Correspondent Blog

In banking, there is often a discussion about “who are our best customers?” Some banks rank customers against current profitability, others against lifetime profitability, and some use a technique called “RFM,” which stands for “Recency,” “Frequency,” and “Monetary.” This article explores the methodology and shows you what this analysis means for a typical bank. How…

Most market participants are focused on just one monetary policy tool available to the Fed – short-term, federal funds rates.  However, the other critical monetary instruments available to the Fed are quantitative easing and tightening (QE and QT, respectively).  While the Fed’s current actions on QT have been deemed long-term, slow-moving, and compared to watching…

Recently, the American Banker hosted their annual Small Business Banking Conference in Nashville, and as always, it was one of the better banking conferences of the year. This conference is crucial because it provides insight into small business banking and has a good mix of essential banking-focused topics with a heavy emphasis on the customer…

Most borrowers have a rudimentary understanding of interest rates, the yield curve, forward rates, and forward premiums.  Commercial bankers are trusted advisors and have a unique opportunity to understand their client’s specific financial and personal situations, explain the basic concepts of capital markets, and offer prudent and objective advice to help customers reach their goals. …

One of the lessons that was driven home at the recent American Banker Small Business Banking Conference in Nashville was the difference in marketing between large national banks and community banks, particularly deposit marketing. Most national and regional banks allocate marketing resources to recently acquired customers to get them to build deposit balances and purchase…

Community banks are striving to increase loan yield and maintain their cost of funding (COF).  Unfortunately, pressure on COF is expected to remain, and loans will reprice slower than expected as borrowers with below-market rates will wait until the last maturity day to refinance their credits.  We have created and used a novel structure to…

You are likely in the process of finalizing your strategic plan. The good news is that strategy matters and your team’s time and effort in refining your strategy should pay off. The question is, how much will it pay off? That answer depends on the strategy your bank is pursuing and the underlying business model…

Our article last week (HERE) discussed the “power of three” marketing rule and how to use it for loan proposals.  The rule states that human brains make better decisions when given a small selection of appropriate options but not too many to become confused. One or two options are usually insufficient, and five or more…

While technology has always been important in banking, it has yet to drive the essential functions of banking. Up to this point, if you could speak to a human, banking was easier. In the last year, this has started to change. With the rise of data, generative AI, personalization, instant payments, embedded banking, and traditional…

We review hundreds of term sheets and proposals for commercial borrowers each month.  One successful loan proposal tactic for community banks to improve their acceptance rate is to embrace the old marketing rule of the “power of three.”  We often see banks proposing one or two options for a commercial borrower, and often, the options…

Last week, we discussed how and why commercial lenders use a bank loan proposal letter (aka commitment letters) to their advantage (HERE).  We argued that a proper strategy and a well-crafted loan proposal letter could help lenders close loans quicker, eliminate more competitors, secure better pricing, and obtain the desired credit structure. In this article,…

Money 20/20 (M2020) is the only conference in the industry where it is both possible and expected to pull off two breakfasts, two lunches, three cocktail parties, and two dinners PER DAY. It’s a whirlwind of education, deal-making, eating, and hugging. In this article, we detail our thoughts and the trends we saw last week…