Banks that roll out a premium product should give some thought about what makes the product “premium.” We all have platinum or elite level checking accounts, and some banks go farther and have a premium fee and loan product. Bankers tend to think of a premium bank product as one that has more bells and whistles than your standard product offering. However, as can be seen below in the latest survey on the topic, more attributes is just a small piece of the puzzle.
Many bankers and investors think rising rates will automatically translate into larger net interest margins (NIM) and greater profits. While first quarter data will likely show the first increase in aggregate loan yield since 2007, it remains to be seen how much of that increase gets translated into wider NIM for community banks at the end of 2017.
Banks put loans on “Watch” in order to better monitor the changes with the borrower, tenant, and property. Whereas a “Special Mention” loan has a potential weakness that deserves management’s close attention, a “Watch” loan may be thought of as a pre-Special Mention and may just require management’s loose attention. While the “Special Mention” classification as a very clear regulatory definition, “Watch” can be more of an economic category.
If you are in retail, you spend a lot of time thinking about the most effective way to display your product and where to put the price. If you’re Tiffany’s, you put your products out there first, make consumers click into the display, or if you are in person, make them ask about the price. In this manner, the website or salesperson have a chance to explain the quality attributes of the product. However, if you are Amazon or most other retailers, you put your price first. The question is, what works best in banking?
We can all agree that the events of Dr. David Dao being forcibly dragged off a United flight were horrific on many levels. In a room full of bankers last week we started off the conversation with two questions – What other domestic airlines could this occur on, and could something similar happen at your bank? The answers to each question proved to be instructive and could present a refined roadmap for your institution. If you are looking to have an active discussion with your bank employees to reinforce your culture, then this is a great place to start.
New data out from FICO shows that physical debit card fraud in the US jumped 70% in 2016. That is because there is not only more debit card usage, but that usage has driven criminals to use more fake card readers to nefariously skim debit card information. Last year, hacked card reader crimes rose 30%. Most of the card fraud comes from ATMs, of which over 66% are owned by non-banks. Over the last several years, that puts card fraud at ATMs up an astonishing 546% according to FICO.
Community banks have a distinct competitive advantage in identifying problem loans. While many bankers are taught to identify financial factors that portend problem credits, evidence suggests that for smaller commercial credits it is non-financial indicators that are better predictors of credit deterioration.
Happy tax day! We actually don’t know how you feel about tax day, so if you are grumpy about it, we apologize. However, as a banker, you should be positive on the subject. Taxes, no surprise, are an excellent inducement to engage customers with financial leadership. Tax strategies, savings, and future planning are all anxieties that drive customers, and potential customers, to research. Proactively seek inquiries, and your bank is likely to reap tremendous rewards.
If there is a homogenous product in banking, it is the checking account. For example, most every bank out there charges a monthly fee for their retail and commercial business accounts.
When stress testing any given loan, there is a fine but correlated relationship between cash flow, property values, and expected losses. In this article, we gather our data and present a composite CRE benchmark in which to calibrate your bank’s model or expectations. At a minimum, this data will help your bank hone their credit shock assumptions and give you an idea on if you have adequate reserve levels at both the loan and loan portfolio level.
The Historical Mistake
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