Correspondent Blog

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…

How many “How to Market to Millennials” sessions or “How to Attract Gen-Z” have you sat through? Chances are you were wasting your time focusing on demographic segmentation. Every generation is indeed influenced by different environmental forces such as – war, protests, smartphones, social media, or crypto — but there is little evidence that shows…

In the last 30 years, the total number of bank charters has declined by 65% (as shown in the graph below). There are many reasons for this industry consolidation.  We believe that the most significant factor driving consolidation is that banks tend to underperform using a risk-for-pay bank business model, and banks that have properly…

Wage Gains Move Front and Center for the Fed As you read this, the January employment numbers will have been released and will probably signal a third straight month of sub-250 thousand job gains.  Will that slow the Fed in its newly redirected path to stamp out inflation? No. First, the weakness can easily be…

Casting About for a Fed Rate Path We knew this week would be partially about trying to reach consensus on what the Fed’s rate path this year might look like. On Monday, we were delivered forecasts from the major Wall Street banks and all were pretty different. Some stuck to the three hike scenario but…

Most banks are concerned with their credit portfolio. As credit risk increases with rising rates, the following question arises – is it better to diversify by geography, property type, or business type? Do you focus your marketing dollars and pricing on particular counties, commuter zones, types of commercial real estate loans, or specific C&I industries?…

Community banks have structured fixed-rate loans for many years with an adjustable repricing feature where a loan is fixed for a number of years and then resets based on a stated spread and an index. However, adjustable term loans have several drawbacks for banks, especially in a rising interest rate environment.  One of the most…

Investors Try to Divine Pace and Magnitude of Rate Hikes Investors will be keen to see if the market volatility following the FOMC meeting last week starts to abate this week and provides a calmer trading environment. While the January jobs report on Friday is the highlight of the week from a data perspective, the…

Can Inflation Be Tamed  Without Damaging Growth? We want to kick-off today’s piece with a quick recap of what we heard from the Fed on Wednesday, and what we heard was decidedly hawkish. Shorter maturity Treasury yields will continue to rise as the Fed’s rate-hiking expectations get more ambitious. The question we have is whether…