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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….

Despite higher inflation/energy, greater volatility and lower projected debt service coverage, banks drove loan growth tightening pricing for investor-owned properties but widening pricing for C&I. In this article, we will break down detailed 2026 commercial loan pricing data and highlight both trends and insights into 2Q. As we reported last week in our credit outlook…

The first quarter of 2026 has brought tariffs, a war, greater inflation/higher energy prices, AI-driven changes, more volatility and more uncertainty. Unfortunately, almost every aspect of this current environment is inversely correlated to bank performance. The bank credit outlook is highly volatile with a skew to the downside due to higher inflation to include higher…

In our previous article (HERE) we discussed differences between how various banks price commercial loans.  When it comes to setting commercial loan rates, we contrasted “ideal” 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…

In a perfect world, when it comes to pricing commercial loans, banks would price customer relationships based on risk-adjusted return on capital (RAROC) and incorporate shareholder value-added (SVA). Banks would then measure profitability at the customer, product, branch, region, or manager level so that management may properly allocate resources to drive institutional profitability. Banks would…

Over the last few months, we have been hosting dozens of banks to lender lunches across the country.  At these lender lunches we discuss credit and pricing trends, deposit gathering strategies, loan pricing and structuring, and fee generation opportunities for community banks.  While we will author a separate article about what we heard from community…

When banks price loans, they stress the borrower’s ability to repay the loan under adverse credit conditions. For example, credit officers will underwrite to various interest rates, vacancy rates, revenue projections, EBITDA or NOI assumptions. However, most banks will not subject that same credit stress analysis to calculate that loan’s ROE. This is unfortunate because…

Today we bring back Sim Cheema, who works on our ARC Team here at SouthState. We talk about the current Fed policy, the economic environment, and what all that means for you and your lenders at your bank.   Learn more about ARC here. Learn more about the Community Bank Summer Performance Series here.  …

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…

Today our own Chris Nichols sits down with Mike Fletcher, President and Co-Founder of Qualtik, to discuss the latest trends in commercial credit. TAKE THE ARC GUIDED TOUR HERE The views, information, or opinions expressed during this show are solely those of the participants involved and do not necessarily represent those of SouthState Bank and…

In a competitive market for commercial clients, each loan feature can be valuable to a community bank. One such loan feature is a prepayment provision on fixed-rate loans.  Some community banks offer fixed-rate loans through a hedging program and utilize a symmetrical prepayment provision, others community banks will market their fixed rate loans based on…

In the 4th quarter of 2024, commercial loan pricing has materially changed. The new administration with its lighter regulatory stance, the potential for tax relief and threat of higher inflationary has generated new optimism for credit, and new risk of higher rates. In this article, we quantify commercial loan pricing trends from our Loan Command…