Correspondent Blog

We see three expected developments in 2022 that will make a loan hedging program an essential competitive advantage for community banks. Increasing short-term rates, higher expected inflation, and increased need for fee income will significantly benefit those community banks that can offer a seamless and document-friendly loan hedging program.  While we have our ARC Program…

While the branch still has its place in banking, it has radically changed since the pandemic. Branch profitability is now harder than ever to achieve. Driven by changing traffic patterns (data HERE), we talked about how these changes permanently altered branch strategy HERE and gave readers five new tactics HERE. In the past, we also…

On Friday, Congress passed the $1.2T Infrastructure Investment and Jobs Act (the “Act” or “IIJA”) which goes to the President’s desk next week when Congress returns to become law and starts to go into effect January 1, 2022. IIJA targets our electricity grid, transportation infrastructure, the digital divide, and economic resiliency. In this article, we…

As Mark Twain said, it is difficult to make predictions, particularly about the future.  However, there are a substantial number of concrete and high probability events that we think we can prognosticate about the next couple of years that will have significant impacts on community banking. The October payroll gains at 531k were the largest…

We see more bankers and meet more bank management teams than almost anyone else in the industry. We constantly speak on what constitutes a top-performing bank and how banks can achieve that status. However, it caught us off-guard recently when a banker asked us what makes a top-performing BANKER. We gave an incomplete answer at…

On our path to describing the Bank Strategy Cube framework, we laid down the four horizontal layers (HERE). In this article, we tackle the vertical layers that complete the cube. Where the horizontal layers pertain to strategy development at different parts of the Bank, the vertical layers provide the foundation for execution. These vertical layers…

A good bank strategy is a multi-layered cube. In this article, we present the four horizontal layers and then follow this article up with the vertical layers to round out the construction of the basic framework that can be used to set any bank’s strategic planning. The reality is that many banks fail to plan…

As we have discussed before, your bank is a manufacture of credit, liabilities, and fee services. Whether you know it or not, you have a certain production capacity for each.  In today’s current environment, some banks are running at full and even overcapacity while some banks are operating at a 50% utilization level. The question…

As we say – every bank must pay for growth. The most obvious case is when a bank hires staff to bring in and service new customers. People. marketing, branches, technology, capital, and many other items are all inputs or investments into growth. The need to grow is probably the single biggest driver for bank…

More than a year ago, the Federal Reserve changed Regulation D, Section 19 to allow an unlimited amount of withdrawals or transfers from a customer’s savings or money market account. Most banks immediately changed their policies to pass on this freedom to their customers. Some banks proactively left the limit in place or modified the…

We looked at the average NIM and ROE for all operating banks in the country (4,973 of them) for the past ten years. We started with the thesis that the wider a bank’s NIM is, the more profitable the bank would be. We also looked at the NIM and ROE for almost 11,000 defunct banks…

We have published multiple articles, economic bulletins, and podcasts on inflation (including here and here).  In this article, we will not make a case for or against the market’s expectation of inflation.  We will assume current gauges such as CPI and PCE accurately reflect the current inflation environment (many arguments can be made for why…