Correspondent Blog

The capital structure of a business refers to the mix of debt and equity used to finance the company’s assets and operations. The simplest forms of financing for a business are equity and debt, although there are many hybrids. Equity represents the most expensive form of financing.  Because debt is legally first to be paid,…

Expect Plenty of Fed Speak on Inflation After the October CPI numbers last week there will be no escaping the topic for Fed officials that venture out into the public sphere. This week there are nine such officials speaking and their views on inflation, and what the Fed will do about it, will be front…

October CPI Report Changes Narrative for the Fed The October CPI report has set an uncomfortable narrative for the Fed as we approach year-end and that new narrative will make it harder for them to preach patience in the face of the highest inflation readings in 30 years. While Powell and his fellow governors likely…

On Friday, Congress passed the $1.2T Infrastructure Investment and Jobs Act (the “Act” or “IIJA”) which goes to the President’s desk next week when Congress returns to become law and starts to go into effect January 1, 2022. IIJA targets our electricity grid, transportation infrastructure, the digital divide, and economic resiliency. In this article, we…

October CPI, Fed Speak, and Budget Bill Madness This holiday-interrupted week (Veterans Day on Thursday) will be headlined by the latest inflation data. With the October jobs report posting strong numbers, and with impressive wage gains, investors will be casting a weary eye on the CPI numbers. The Fed has planted their flag squarely in…

As Mark Twain said, it is difficult to make predictions, particularly about the future.  However, there are a substantial number of concrete and high probability events that we think we can prognosticate about the next couple of years that will have significant impacts on community banking. The October payroll gains at 531k were the largest…

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…