Correspondent Blog

We estimate that approximately 80% of all banks in the country do not have a commercial loan pricing model that adjusts for credit risk, the shape of the yield curve, acquisition costs, maintenance costs, or relationship revenue. However, banks do not need a loan pricing model to eliminate the biggest mistake commonly committed today on…

There are a handful of banks in this nation that really know their small business or commercial customer. They say they are about service and they actually walk the walk. They deliver superior service compared to the competition and they put the customer in the middle of everything they do. We interviewed five of these…

Capital markets move quickly, and last week the 10-year Treasury yield did not just increase, but it increased by almost 20 basis points in one day. Many pundits and economists will be writing about the cause and impact of rising rates. They will note how the market is now pricing interest rate hikes by the…

In the past (HERE), we highlighted how an employee handbook can have a colossal impact on culture that can radically alter your bank’s trajectory. We talked about how culture alone allowed Zingerman’s, a little Michigan deli, to have a worldwide following. We showed employee handbook examples from Netflix, Zappos and Nordstrom to demonstrate how their…

A tool that every banker should have at their disposal is the ability to figure out what a statistically valid sample size is from a given population (calculator at the bottom). A simple everyday example is in the case where examiners are coming in and you want to be sure all your wires are BSA…

If you’re a bank that keeps a loan pipeline report, chances are you have some excellent data that will form the basis of making your bank more efficient. Of the key performance indicators (KPI), tracking length of time to close, approval rates, fall out rates and lost rates are likely on the top of your…

Why do some banks grind it out and struggle to produce a 9% return on equity (“ROE”), while other banks such as Bank of America and Chase produce 20% plus ROE for the same business segment? One answer is that banks that produce an above-average ROE either have a more profitable customer segment focus, more…

January is typically a slow month for loan production at community banks, and the pandemic-hampered economy made the month even more challenging for many banks. The data from the Federal Reserve’s H.8 report showed that all loans were essentially flat in January for banks. For January, for small domestically chartered commercial banks (defined as not…

Our first indication of industry performance for 4Q comes to us in the form of earnings disclosures from the top 24 banks. In this article, we break down five lessons learned from analyzing large bank performance for the fourth quarter (4Q) of 2020 compared to 2019 and see how we can turn this data into…

A frustrated bank leader sat alone in her office amidst stacks of analysis showing the slow erosion of the net interest margin – once the bank’s engine of profitability. The leader had watched the margin ebb like the wick of a burning candle, despite the monthly efforts from skilled advisors and analytical staff. New target…

Community banks divide into two groups – those that have shifted their digital marketing to encompass the pandemic and those marketing as if it was business as usual. Do you know which type is by far the least common? That’s right, the first. Do you know which type is by far the most successful? Yep…

One of the biggest mistakes that some bankers make is believing that banks are in the business of making loans.  It is true that banks make loans, but originating a loan is unquestionably an unprofitable business.  Banks earn an acceptable return on capital by keeping loans, not by making them.  We recently worked with our lender on a…