Correspondent Blog

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…

March PPI Hits All-Time High and Treasuries Rally March PPI came in hotter than expected with new cycle and all-time highs across many of the metrics and Treasuries rallied as a result. Yes, that’s right Treasuries rallied.   While the CPI report from yesterday had a better than expected Core CPI number (thanks to some…

While we look at many annual reports, the two CEO missives that we never miss are Berkshire Hathaway’s and JP Morgan Chase’s (JPM) shareholder letter.  We feel that as community bankers, we can learn much from Jamie Dimon (Chairman and CEO of JPM) and from Warren Buffet. Recently, JP Morgan Chase released its 64-page 2021…

March CPI and More Treasury Supply Likely to Keep Pressure on Yields We open the week with Treasuries continuing to be on the back foot as yields probe ever higher. The 10yr is at 2.75%, the highest level since January 2019.   The upward pressure on yields is likely to remain this week as the…

Our recent sampling of 73 banks indicates that most banks have not adjusted loan or relationship pricing assumptions over the last two years. That could be a mistake as the environment has been radically different since 2020, and many banks are mispricing their commercial loans and relationships. In this article, we provide banks with four…