Correspondent Blog

75bps Returns as the Expected Rate Hike for Next Week The initial chatter about a possible 100bps rate hike that came after the ugly June CPI report has died down and a 75bps rate hike has returned as the consensus outlook for next week’s FOMC meeting.   The chatter died down immediately after Friday’s University…

The Federal Reserve is rapidly changing the interest rate environment to fight inflation.  The Fed’s actions are forcing lenders and borrowers to consider ways to protect cash flow, credit, liquidity, and interest rate risks.  Many borrowers ask lenders how they can use swaps, caps, floors, and collars to protect their businesses and lower borrowing costs. …

Examining Bond Portfolio Trends: Second 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 $13.5 billion (not including SouthState Bank), or $104 million on average…

Once Again, CPI Hotter Than Expected Once again CPI disappointed markets with a hotter-than-expected read and that has sent Treasury yields higher once again.   The overall inflation rate rose 1.3% for the month which was above the 1.0% increase in May and higher than the 1.1% expected. The 1.3% is a new cycle high….

Email is one of the most effective bank marketing channels available. Most banks send emails with little regard to optimization – they create an email, then send it. Other banks, like ourselves previously, pour over countless amounts of data to optimize open rates, clicks, and conversions. Now, it is about personalization and using artificial intelligence…

Investors Brace for Hot June CPI Report and So-So Retail Sales Two factors will probably drive most of the price action this week and that’s Wednesday’s June CPI Report and Friday’s Retail Sales.   Also, in the background keeping pressure on prices will be reopening auctions of 10yr notes tomorrow and 30yr bonds on Wednesday….

At this point in the business cycle, we believe that community banks should migrate to higher credit quality loans.  However, in response to our last few blogs, some community bankers told us they have few opportunities to originate loans at 1.75X debt service coverage ratio (DSCR) and sub 60% loan-to-value (LTV).   We believe that the…

Strong Job Growth Continues in June While Wage Gains Remain Stable Nonfarm payrolls increased 372 thousand with those gains continuing to be fairly widespread. Expectations were for 265 thousand jobs and the increase was just below May’s 384 thousand jobs. The largest gains came in leisure and hospitality, in professional and business services, and healthcare. Total…

In an earlier article, we discussed how we use “cost per impression” as a metric for planning, budgeting, and executing bank events that are specific for customer retention and branding. In this post, we expand that analysis and apply it to those events that a bank hosts or participates in designed to generate leads (“lead…

We established that stagflation (defined as high inflation and likely accompanied by higher interest rates and stagnant or no growth) could be toxic for real estate projects.  Few bankers working today have any experience with how destructive stagflation can be since this environment last occurred in the 1970s.

Set aside the noise of cryptocurrency for a second and focus on the potential of a new digital asset, or crypto, wallet. The crypto wallet can be the centerpiece of customer engagement for Web 3.0 and can be used for a myriad of new applications. The bigger picture here that banks should consider is that…

We recently posted an article (HERE) about how the Federal Reserve is bursting the everything bubble, and this will cause pain for some banks in the form of interest rate, credit, and liquidity risk.  One of the likely outcomes of this tightening cycle is stagflation, which will cause cash flow constraints for borrowers and create…