Correspondent Blog

Robert Wilmers, the CEO of M&T, used to write one of the best bank investor letters. With Mr. Wilmers retired, we are down to two “must read” letters: Berkshire Hathaway’s and JP Morgan Chase’s (JPM). We feel that as community bankers, we can learn from Jamie Dimon (Chairman and CEO of JPM) and from Warren…

The 2024 annual Consumer Banking Association conference (CBA Live) took place in Washington, D.C., over three days last week. Overarching topics (by word count and sentiment) include the imperative for greater consumer protection, the required more significant effort to fight fraud, rapid innovation (particularly in A.I.), and the need to keep evolving your workforce. We…

When it comes to bank planning, your strategic horizon has a huge influence on your success. Recently, we published a piece urging banks to set their strategic planning horizon out longer (HERE). We were inundated with questions and opinions. Our overarching point was that banks underperform, in part, because their strategic planning time horizon is…

One common question we field is recommendations of books to improve either bank performance or personal performance. Since many bankers likely have a self-improvement goal in their New Year’s resolutions, we wanted to put out our recommendations right from the start. To do this, we teamed up with Jack Hubbard, Managing Partner of the Modern…

Most market participants are focused on just one monetary policy tool available to the Fed – short-term, federal funds rates.  However, the other critical monetary instruments available to the Fed are quantitative easing and tightening (QE and QT, respectively).  While the Fed’s current actions on QT have been deemed long-term, slow-moving, and compared to watching…

You are likely in the process of finalizing your strategic plan. The good news is that strategy matters and your team’s time and effort in refining your strategy should pay off. The question is, how much will it pay off? That answer depends on the strategy your bank is pursuing and the underlying business model…

On September 20, 2023, the Federal Open Market Committee (FOMC) left its benchmark rate unchanged, but it would be a mistake to conclude that the committee did not send a strong message about the projected path of future interest rates.  The FOMC revised its view on future projected interest rates – rates will be “higher…

On September 7, 2023, the FDIC released its banking profile.  This quarterly publication provides a comprehensive financial results summary for all FDIC-insured institutions (4,645 commercial banks and savings institutions insured by the FDIC).  While banks under $10B in assets comprise 97.8% of all banks by number, those same banks comprise only 14% of all banking…

Earlier this month, on August 7, 2023, Moody’s Investor Services (“Moody’s”) published a banking sector review.  That publication was referenced in the media as a US bank rating action, with a downgrade to ten larger banks (and a negative outlook to 11 other larger banks). However, that publication, directly and indirectly, identified three discrete risks…

The banking industry’s return on equity (ROE) was 14.42% as of Q1/23 and so far is looking materially lower for Q2/23. How should community banks target and compare their ROE to the industry and their peer group, and what defines a top-performing bank?  Most importantly, is there an ROE level ensuring a bank remains long-term…

Many banks pride themselves on superior customer service, and approximately 90% of all community banks believe that they provide an above-average level of customer service (the math cannot work that way).  The reason bankers should want to provide an above-average level of service is to increase profitability, which translates to charging customers more in the…

It turns out that confidence is more valuable than capital. While we wrote about the root cause of the failure of Silicon Valley Bank (SVB) HERE, the lessons of the current banking crisis go beyond interest rate risk management. While interest rate risk caused the most significant impact on value, several other factors contributed to…