Correspondent Blog

Some Friendly Inflation News Appears The last major piece of economic information is out this morning and April personal spending slightly bested expectations rising 0.9% vs. the 0.8% forecast but was off against March spending which was revised higher from 1.1% to 1.4%. Adjusted for inflation, spending rose 0.7% vs. 0.5% in March.   That…

While every bank talks about delivering on their service promise, only about 35% of banks have a formal effort and track key performance indicators (KPI). It is no surprise that these banks not only have higher customer experience performance but have a higher return on equity numbers. A better customer experience means less churn, a…

Customers and competitors are challenging community banks to extend loan duration – borrowers are eager to lock fixed rates before they rise further, and many competitors are happy to oblige.  But what are the optimal fixed terms for community banks given today’s interest rate, credit, and liquidity environment?  While every bank’s mix of deposits and…

Treasuries Under Pressure as Week Opens Equities are finding an early bid this morning off news that President Biden will review the China tariff policy. That comment boosted risk assets on the possibility that some tariffs may be rolled back. Going from a review of China tariffs is one thing and getting to actual rollbacks…

Events in this Cycle Have Happened Fast With no economic releases today, and no planned Fed appearances, it could be a quiet start to the weekend. Let’s hope. For now, Treasuries are sliding from unchanged to down slightly in price with a rebound in stocks indicated. Whether stocks can hold those opening gains into the…

If your bank truly wants to be known for service, the very first step is to get your problem resolution process right. When it comes to problem resolution, the two metrics that matter the most are the number of interactions required to solve the problem and the time it takes to solve the problem. The…

In two recent articles, we reviewed the banking industry’s deposit behavior with regard to cost of funding earning assets (COF) (HERE), and we compared how community banks’ COF behaves relative to national banks in a rising interest rate cycle (HERE).  We demonstrated that the average community bank’s COF is highly correlated to short-term interest rates…

Powell’s Tough Talk Continues We mentioned on Monday investors were going to be looking for clues both for how the economy is reacting to the early rounds of rate hikes, and also additional clues as to the path of those rate hikes. The market and Fed Chair Powell offered up some partial answers to both…

Looking for Clues Treasuries are starting the week tentatively in the green as they await more Fed speak and a look at April retail sales and housing activity. With the rise in rates and, of course, inflation the market will be looking for any sign of buckling by consumers.   As far as Fed speak,…

Hawkish Fed Speak Continues Treasuries are weaker this morning as some hawkish commentary late yesterday from Chair Powell and San Francisco Fed President Mary Daly reiterated the Fed’s commitment to squash inflation.   Powell’s comments were interpreted differently by various outlets but he repeated his comment from the FOMC press conference that should inflation continue…

April CPI Hotter Than Expected April CPI disappointed markets with a hotter-than-expected read and that has sent Treasury yields higher once again.   The overall rate rose 0.3% for the month which was well off the 1.2% increase in March but a touch higher than the 0.2% expected. The year-over-year rate ticked down to 8.3%…

The most significant problem with bank innovation is that bankers see or hear about a sexy piece of technology at a conference or at another bank and then acquire it. The new piece of technology ends up solving a known problem but, in the process, creates more problems, and risks, than it solves. It’s called…