Brand Differentiation – How One Bank Is Producing 132% Profit Growth
If your bank struggles to create a clear value proposition and brand differentiation, then we have a case study for you. In December 2021, a Brazilian bank, Nubank, went public in the U.S. and became the most valuable bank in Latin America. Their secret – fanatical customer service. This article looks at how this bank…
How To Take Advantage of the FOMC Meeting
Last week’s FOMC Meeting resulted in an increase in short-term interest rates by 25 basis points (bps) and projected seven rate hikes in 2022 and another four hikes in 2023. The FOMC projects the Fed Funds rate to reach 1.875% by the end of the year and 2.75% next year (see DOT plot below). However,…
Light Data Week but Heavy on Fed Speak
Light Data Week but Heavy on Fed Speak The week is light on economic data but heavy on more Fed speak. The microphones have already been turned on this morning and Atlanta Fed President Raphael Bostic was first out of the gate with several statements that sent Treasury yields immediately higher. First, he noted the…
How To Sell Prepayment Provisions In Commercial Loans
If banking had an Olympics, creating loan value would be an event. The recent Fed meeting, with its hawkish tone, makes the sport of loan value creation even more important. While many lenders are good at gathering new business, they may lack the experience to create optimal mutual value. To make it into the podium,…
The Tightening Cycle Begins
Fed Begins Rate Hikes. More to Come As expected, the Fed raised the overnight target rate 25bps to 0.25% – 0.50%. The updated Dot Plot now shows a total of seven 25bps hikes in 2022, including today’s, and another three hikes in 2023 reaching 2.75%. The longer-run fed funds terminal rate is forecast to…
Countdown to Rate Liftoff Begins
Countdown to Rate Liftoff Begins The March FOMC meeting concludes this afternoon with a 25bps rate hike a foregone conclusion. As we mentioned on Monday, 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 interest in…
How Banks Can Compete for Loans Against Insurance Companies and CMBS
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
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
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…
Do We All Know Where Ukraine is Now?
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…
Using The OODA Loop For Faster Bank Decision Making
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…
Why Now Is The Time To Use Swap Spreads For Loan Pricing
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…