Correspondent Blog

Bankers can be forgiven for not anticipating the start of the pandemic.  However, bankers must now be planning their business to capitalize on the transition from a pandemic to an endemic environment.  There is convincing evidence that the global economy will transition to an endemic phase after the omicron variant subsides – but caveats abound. …

Busy Week Headlined by the Fed For a Fed meeting that isn’t going to produce a rate hike, or any updates to rate and economic forecasts, it’s sure shaping up to be quite the pivotal meeting anyway. The market goes into Wednesday’s meeting with a consensus expectation that the Fed will signal quarterly 25bps rate…

Is the Treasury Market Ready for the Fed? We opened our article last Friday with the thought that, with a light data calendar, a Fed having gone into its pre-meeting quiet period, and a dearth of new information the market would range-trade until the meeting. Well, we got that wrong. The market was in no…

If you want to know how you can improve your bank’s profitability, one place that you can start is better loan pricing. While chances are your bank prices most of its loans correctly, it is the fringe cases that, in aggregate, end up having a large impact on bank profitability. In this article, we look…

We see three expected developments in 2022 that will make a loan hedging program an essential competitive advantage for community banks. Increasing short-term rates, higher expected inflation, and increased need for fee income will significantly benefit those community banks that can offer a seamless and document-friendly loan hedging program.  While we have our ARC Program…

Market Looking Ahead to FOMC Meeting Next Week This week is thin on market-moving economic releases, and it’s also thin on Fed headlines as officials have gone into radio silence prior to next week’s FOMC meeting. That’s not to say the holiday-shortened week is completely devoid of data, as some housing numbers will make an…

Range-Trading Appears to Lie Ahead Today, we receive a boatload of data headlined by retail sales for December. Other notable reports are industrial production, and the University of Michigan Sentiment survey for January. It’s not likely, however, that any of the new releases will move markets out of their recent ranges prior to the MLK…

Examining Bond Portfolio Trends: Fourth Quarter 2021 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 $19.0 billion, or $143 million on average per portfolio.  Twelve months…

Most banks serve a geographical area defined mainly by a political outline, such as a set of counties. Other banks choose less-defined regions, such as the “Tri-city Area” or “Northern Virginia.” While these defined service areas may be fine for marketing purposes, when it comes to operating efficiency, banks may want to think along other…

December CPI Headlines Busy Week While the December jobs report posted solid numbers, probably more important to the Fed’s intentions to possibly hike in March will be what the inflation numbers do between now and then. December CPI will be the first inflation report since last month’s FOMC meeting.  Expectations are that price pressures will…

The FOMC’s recent hawkish pivot and indications of multiple rate hikes in 2022 have created market volatility and an increase in longer-term interest rates. In a period of rapid change (or high volatility), we see about 50% of banks fall into a common trap of mispricing their commercial credits.  This loan pricing mistake does not…

Fed Minutes Might Overshadow December Jobs Report The December jobs report is due out this morning (8:30 ET), but the most consequential market moving event has already occurred and that was the release of the FOMC December minutes on Wednesday. We discuss in more detail below our thoughts on the minutes and what the market…