Correspondent Blog

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…

This week the FOMC increased the Fed Funds rate by 75 bps, as expected to the 3.75% to 4.00% target range. The Effective Fed Funds rate jumped up and should stabilize at 3.83%, as did the 1-month term SOFR, to 3.79%.  The futures market now expects close to average odds of a 75bps increase in…

Competition is intense, and every bank is looking for a competitive advantage. Better products, faster service, or insightful advice can translate into additional loans, better credit spreads, or extra fee income. Sometimes just a graphics tool can help a banker win more loan business. At SouthState, our commercial lending teams use an online proposal generator,…

Community banks have solid competitive advantages when competing against insurance companies (primarily life insurance companies or “Lifecos”) and commercial real estate securitization conduit lenders (CMBS) for commercial borrowers. Unfortunately, some bankers are not positioning their services correctly to explain why borrowers should do business with their community bank. Some bankers even use fatalistic arguments that…

In our article last week (HERE), we discussed how the yield curve is currently flat between the three and 20-year points.  This makes term loan pricing between three years and 20 years virtually identical.  Banks that cannot offer competitively priced term loans out to 20 years may be at a significant disadvantage when competing or…

The capital structure of a business refers to the mix of debt and equity used to finance the company’s assets and operations. The simplest forms of financing for a business are equity and debt, although there are many hybrids. Equity represents the most expensive form of financing.  Because debt is legally first to be paid,…

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…