Correspondent Blog

March prepayments had a little bit for everyone but mostly it was faster prepay speeds that printed before the economy ran off the rails owing to the coronavirus shutdown. The March report saw aggregate conventional Fannie Mae 30-year speeds rise 42%, double the consensus call for a 20% increase. Ginnie Mae II 30-year aggregate speeds…

So far this week trading has been dictated by the outlook of coronavirus cases and as we’ve mentioned in the past, with the outlook in New York improving at the margins, New York-based traders are often reacting with risk-on enthusiasm. We’re not, however, as sanguine about the outlook as other regions seem more than ready…

If you are in the military or public safety and have participated in a tactical operation center, you are likely familiar with the “Planning P.” The Planning P is a national framework that helps quickly assimilate information and drive to decisions. This is exactly what is needed in any fast-moving event, such as if your…

The Coronavirus is simultaneously disrupting supply and demand in the world economy.  The shock to the economy will have a profound effect on the US economy, and community banks will not be immune from this disruption.   It appears that a global recession is inevitable, but the full extent of damage to the banking industry is…

Fed Stole Spotlight Last Week, will Congress This Week? The Fed unveiled its bigger tool box last Thursday and the reverberations around the lengthy menu of new programs will continue to garner headlines this week. The breadth and scope of the programs encompasses practically all financial areas from junk bonds to assisting states and municipalities….

April 9, 2020 will go down in the history of the Federal Reserve as a watershed day. The Fed came out with a plethora of lending programs that cover all manner of assets and asset classes the likes of which have never been employed before in the Fed’s storied history. In essence, the Fed is…

The risk-on rally this week ran out of steam yesterday afternoon as investors ran too far ahead of the good news on slowing case level growth. It’s not hard to see that New York-based traders reacted with enthusiasm as case counts tapered for a third straight day in the Big Apple, but New York does…

We have often characterized banks as being “manufacturers of credit.” Like any manufacturing process, banks need to produce a product, in our case loans, to meet the customer’s demand. Loan production takes inputs such as capital, analysis, and documents and combines them in a standardized process to produce an end product. The Paycheck Protection Program…

Is April 30th a Realistic Target? Now that all but the most recalcitrant states have opted for some form of stay-at-home order the U.S.’s number of reported COVID-19 cases should start to level off, but the trajectory this week and next will most likely still be upwards. The latest lockdown actions will exacerbate the economic…

We were expecting bad job numbers in March but not the horrific numbers we’ll see next month. That’s because the survey for the March jobs report occurred on March 12 and that was when the weekly jobless claims jumped a pedestrian 282,000. The subsequent weekly claims hit 3.3 million and 6.6 million yesterday so the…

We suppose it’s possible to have an uglier quarter to personally live through, but from a national perspective the collective financial and personal experience of the first quarter of 2020 certainly puts it in the running for Worst Quarter Ever. Good bye and good riddance. Here are some numbers for you:  from the S&P’s all-time…

We have been writing on the various strategies available to community banks when structuring commercial loans in this current challenging business and credit environment. With the flat and low yield curve, we have discussed how banks may offer commercial loans through the ARC hedge program using two different strategies: 1) embedded floors, and 2) forward…