Correspondent Blog

Many banks are doing an excellent job at embracing generative AI (Gen AI). However, not all have a specific Gen AI strategy, and they should make their journey more efficient. A quality Gen AI strategy aligns an organization’s objectives, its use cases, and the delivery mechanism and metrics that measure business value. In this article,…

Take a second to think about how much of your operating, sales and marketing effort is spent acquiring new customers versus growing your existing customers. If you are like most banks, 80% of your effort is not directed at increasing product usage. This could be a problem because when you look at conversion rates for…

In Part 1 (HERE), we explained the why and how to use generative AI (Gen AI) for bank strategic planning. We highlighted how Gen AI changes the planning process and provided sample prompts.  In this article, we cover the remaining five steps and detail how to build a Monte Carlo model to test your initiatives….

Most bankers would refuse to accept risk without reward (or revenue).  It would make no sense to risk the bank’s capital without adequate compensation. However, some banks are inadvertently taking risk without any additional revenue. The yield curve is currently flat, and the average community bank’s cost of funding is highly correlated to Fed Funds…

As you approach strategic planning season, one topic that will surely come up is your strategy for generative AI (Gen AI). Luckily, you can turn to Gen AI to help you in your planning, as the strategic process is just one of the many bank processes that bankers can improve with this technology. This article…

Banks often lose 5% of a loan’s value before a loan is even booked due to interest rate risk in loan pricing. Persistently high inflation and the unknowns in the new administration’s implementation of stated policies have translated to rapid increases in long-term interest rates.  In a period of rapid change (or high volatility), we…

Based on the 2007 to 2010 bank failure experience, we modeled the financial health of every bank using the last 16 quarters of historical performance.  We have also created projections for the next 18 months. There are 150 banks that currently have a Grade of “8” out of 10, with 10 being the safest. In…

Last year’s worries of deterioration in labor-market conditions have evaporated and the Fed is still harboring concerns about elevated inflation risks. Many banks budgeted some six rate cuts in their 2024 asset-liability plans last year that never materialized. Going forward, the major unknown is the new administration’s policies that all skew to higher inflation (from…

As fans of the hit Apple TV psychological thriller Severance know, one of the jobs of severed Lumon employees is to find the numbers that elicit negative emotions and make them disappear. Similarly, bankers must do the same thing when dealing with asset-liability management (ALM). This article examines how running multiple bank simulations can help…

A credit tenant loan (CTL) is typically structured as a loan secured by the real estate pledged as collateral, with or without personal borrower guarantees, and, most importantly, the obligation of a credit-rated tenant of that real estate to pay rent.  These loans have both bond and loan qualities.  They are like a bond in…

To ring in and celebrate the New Year, check up on your bank’s future financial health. Based on the 2007 to 2010 bank failure experience, we modeled the financial health of every bank using the last 16 quarters of historical performance.  We have also created projections for the next 18 months. Each bank has an…

For a Boxing Day promotion, we are giving away 60 days of free usage for up to five bankers at each community bank for our Loan Command application. The objective is to allow you to see the latest profitability of your loans and deposits, on a forward looking basis. In addition, you can check out…