Correspondent Blog

Based on the futures market, the Federal Reserve is expected to raise the Fed Funds rate to 3.00% at its December 2022 meeting. The Fed will also aggressively shrink its balance sheet to tame unwanted inflation. These two Fed moves, along with the economic environment and customer behavior will impact your forecasting of your cost…

Increasing Wage Gains Will Keep the 50bps Rate Hikes Coming   Treasuries are trading heavy this morning as the Employment Cost Index (ECI) came in above expectations and that is sparking concerns of the dreaded wage-price spiral. That is essentially when fatter wallets encourage more spending which in theory contributes to further price increases.  …

Banks that focus on the customer experience have come to learn that it is not the forward-facing customer experience that matters, but the “total experience” that now counts. Total experience is the business strategy for creating superior customer AND employee experience. In this article, we walk through why banks should focus on total experience (TX)…

Higher Rate Levels Take a Bite Out of Housing Activity   While the Fed has only hiked once to date, they will follow that with a 50bps hike next week, meanwhile, the market has been busy doing plenty of the heavy lifting for the Fed.   One sector that has been a real economic star…

Banks have ceased using LIBOR to price assets and liabilities after 2021. However, some community banks are still deciding on the correct term lending index to adopt. Many banks are uncertain that they have chosen the best term index for their products and markets. We believe that having more options for community banks is beneficial….

Fed Chair Powell Joins Hawkish Sweepstakes We mentioned earlier that it seems each Fed official is trying to out-hawk the other and Fed Chair Powell has joined that competition.   He mentioned yesterday in an IMF panel discussion that a 50bps rate hike is certainly on the table for May and that additional 50bps hikes…

Fed Speakers Continue to Explore Hawkish Frontier We mentioned on Monday with a light week of economic information the trading will be driven mostly by Fed speakers trying to out-hawk the other.   So far, we haven’t been disappointed. Reliably quote-worthy St. Lous Fed President James Bullard was first out of the box with a…

It was 102 years ago, almost to the day, that Babe Ruth hit his first home run as a Yankee against his previous team, the Boston Red Sox. That hit launched a juggernaut that not only changed baseball but changed the view of both team building and risk mitigation. In this article, we highlight the…

Historically, community banks have relied on net interest margin (NIM) instead of fee income to drive return on equity (ROE). In contrast, larger banks have emphasized non-interest income rather than NIM to boost ROE and revenue. For example, 40% of JP Morgan’s commercial banking revenue is derived from fee income, and JP Morgan’s commercial banking…

Examining Bond Portfolio Trends: First Quarter 2022 Beginning in May 2012, we started tracking  portfolio trends of our bond accounting customers here at the Correspondent Division of SouthState Bank.  At present, we account for over 130 client portfolios with a combined book value of $12.9 billion (not including SouthState Bank), or $99 million on average…

Light News Week Leaves Focus on Fed Speak There’s not much on tap this week in the way of first-tier economic data so the focus will be on Fed Speak.   This is the last week for Fed officials to speak before going into their quiet period prior to the May 4 FOMC meeting.  …

This week is the start of bank earnings week, and the best bankers on earth will be presenting their results. It doesn’t matter if you are in front of your shareholders, equity analysts, or boss. Sooner or later, you will need to present data to showcase your results. When making a data presentation, there is…