Correspondent Blog

In our previous article (HERE) we discussed differences between how various banks price commercial loans. We contrasted ideal pricing and real-world pricing strategies employed by banks. We highlighted the objectives of loan pricing and summarized seven tools that community banks can use to price commercial loan relationships. In this article, we would like to further…

Despite higher inflation/energy, greater volatility and lower projected debt service coverage, banks drove loan growth tightening pricing for investor-owned properties but widening pricing for C&I. In this article, we will break down detailed 2026 commercial loan pricing data and highlight both trends and insights into 2Q. As we reported last week in our credit outlook…

We are often asked by lenders about pricing differentials for fixed-rate commercial loans with and without prepayment provisions.  For example, if a bank were to price a loan with a yield maintenance provision the loan would have a much longer expected life, and under most circumstances the bank would not have negative impact if rates…

We are often asked by lenders about pricing differentials for fixed-rate commercial loans with and without prepayment provisions.  For example, if a bank were to price a loan with a yield maintenance provision the loan would have a much longer expected life, and under most circumstances the bank would not have negative impact if rates…

In our previous article (HERE) we discussed differences between how various banks price commercial loans.  When it comes to setting commercial loan rates, we contrasted “ideal” and real-world pricing strategies employed by banks. We highlighted the objectives of loan pricing and summarized seven tools that community banks can use to price commercial loan relationships. In…

In a perfect world, when it comes to pricing commercial loans, banks would price customer relationships based on risk-adjusted return on capital (RAROC) and incorporate shareholder value-added (SVA). Banks would then measure profitability at the customer, product, branch, region, or manager level so that management may properly allocate resources to drive institutional profitability. Banks would…

We talk to thousands of lenders across the country each month about structuring and pricing loans.  We have never fielded so many questions and debates surrounding pricing differential between fixed versus floating-rate loans.  We believe that this development is primarily driven by the uncertainty of the future path of interest rates (a perennial issue for…

In a competitive lending market, community banks are looking for an edge to win quality loans. On quality credits, many community banks are eliminating loan origination fees and prepayment provisions to differentiate from competition. Since it is easy for any bank to eliminate fees and prepayment provisions, that competitive advantage quickly becomes commonplace and no…

In recent articles (HERE) we discussed the importance of commercial loan prepayment speeds.  We explained why loan prepayment speed is a major factor influencing a bank’s profitability, and how national banks use historical analysis, quantitative modeling, and predictive analytics to structure loans to increase loan retention (decrease loan prepayments). We also outlined how various input…

In a recent article (HERE) we discussed the importance of loan prepay speeds.  We explained why loan prepayment speed is a major factor influencing a bank’s profitability, how national banks use historical analysis, quantitative modeling, and predictive analytics to structure loans to increase loan retention (decrease loan prepayments).  We introduced the crucial factors influencing commercial…

When pricing and structuring commercial loans, few community bankers consider factors that affect commercial loan prepayment speeds. Further, even many sophisticated loan pricing models do a poor job of modeling commercial prepayment speeds. But loan prepayment speed is a major factor influencing a bank’s profitability and, in this article, we will outline why this is…

Over a thousand community banks work with us in various capacities across the country.  We observe and measure commercial loan pricing (on average we see over a hundred commercial loans per week). Our bank customers range in size from under $100mm to over $10B in assets.  We see pricing on commercial loans as small as…