Correspondent Blog

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…

Last week the Federal Reserve hiked interest rates by 75 basis points – its most significant hike since 1994. This decision coincided with rate hikes by the Swiss National Bank, its first since 2007, the Bank of England, and the European Central Bank announced at an emergency meeting that they would raise interest rates next…

Banks that are looking to enhance their risk management practices should consider incorporating the concept of the velocity of risk into their enterprise-wide risk management practices. Some risks occur slowly; others strike quickly and hard. The velocity of risk is the time frame in which the risk may occur. In this age of social media,…

Many community banks are searching for ways to increase fee income, and many bank CEOs have concluded that fee income is a significant driver of revenue and profitability.  We argue that larger banks do not have an inherent advantage over community banks in generating fee income because of their scale.  Most fee income generated by…

Banks don’t respect the power of understanding customer lifetime value (CLV). It is the one performance metric with the highest correlation to long-term bank profitability, around 88%. It is more important than margin, cost of funds, non-interest income, and loan profitability COMBINED. Not only do few banks calculate it, but many banks also spend resources…