Correspondent Blog

We often talk about “frictionless banking,” making it easy for the customer to open an account or add deposit balances. However, as banks design future products, they should consider taking into account the “Ikea Effect” to help increase customer lifetime value. In this article, we explain what the Ikea Effect is and how to apply…

Bankers should consider the shape of the yield curve when structuring, marketing, and pricing loans to maximize return and reduce risk.  The shape of the yield curve can also help lenders understand borrowers’ needs and better position the bank against competitors. Definition of The Yield Curve A yield curve plots interest rates with different maturity…

For decades community banks bolstered ROA/ROE by booking 5-year fixed-rate term loans funded with short-term deposits – called a carry trade.  The carry trade has historically worked for banks because interest rates were in a long-term pattern (approximately 40yrs) of decline prior to the pandemic, resulting in improving NIM for most banks. What some bankers…

On July 4th, the President signed into law his expansive policy and economic package that will bring sweeping changes to banking and America’s finances. In this article, we breakdown not only where the Big, Beautiful Bill (HR 1) helps and hurts banking, but we provide strategies on how to take the best advantage of these…

It is not every day that you get to own a portion of a banking vendor without putting capital in upfront. ModernFi, a company that provides reciprocal deposits providing access to insurance through network banks (subject to certain conditions) and competitor to legacy deposit networks, is in the process of building a bank-owned consortium to…

Through most of 2025, the Fed Funds futures market has been predicting multiple imminent interest rate cuts by the Federal Reserve. Many banks have bet their budgets on a lower cost of funds and better credit performance. While this market was consistently forecasting rate cuts just a few months in the future, those cuts did…

Every bank has some percentage of deposits that they “hand” or bespoke price. Exception pricing occurs when a rate sensitive customer requires a higher rate to maintain or grow their deposit balances at the bank. Deposit exception pricing is both an art and a science and, in this article, we discuss five tactics that will…

We are not big proponents of loan pricing grids. We find pricing grids to be rudimentary – lacking the myriad of inputs that distinguish risk-adjusted return on capital (RAROC), such as acquisition and maintenance costs, fees, interest rate, credit risk, and cross-sell opportunities (some of the most important drivers of banking profitability).  We believe that…

The banking industry’s average return on assets (ROA) for Q1/25 was 1.16% – an improvement from the prior quarter and the one before that.  Community banks between $100mm and $10Bn in assets recognized 1.13% ROA.  Community banks are facing several primary challenges.  If your community bank management team aims to improve your bank’s financial performance,…

You set deposit pricing targets, and invariably, you must deal with customers (and bankers) who want to exceed those targets. While this primarily occurs in certificates of deposit and money market accounts, it also occurs in savings accounts, analyzed transaction accounts, and interest-bearing transaction accounts. The question is – when do you grant an exception,…

Perhaps no piece of technology connects to building franchise value better than the ability to allow your retail and business customers to open accounts online. While the integration of agentic and generative AI may ultimately create more value, for now, account opening stands supreme as one of the most important customer-facing technologies a bank can…

Community bankers need actionable recommendations.  For example, if your bank has a higher efficiency ratio, lower fee income, or higher loan prepayment speeds than its competitors, then advising management to decrease efficiency ratio, increase fee income, or reduce loan prepayment speeds is not actionable.  How does management achieve those recommendations?  We are big proponents of…