Correspondent Blog

The combination of the greater pandemic-induced adoption of banking technology, higher branch operating costs, a greater number of workers working from their homes, and the changing needs of those workers, has altered branch mathematics and profitability. In this article, we look at the game theory behind branching and why there is a new equation for…

Most community banks will find it challenging to meet their loan growth targets in 2021.  Part of the challenge is lack of loan demand, elevated and rising loan payoffs, and stiff competition.  Therefore, most community banks conclude that they do not want to sell participation in a good commercial loan to another lender. However, selling…

Pick up almost any survey, from Pew to JD Power and you will find that deposit account fees are a significant driver of customer satisfaction. Often it is a major factor in choosing or leaving a bank. Unfortunately, many banks set their fees according to where their competitors are. If your bank does this understand…

This year may be the right time for your bank to embrace a loan hedging program.  With the economy recovering from a pandemic and the possibility of stoking inflation, banks that can offer borrowers more flexible loan structures may be in a better position to win more and better quality loans.  While the Federal Reserve…

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…