Correspondent Blog

Want to make better decisions and be a better leader? Understanding system thinking is a great unlock. Last week (HERE), we discussed the importance of system thinking and described the four main types of systems (below) that bankers need to recognize before solving a challenge. In this article, we provide a framework for managing problem…

Few questions matter more to a community bank than how its earnings respond when interest rates move. Yet little research has been published to answer this question or how variable-rate lending contribute to risk and profitability. A recent study in 2026 by James W. Kolari, Ivan Pastor Sanz, and Wei Liu (ssrn-6898599) tackles that gap…

When trying to figure out any problem in banking, including strategic planning, it helps you to understand the system you are dealing with. Oftentimes bankers apply the wrong mental model to a problem and come up with a suboptimal answer. System thinking is the ability to recognize a pattern before you act so that you…

Knowing the correlation of interest rates to your bank funding cost is critical. For years, community bankers believed that their deposit base is sticky, relationship-driven, and too lightly priced to move much when interest rates change. By corollary, if your cost of funds barely budges when the Fed acts, you can hold longer-dated fixed-rate loans…

Fed President Warsh didn’t moved rates today and implied that the next rate move might be up. However, for much of the past year, some loud and persistent voice(s) had insisted that interest rates are headed lower, and a surprising number of market participants have arranged their balance sheets as though that outcome were a…

Its World Cup mania and creating a model to predict the winner is excellent training for bankers looking to forecast their deposit run off in the future. In this article, we take bankers through a step-by-step process of “vibe modeling” a World Cup model and then apply it to modeling future deposit run off due…

The International Emergency Economic Powers Act (IEEPA) is a 1977 U.S. statute granting the President sweeping authority to regulate foreign commerce and impose economic sanctions. In February 2026, the U.S. Supreme Court ruled in a 6–3 decision that IEEPA does not authorize the executive branch to unilaterally impose import tariffs without explicit congressional approval. This…

There is an explosion of entities waiting to become banks. In the last 60 days for example, no less than six bank applications were filed (including the formidable Revolut Bank). Behind that, there are a rash of new competitors coming to include banks by Affirm, PayPal, World Liberty, Mercury, NuBank and UKG. Most will create…

Less competitive markets can boost returns for community banks. Specialized lending refers to customized financing tailored to specific industries, asset classes, or complex business transactions. Unlike standard commercial loans that rely on simple financial ratios, specialized lending requires expertise to evaluate unique collateral and cash flow structures. There are some specialized lending opportunities that fit…

While AI can help banks, this month it is more like AI competition. Earlier this month Anthropic released its “Claude for Small Business” suite of agents and ChatGPT introduced its new personal finance experience which connects users’ financial institutions to allow them AI-generated insights. This infrastructure is quickly changing the financial landscape. In this article,…

We might have a divided Congress. Pundits, economists, and the market provide economic forecasts such as GDP, interest rates, inflation, consumer and business demand, loan default rates and banks’ cost of funds.  Unfortunately, people overestimate their competence even in areas where they possess experience and knowledge.  Market forecasts represent the sum of all actors expressing…

It is clear that we are not going to get a rate cut for the rest of the year. Unfortunately, most banks have built in two or more rate cuts into their budget. While a rate cut has been statistically off the table since January, many banks still have not adjusted their deposit strategy and…