Correspondent Blog

You can slice and dice your credit portfolio all you want, but if you are not paying attention to cross-correlations, your efforts could be sub-optimal. For example, many banks separate their multifamily exposure away from their single-family exposure. In some markets, these two subsectors are almost 80% correlated. A drop in housing prices usually occurs…

The market is now pricing Fed Fund hikes beginning in 2022, and the proposed fiscal stimulus in the form of two separate infrastructure bills totaling $4.5T has created a new sense of optimism for FOMC members. However, the lingering concern that many bankers hold is can the country (US Department of the Treasury) afford to…

These days, if you want to make tough branch decisions, use a good college student instead of an experienced banker. We will come back to the college student but, in this post, we pitted experienced bankers against the latest branch models against the latest machine learning applications to see which method was more accurate at…

When designing products, choosing vendors or trying to solve usage challenges, understanding the importance of alerts and notifications is critical to success. Alerts are important now and will be even more essential for the modern banker to understand in the future as banking morphs into a collection of mobile apps and wearables. While we have…

After months of being in a steady-state, the PPP world caught fire. You have the borrowers from Round 1 (2020 origination) that have not filed for forgiveness yet and are now facing principal and interest payments; you have Round 2 Forgiveness heating up, and then, as of last week, you have the new SBA Direct…

The market is preparing for the end of USD LIBOR as a benchmark index after 2021.  Most national and regional banks have created LIBOR working groups and have formulated a transition plan for LIBOR.  At SouthState Bank, we have been busy over the last year working on our transition from LIBOR to alternative indexes for…

The average bank closes about 35% of their loans on their commercial loan pipeline report. Hearing this number begs the question – is that the optimal level for that metric? Put loans on that have a greater percentage of closing, and you potentially deprived transactions from getting the support they need. Put more loans on,…

Most customers are borrowing neophytes.  We estimate that the majority of community bank borrowers have a rudimentary financial and accounting understanding, and these borrowers may focus solely on the interest rate on a loan when comparing their options.  Even “sophisticated” and seasoned borrowers do not know how to compare their borrowing options to optimize outcomes. …

More than a year ago, the Federal Reserve changed Regulation D, Section 19 to allow an unlimited amount of withdrawals or transfers from a customer’s savings or money market account. Most banks immediately changed their policies to pass on this freedom to their customers. Some banks proactively left the limit in place or modified the…

Recent regulatory messages have reinforced the importance for commercial banks to prepare for the end of LIBOR after 2021.  However, banks cannot wait until the end of 2021 to find replacement index(es)  because the transition from LIBOR requires changes to systems, vendors, training, and marketing that can take several quarters to finalize and implement.  To…

Areas of improvement in banking abound, which is part of the problem. Banks often struggle with how and where to focus their resources to produce innovative products and services. Do you tackle digitizing the consumer loan process, or do you push into cryptocurrencies? Do you introduce a new treasury management product or upgrade your online…

Every year we analyze the industry’s cost of funding earning assets (COF) and track how community bank’s COF behaves relative to larger banks and how COF moves with various indices. The information is critical for all banks as it is helpful to understand how sensitive your balance sheet is to rising or falling rates. We…