65. Reduces the required footprint of the branch itself while at the same time facilitating branch expansion.

66. Fosters sales by freeing the Branch Manager and platform staff from day-to-day operational teller tasks.* Results based on a full conversion of a branch network of at least 10 locations. 37

67. Two-Year Plan 38

69. Installed standalone unit at Lenovo campus in July

70. Lenovo is converting thru-wall ATM space into office space

71. Member service associate will start 4th Q

72. 4,000 Lenovo employees work on campus

73. Operates as a spoke of a larger branch

74. Very Cost-effective: Express Branch model will allow us to open with as little as 1 Express Teller machine and 1 associate. 39

76. Cash and coin withdrawal

77. Official check withdrawal

78. Account inquiries and transfers

79. Signature pad

80. ID verification

81. Receipt printed

82. Check 21 enabled

83. On-screen account # entry

84. Handset/hands free40

85. Express Teller Service Center “We are replacing 110 branch tellers and supervisors with 48 Express Tellers and 3 supervisors to service our 19 location branch network.” 41

86. A Success Out of the Gate! During a Winter storm Coastal was able to open two branches with a single Express Teller from our headquarters that otherwise would have been closed. Our Express Teller Machines , equipped with battery back-up power, kept member service up and running during a power outage. Our extended hours transactions are spiking, 2,500 sessions in October.( 7:00-8:30 a.m. and 5:30-7:00 p.m.) 42

87. Better Ability to Serve Extended Hours 40,000 Express Teller sessions in October Express Teller session comprise 65% of total branch transactions in October 6% of Express Teller sessions done during extended teller hours in October 43

88. Members Migrating to Express Total Branch Sessions 44

89. Serve More Members Without Increasing Wait Time Time Sessions 45

90. 46

91. In Summary Lower costs = more locations Fewer employees Extended hours Better service Member acceptance 47

92. Questions? ? ? ? ? ? ? ?