Correspondent Blog

Customers and competitors are challenging community banks to extend loan duration – borrowers are eager to lock fixed rates before they rise further, and many competitors are happy to oblige.  But what are the optimal fixed terms for community banks given today’s interest rate, credit, and liquidity environment?  While every bank’s mix of deposits and…

If your bank truly wants to be known for service, the very first step is to get your problem resolution process right. When it comes to problem resolution, the two metrics that matter the most are the number of interactions required to solve the problem and the time it takes to solve the problem. The…

In two recent articles, we reviewed the banking industry’s deposit behavior with regard to cost of funding earning assets (COF) (HERE), and we compared how community banks’ COF behaves relative to national banks in a rising interest rate cycle (HERE).  We demonstrated that the average community bank’s COF is highly correlated to short-term interest rates…

The most significant problem with bank innovation is that bankers see or hear about a sexy piece of technology at a conference or at another bank and then acquire it. The new piece of technology ends up solving a known problem but, in the process, creates more problems, and risks, than it solves. It’s called…

Your bank’s  deposit beta is going to rapidly change. In our previous article (HERE), we reviewed the banking industry’s cost of funding earning assets (COF), and we compared how community banks’ COF behaves relative to national banks in a rising interest rate cycle.  We showed that the average community bank’s COF is highly correlated to…

Most banks think in terms of linear growth. As a result, bankers love the idea of a sales funnel – put enough prospects at the top of the funnel, and a certain number of customers will fall out the bottom. Add more resources, and you get more customers. It is easy to understand. Unfortunately, there…

Based on the futures market, the Federal Reserve is expected to raise the Fed Funds rate to 3.00% at its December 2022 meeting. The Fed will also aggressively shrink its balance sheet to tame unwanted inflation. These two Fed moves, along with the economic environment and customer behavior will impact your forecasting of your cost…

Banks that focus on the customer experience have come to learn that it is not the forward-facing customer experience that matters, but the “total experience” that now counts. Total experience is the business strategy for creating superior customer AND employee experience. In this article, we walk through why banks should focus on total experience (TX)…

Banks have ceased using LIBOR to price assets and liabilities after 2021. However, some community banks are still deciding on the correct term lending index to adopt. Many banks are uncertain that they have chosen the best term index for their products and markets. We believe that having more options for community banks is beneficial….

It was 102 years ago, almost to the day, that Babe Ruth hit his first home run as a Yankee against his previous team, the Boston Red Sox. That hit launched a juggernaut that not only changed baseball but changed the view of both team building and risk mitigation. In this article, we highlight the…

Historically, community banks have relied on net interest margin (NIM) instead of fee income to drive return on equity (ROE). In contrast, larger banks have emphasized non-interest income rather than NIM to boost ROE and revenue. For example, 40% of JP Morgan’s commercial banking revenue is derived from fee income, and JP Morgan’s commercial banking…

This week is the start of bank earnings week, and the best bankers on earth will be presenting their results. It doesn’t matter if you are in front of your shareholders, equity analysts, or boss. Sooner or later, you will need to present data to showcase your results. When making a data presentation, there is…