Correspondent Blog

October Jobs Report to Inform on the Timeline to Reach Full Employment The October employment report will be released at 8:30 am ET this morning and it will be a key piece in refining the timeline to full employment which, in turn, will most likely guide when interest rate hikes begin. The median Bloomberg expectation…

Fed Meets to Decide Taper While Investors Look to Rate-Hiking Guidance The Fed has a tough job. That is abundantly clear to all that cover financial markets, or work in them in some shape or form. With the Fed concluding its FOMC meeting today, and an official tapering announcement expected, the bigger question is when…

Today, the President’s Working Group released its long-awaited report on cryptocurrency (HERE) and the use of stablecoin in the payment system. The report gives a prominent role for banks causing many bankers to celebrate while others are left wondering what it all means for the future of banking. If you seek a working knowledge of…

FOMC Taper Decision and October Jobs Report We have finally arrived at the FOMC meeting that should unveil the Fed’s plans on tapering quantitative easing purchases. Meanwhile, the market has moved on to other matters, as in how fast will tapering be accomplished and when will rate hikes begin? Fed Chair Powell stated at the…

If your bank is like most of its peers, your credit policy permits loan to value (LTV) ratios somewhere between 65% and 85% depending on the category, business cycle, and other forms of support.  In today’s competitive lending market, many banks are pushing boundaries, and loan to values are creeping higher.  We argue that banks…

Disappointing Third Quarter GDP Points to Better Fourth Quarter Third quarter GDP came out yesterday and at 2.0% quarter-over-quarter annualized disappointed versus the 2.6% expectation. The seeds, however, look to have been sown such that fourth quarter GDP has a chance to post something closer to 5%. The fingerprints of supply chain disruptions and rising…

We see more bankers and meet more bank management teams than almost anyone else in the industry. We constantly speak on what constitutes a top-performing bank and how banks can achieve that status. However, it caught us off-guard recently when a banker asked us what makes a top-performing BANKER. We gave an incomplete answer at…

Most bankers and analysts believe that maintaining net interest margin (NIM) is crucial for bank profitability.  Many community banks are working hard to maintain NIM and thus profitability (ROA) – so the thinking goes.  However, the current focus on NIM may actually be hurting banks’ performance. The Dangers of Net Interest Margin We have tracked…

Our First Look at Third Quarter GDP The market will get its first look at third quarter GDP on Thursday and it’s expected to show quite a bit of deceleration from the pace of the last two quarters due to some unwinding of fiscal stimulus as well as the slowing impact of the Delta variant…

Market Continues to Price in a More Aggressive Hiking Schedule. Who will be Right? The market continues to price in a sooner and more frequent rate-hiking schedule than the Fed. Investors also are showing elevated concern over inflation which has something to do with that quicker rate-hiking scenario. We delve into those two related items…

The graph below demonstrates loan repricing changes quarter-over-quarter from June 2020 to June 2021 for banks in three asset bands (under $1B, $1-3B, and over $25B).  The top three stacks of the bars show fixed-rate loans that reprice 3-5 years, 5-15 years, and over 15 years.  The bottom three stacks show floating and adjustable-rate loans. …

September Housing Numbers and More Fed Speak With the November FOMC meeting still a few weeks away we’ll be greeted with a plethora of Fed speakers this week to give us their latest views on the economy and monetary policy. The headliner will be Chair Powell speaking Friday in a policy panel discussion. Investors will…