Correspondent Blog

Community banks have solid competitive advantages when competing against insurance companies (primarily life insurance companies or “Lifecos”) and commercial real estate securitization conduit lenders (CMBS) for commercial borrowers. Unfortunately, some bankers are not positioning their services correctly to explain why borrowers should do business with their community bank. Some bankers even use fatalistic arguments that…

Investors Await Wednesday’s FOMC Meeting The FOMC meeting that concludes on Wednesday afternoon has the market’s attention, even though a 25bps rate hike is a foregone conclusion. The real focus for investors will be in the forecast for further rate hikes this year, and the updated economic forecast with inflation and GDP key items of…

February CPI Looms for Market The back-up in yields this week has several reasons driving it but concern about inflation is certainly one of the primary factors.   Part of the uncertainty about inflation will be answered by tomorrow’s February CPI report. The news is not expected to be good as the overall monthly CPI…

Ukraine War Will Continue to Dominate Trading This Week Even if the economic calendar were chock full of first-tier releases, it would be developments in the Ukraine war that would dominate trading. The fact we have a fairly light week of data makes the war influence that much greater.   Developments over the weekend haven’t…

The OODA Loop is a decision-making framework that we have found increasingly helpful to solve a variety of problems and give leaders a methodology for making decisions quickly. The concept was developed by Air Force Colonel John Boyd, one of the great strategists of modern times. The framework emphasizes speed and agility while looking for…

Community banks face intense competition for profitable borrowers and relationships.  With short-term interest rates rising and long-term rates still at historically low levels, all bankers should understand how swap spreads may provide a competitive lending advantage.  In this current market, swap spreads are negative, and banks that can utilize swap spreads in pricing loans gain…

Last week, JP Morgan opened banking’s first presence in the metaverse within the blockchain-based virtual world of Decentraland (go HERE for a primer). The “Onyx Lounge,” named after the Bank’s blockchain product, comes complete with a roaming tiger greeting visitors and an ironic portrait of CEO Jamie Dimon, who has been a crypto naysayer. Now,…

In our article last week (HERE), we discussed how the yield curve is currently flat between the three and 20-year points.  This makes term loan pricing between three years and 20 years virtually identical.  Banks that cannot offer competitively priced term loans out to 20 years may be at a significant disadvantage when competing or…

The reality is that most banks only design less than half a product. Sure, bankers are great at getting the basics right, but there is rarely much thought around 66% of the product’s design after that. In this article, we look at the elements of excellent bank product design and provide some hacks on how…

Community banks refine their products and services to compete for better borrowing relationships – the better borrowing relationships are associated with better credit quality, meaningful cross-sell opportunities, acceptable margins and fee income, and higher return on equity (ROE).  Unfortunately, current market dynamics are making it hard for community banks to outcompete for these better borrowing…

Scoff at the NFT’s all you want, but they are your bank’s future. Not every bank, just those that will survive. All the crypto ads during the Super Bowl are another sign of this. Sure, in part, it’s a hype-driven Pets.com moment. However, like the changes that took place around Web 1.0, Web 3.0 is…

In a recent blog [Here], we argued that banks are almost always in an inferior position by not re-quoting the loan rate with market movement until the loan closes. We think that when banks book a fixed-rate loan, the fixed-rate must be finalized at the closing table; otherwise, banks give borrowers a free option that…