Correspondent Blog

Last week the Federal Reserve raised the Fed Funds rate by another 75 basis points – that was no surprise to the market.  However, in Powell’s unscripted remarks at the press conference, he stated that interest rates have reached a “neutral level.”  The market reacted to those words with equities and bonds both rallying.  We…

Over the past several years, bank investors have been hungry to hear about growth and expansion. Revenue and growth have fueled bank multiples. Now, the tone is markedly different. We have poured through the recent 2Q earnings releases, spoken with a rash of institutional bank investors, traded thoughts with analysts, and compiled the following list…

Last week we discussed how lenders might use swaps, caps, floors, and collars to help borrowers manage borrowing costs.  We outlined how the market values swaps and volatility instruments (like caps and floors), and we reviewed the fundamental reasons for how and why these hedging instruments are applied to commercial loans.  In this article, we…

Back in 2015, Brazil led the world in fan football-related injuries. Passions ran so high that there would be 25 deaths and about 300 serious injuries from fan-on-fan violence in a typical year. More private security was brought in and fights increased. A more significant police presence was tried, and altercations increased more. It was…

The Federal Reserve is rapidly changing the interest rate environment to fight inflation.  The Fed’s actions are forcing lenders and borrowers to consider ways to protect cash flow, credit, liquidity, and interest rate risks.  Many borrowers ask lenders how they can use swaps, caps, floors, and collars to protect their businesses and lower borrowing costs. …

Email is one of the most effective bank marketing channels available. Most banks send emails with little regard to optimization – they create an email, then send it. Other banks, like ourselves previously, pour over countless amounts of data to optimize open rates, clicks, and conversions. Now, it is about personalization and using artificial intelligence…

At this point in the business cycle, we believe that community banks should migrate to higher credit quality loans.  However, in response to our last few blogs, some community bankers told us they have few opportunities to originate loans at 1.75X debt service coverage ratio (DSCR) and sub 60% loan-to-value (LTV).   We believe that the…

In an earlier article, we discussed how we use “cost per impression” as a metric for planning, budgeting, and executing bank events that are specific for customer retention and branding. In this post, we expand that analysis and apply it to those events that a bank hosts or participates in designed to generate leads (“lead…

We established that stagflation (defined as high inflation and likely accompanied by higher interest rates and stagnant or no growth) could be toxic for real estate projects.  Few bankers working today have any experience with how destructive stagflation can be since this environment last occurred in the 1970s.

Set aside the noise of cryptocurrency for a second and focus on the potential of a new digital asset, or crypto, wallet. The crypto wallet can be the centerpiece of customer engagement for Web 3.0 and can be used for a myriad of new applications. The bigger picture here that banks should consider is that…

We recently posted an article (HERE) about how the Federal Reserve is bursting the everything bubble, and this will cause pain for some banks in the form of interest rate, credit, and liquidity risk.  One of the likely outcomes of this tightening cycle is stagflation, which will cause cash flow constraints for borrowers and create…

Every bank wants to be “innovative,” but the truth is innovation is difficult. Add to that a bank’s resource constraints, compliance demands, budget goals, legacy IT infrastructure and talent gaps, and innovation for a bank is extremely difficult. When it comes to bank innovation, it pays to have a methodology in which to think about…