Correspondent Blog

In Q2/24, the average return on equity (ROE) for the entire banking industry increased to 11.67% (from 11.11% in the previous quarter).  However, for community banks (under $10B in assets), the ROE declined to 10.44% (from 10.57% in the previous quarter).  When we analyze the causes of the decline in ROE for community banks we…

In two previous articles (here and here) we discussed how loan size and loan term affect the profitability of commercial loans.  We continue this theme of major drivers of loan and bank profitability and discuss the importance of cross-selling and upselling, and its impact on bank performance.  In this article, we consider the common features…

Since our last update on 2Q credit HERE, 3Q commercial loan pricing trends start with a better economic picture as higher than-planned growth and softer inflationary data have changed part of the market’s outlook. The fear of recession has decreased in 3Q, and the new primary concern shifts back to interest rate risk and deposit…

Our recent sampling of 73 banks indicates that most banks have not adjusted loan or relationship pricing assumptions over the last two years. That could be a mistake as the environment has been radically different since 2020, and many banks are mispricing their commercial loans and relationships. In this article, we provide banks with four…

Community banks pride themselves on superior customer service. Approximately 90% of all community banks believe that they provide an above-average level of customer service (of course, the math cannot work that way, as half of all banks should be providing a below-average level of customer service). Research by various consultants shows that 80% of companies…