Correspondent Blog

Based on our observations, we estimate that somewhere between 20% and 25% of community banks have adopted a policy requiring minimum yield or credit spreads for their newly originated commercial loans. The strategy requiring minimum commercial credit spreads may be well-intentioned, but the results for banks may be less than optimal. We understand and are…

Election Calculus Enters The Equation This is a week with a ton of first-tier data but will it matter? With the first of three presidential debates set to air on Tuesday evening, election scenarios will move front and center as market drivers ending of course on November 3rd. Or perhaps, not ending on that date…

Not that economic results have been driving markets much since the pandemic hit it’s even less likely as we get closer to the elections and investors start to enter that event into the trading calculus. It will still be the direction of the pandemic that will be calling most of the shots but as the…

Even though we had an FOMC meeting last week we are being inundated with Fed speak again with almost every FOMC member opining on the economy and US policy this week. The headliner, however, was Chair Powell paired with Treasury Secretary Mnuchin testifying before the House Financial Services Panel yesterday. They will repeat the performance…

Chances are, even if you limited your Paycheck Protection Program (PPP) origination to just customers, you still have some fraud. If you took on new customers, you likely have between 5% and 10% fraud, even with a medium level of screening. According to an Aite Group survey done in June, financial institutions are only catching…

Uncertainty creates significant challenges for business managers, and while variability in outcomes is a business constant, the degree of uncertainty during a pandemic is extraordinary. Therefore, how do community banks distill today’s interest rate forecasts and position their loan portfolio for optimal performance? Choosing the duration of your loan portfolio isn’t a passive decision. Banks…

Fed Speak and Home Sales Even though we just had an FOMC meeting last week we will be inundated with Fed speak again with almost every FOMC member opining on the economy and US policy. The headliner, however, will be Chair Powell paired with Treasury Secretary Mnuchin testifying before the House Financial Services Panel tomorrow…

It’s FOMC meeting day but before we learn what the Fed has in store for us (which we’ll talk more about below), we did get the August retail sales numbers and they reflect a note of caution that if fiscal stimulus continues to fade into the fall, does that risk a W-shaped bounce rather than…

It was only two years ago when we were in the golden age of banking. The ten-year treasury was above 3%, loan growth was strong, funding cost was low, and credit quality was near its high – if not at record highs for some banks. Fast forward today, and you have a 0.67% ten-year, a…

As any lean six sigma practitioner will tell you, banks need to continuously define problems, measure against benchmarks, analyze, improve, and control their PPP Forgiveness application process. With a couple of thousand applications processed over the past five weeks, we are improving our process daily. In this article, we focus on the back end of…

The economic consequences of Covid-19 have altered average credit quality and created a flat and shallow yield curve.  Community banks are working diligently to support their local communities and survive in these challenging times.  One tool that many community banks have utilized in this business environment is a loan-level hedging product. There are several benefits…

FOMC Meeting & August Retail Sales The FOMC rate decision on Wednesday will be the highlight of the week, but with most economic reports posting decent numbers of late, it’s not likely the Fed will announce any new initiatives on Wednesday like quantifiable targets to guide reward guidance or longer duration quantitative easing purchases. Still,…