Correspondent Blog

After talking about the role of bank product managers (HERE), many bankers and bank board members asked the question – How do you know when to start a new product? This article covers seven rules that form our framework for when banks should consider either building or buying a new product. The Rules will help…

The average commercial loan term for amortizing credit facilities at community banks is between four and five years. Banks need to understand the optimal loan term for amortizing credits to maximize profit and minimize risk. We analyzed the average community bank’s preferred loan term based on risk (probability of default, loss given default, and expected…

If you ever wanted to know the most popular strategic planning initiative for a bank over the last three years, it is this one – generate more non-interest income. An estimated 30% of banks have this as their focus. The funny part is that despite this being a major conversation and the source of many…

It was back in 2014 when researchers at DeepMind directed their nascent artificial intelligence application to the game Breakout. Instead of programming DeepMind on how to play the game, the researchers programmed DeepMind to learn about learning to play the game. That is a meta-level that isn’t normally programmed, but the result of that effort,…

Last April, we published a piece (HERE) about how the pandemic has shifted traffic patterns to permanently impact branch strategy. We discussed how a combination of a faster shift to mobile banking during the pandemic and fewer trips to work, school, transportation hubs, and retail outlets had changed branch placement.  Traffic to urban core branches,…

For decades, community banks have structured term loans as 5-year fixed-rate facilities.  In the last six months, the percentage of 5-year fixed-rate loans at community banks has increased by approximately 25%, but this same bucket has held steady at larger banks (those over $25B in assets).  We believe that now is the right time for…

One deficiency at most banks is that while there is a business line owner, there is rarely a product manager (PM) of a particular product such as commercial loans, demand deposits, treasury management, or even digital banking. As a result, most banks roll out a new product and then move on. Neglected, products quickly become…

We recently interviewed a top commercial loan producer at a regional bank who explained how he uses three common principles to beat out his competition. We want to share his principles, philosophies, and techniques in hopes that it might serve as an aid for some of your new relationship managers and a reminder for some…

Bank payments are a mess. Every payment method is a different channel. Worse yet, we confuse our customers with different forms, procedures, and jargon. It has been 50 years and we still expect our customers to know the difference between a wire and an ACH. If we can’t talk to customers about it right, we…

Both the Federal National Mortgage Association (Fannie) and the Federal Home Loan Mortgage Corporation (Freddie) have aggressive multifamily lending programs and comprise the bulk of the market. Freddie’s total multifamily finance activity in Q1/21 was $14B, and Fannie Mae’s was $21.5B.  Some bankers complain that taxpayers’ dollars are creating an unfair playing field for financing…

If you are looking to make best-in-class decisions, it pays to have a variety of best-in-class tools at your disposal. Oftentimes, a reason why banks don’t innovate more is that they lack the tools and experience to properly understand the risk and the return. Without a way to quantify the risk, stagnation occurs. As banks…

Our previous publications discussed current banking industry dynamics for loan pricing, how community banks are responding, and some winning strategies for community bankers.  We contend that excess liquidity and tepid loan demand are the main culprits in driving community bank net interest margin (NIM) to the lowest level in recent history.  With loan-to-deposit ratios dropping…