Correspondent Blog

In the next twelve months, the transition from LIBOR to alternative Risk-free Rates (SOFR in the US) will take an important course. Banks with products tied to LIBOR need to understand the implications of ISDA Fallback Protocol and how to manage possible risks with this critical industry transition. Shortly, ISDA (International Swaps and Derivatives Association)…

While stock investors once again looked at the world through rose-colored glasses yesterday, second quarter bank earnings certainly don’t point to V-shaped recovery. The big three of JPMorgan Chase, Citigroup, and Wells Fargo set aside almost $28 billion in loan loss reserves which is second only to the set asides in the last quarter of…

In the last quarter, the money market world has changed, which has important implications for banks. Not only is it less competition, but the influence that money market funds have on banks is substantial, and so it means less pressure on rates. Less pricing influence means less deposit price sensitivity, which not only means rates…

Positive news on a virus treatment last Friday blunted the steady drumbeat of increasing virus cases, at least for a day, and that serves as notice that the market is still completely focused on the outlook for the virus vis a vis the reopening of economies.  As piece of that involves plans for school openings…

One of the most underappreciated commercial real estate trends in banking is the remarkable stability of multifamily rents during this pandemic. As of last week, according to the National Multifamily Housing Council (NMHC), 77.4% of renters in an 11.4 million sample size of professionally managed apartment complexes were making their rent payment which compares to…

The continued rise in virus cases has knocked the momentum out of stocks this week, especially with limited economic releases to divert attention. And that seems to be the case this morning with futures pointing to a lower open for stocks while Treasury yields dip to levels last seen nearly three months ago. We do…

In a week with light data the market’s focus is even greater between the outlook on reopening versus the surge in virus cases and all that that could mean in slowing an expected economic rebound. On Monday, the mood was hopeful but it turned sour yesterday as once again spiking case counts, and increasing ICU…

Underappreciated in the banking industry is the growing role of identity and access in banking. As banks build their digital strategies, we need to stop and think about how we know our customers (identity) and how we know that the verified customer we believe is trying to access a banking channel is really the customer…

Perhaps there’s no better way to illustrate the tug-of-war between hopes for better economic results from reopenings and concern over increasing case counts than the reaction last Thursday to the June jobs report.  While almost every metric in that report beat expectations,  topped by a record 4.8 million new jobs, equities gave back much of…

Covid-19 and the responses to the pandemic are exerting various pressures on community banks.  How a community bank underwrites and books commercial credit through the end of 2020 will have a significant impact on the bank’s profits and credit quality through the entire next business cycle. In this article, we focus on four key steps…

Welcome to the third quarter of 2020, and good riddance to the second, although its historic spasms will live long in the charts that we’ll have to graph over the next year or two. While we were expecting to be heading down the road of reopening at this point, the recent surge in viral cases…

Recent survey data from borrowers that took a Paycheck Protection Program (PPP) loan was surprising as more borrowers than we first expected will be using the EZ Form and fewer borrowers than expected will be using the 24-week covered period. In this article, we breakdown some of this data and then discuss how it might…