Correspondent Blog

The banking industry’s cost of funds (COF) is highly correlated to short-term interest rates.  However, as of Q2/22, the average community bank’s COF has risen only a few basis points.  Community banks should be concerned about their COF because looking at current deposit conditions is like driving a car while looking at the rearview mirror….

Based on the futures market, the Federal Reserve is expected to raise the Fed Funds rate to 3.00% at its December 2022 meeting. The Fed will also aggressively shrink its balance sheet to tame unwanted inflation. These two Fed moves, along with the economic environment and customer behavior will impact your forecasting of your cost…

Every year we analyze the industry’s cost of funding earning assets (COF) and track how community bank’s COF behaves relative to larger banks and how COF moves with various indices. The information is critical for all banks as it is helpful to understand how sensitive your balance sheet is to rising or falling rates. We…