Great Western Bank
Our client is a small retail bank in the United States called Great Western Bank (GWB). GWB has 50 branches across the Western United States. In the past two years, the company has experienced a …
This case tests quantitative analysis of a profitability problem requiring candidates to diagnose root causes using financial data (revenue decline driven by interest rate compression), then balance short-term cost-cutting with customer retention risks revealed through market research. The case emphasizes that naive cost-cutting without understanding customer economics can destroy more value than it saves.
Clarifying Information
- As a retail bank, GWB provides checking and savings accounts to members of the public, rather than companies. It then uses these deposits to make loans, also to individuals.
- GWB generates revenue by making three types of loans: mortgages, auto loans, and personal loans. The bank’s assets are evenly allocated across these types of loans and its Central Bank reserves (i.e. 25% in each of the four categories).
- Profitability has fallen by $34M over the last two years.
- GWB has approximately 300,000 customers and $4.4B in interest-bearing deposits
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