Tag

We might have a divided Congress. Pundits, economists, and the market provide economic forecasts such as GDP, interest rates, inflation, consumer and business demand, loan default rates and banks’ cost of funds.  Unfortunately, people overestimate their competence even in areas where they possess experience and knowledge.  Market forecasts represent the sum of all actors expressing…

During the pandemic, some banks extended asset duration as if they were convinced that interest rates would not rise again in the future. At that time, we published multiple articles warning banks to dynamically assess their asset-liability management (ALM) assumptions and consider alternative paths of interest rates; paths that looked normal just before the pandemic….

Now that we have complete call report data, the banking industry unveils some tidbits of knowledge that has an impact on every bank’s positioning and strategy. In this article, we recap the major trends of the quarter and discuss what it means for a data-driven, strategically focused bank management team. The Backdrop for Bank Performance…

In our previous article (HERE) we discussed differences between how various banks price commercial loans. We contrasted ideal pricing and real-world pricing strategies employed by banks. We highlighted the objectives of loan pricing and summarized seven tools that community banks can use to price commercial loan relationships. In this article, we would like to further…

Annually we study community banks’ performance to investigate which financial variables correlate to Bank ROA. We then explain that correlative relationship using further studies, analysis, and industry observations. We use average five-year ROA and measure the correlation coefficient (R2) for various financial variables. Over the years the relationship between NIM and ROA has been remarkably…

Now that we have all the 2025 data for the banking industry, we spent some time working with Amberoon, sifting through the data, the trends, and the insights to produce a dashboard and in-depth report on almost every community bank in the U.S. Beyond metrics, this is our first iteration (now in beta form) of…

One reason why banks have efficiency ratios over 40% is because they install a bunch of actions – workflow, technology, and strategy, which assume that banks need to operate in silos. Commercial banking has one set of solutions, while retail has another. Banks keep data in 30+ various places, have 40+ different data models, and…

As banks finish strategic planning, it is helpful to understand your bank’s performance assuming you DON’T make any changes. A statistical reliable model that factors historical performance, current business model and future market assumptions allows bank executives to more accurately apply capital, resources, and risk to improve performance with a higher degree of confidence. In…

On the path to improving bank profitability, we concluded our summer performance series for a handful of community banks.  Because of the demand and success of the format, we are extending this program for a “Fall Performance Series.”  For banks that are consistently earning below 1% ROA, we may be able to help increase performance…

We recently published an article (here) that demonstrated how return on equity (ROE) (and return on assets (ROA))  were the main predictors of community banks’ survivability.  Conversely, community banks’ NIM and credit quality were not, in themselves over the last four years, predictors of which community banks survive or become acquisition targets.  Community banks’ average…

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,…