Correspondent Blog

It is not every day that you get to own a portion of a banking vendor without putting capital in upfront. ModernFi, a company that provides reciprocal deposits providing access to insurance through network banks (subject to certain conditions) and competitor to legacy deposit networks, is in the process of building a bank-owned consortium to…

Through most of 2025, the Fed Funds futures market has been predicting multiple imminent interest rate cuts by the Federal Reserve. Many banks have bet their budgets on a lower cost of funds and better credit performance. While this market was consistently forecasting rate cuts just a few months in the future, those cuts did…

Every bank has some percentage of deposits that they “hand” or bespoke price. Exception pricing occurs when a rate sensitive customer requires a higher rate to maintain or grow their deposit balances at the bank. Deposit exception pricing is both an art and a science and, in this article, we discuss five tactics that will…

We are not big proponents of loan pricing grids. We find pricing grids to be rudimentary – lacking the myriad of inputs that distinguish risk-adjusted return on capital (RAROC), such as acquisition and maintenance costs, fees, interest rate, credit risk, and cross-sell opportunities (some of the most important drivers of banking profitability).  We believe that…

The banking industry’s average return on assets (ROA) for Q1/25 was 1.16% – an improvement from the prior quarter and the one before that.  Community banks between $100mm and $10Bn in assets recognized 1.13% ROA.  Community banks are facing several primary challenges.  If your community bank management team aims to improve your bank’s financial performance,…

You set deposit pricing targets, and invariably, you must deal with customers (and bankers) who want to exceed those targets. While this primarily occurs in certificates of deposit and money market accounts, it also occurs in savings accounts, analyzed transaction accounts, and interest-bearing transaction accounts. The question is – when do you grant an exception,…

Perhaps no piece of technology connects to building franchise value better than the ability to allow your retail and business customers to open accounts online. While the integration of agentic and generative AI may ultimately create more value, for now, account opening stands supreme as one of the most important customer-facing technologies a bank can…

Community bankers need actionable recommendations.  For example, if your bank has a higher efficiency ratio, lower fee income, or higher loan prepayment speeds than its competitors, then advising management to decrease efficiency ratio, increase fee income, or reduce loan prepayment speeds is not actionable.  How does management achieve those recommendations?  We are big proponents of…

As you considering strategic initiatives for next year, one initiative to consider is to make the bank more AI friendly. The digital landscape is undergoing a seismic shift. Traditional Search Engine Optimization (SEO) is no longer sufficient in an era dominated by generative AI. For bank executives, understanding and implementing “Generative Engine Optimization” (GEO) is…

We have the privilege of using our risk-adjusted return on capital pricing (RAROC) model, and various other profitability tools, to analyze individual and multi-bank performance.  Our data and analysis strongly suggest that banks that can measure instrument and relationship-level performance for return on assets (ROA) and return on equity (ROE) can improve simply by reallocating…

In this market, it is anyone’s guess as to where credit is heading. The recent volatility has dramatically increased credit, interest rate and liquidity risk. To mitigate this potential impact, banks should consider technology enabling the real-time financial monitoring of their customers. In this article, we will make a case for why your bank should…

Bankers agree that reward (revenue) is a prerequisite for accepting risk. It would make no sense to risk the bank’s capital without adequate compensation. However, to avoid commercial fixed rate loan risk, the first crucial step is to measure that risk. We will show how banks that start to accurately measure interest rate risk embedded…