July 2019

Should Your Bank Have A Long Term Fixed-Rate Loan Program

More Competitive Lending

In the last few months, more than a dozen bankers have reached out to us about the merits of a fixed-rate loan program. Up until a few months ago, we didn’t know that the industry had started coining the term “fixed-rate loan program.”  We always assumed that banks made loans that borrowers needed, whether fixed-rate, adjustable-rate, or some form of hybrid.  Now, this seems to be a thing and we, not surprisingly, have an opinion on the matter.

Banks That Want A Strong Culture Can Learn From This Netflix Document

Bank Culture
BANK CULTURE

When it comes to corporate culture, many banks know that building a genuine and sustainable culture is like baptizing cats. It’s tough work fraught with many scratches and a lot of moving around. However, when it comes to corporate culture, Netflix is in the pantheon and can give banks insight. In 2011, their CEO, Reed Hastings, their Chief Talent Officer, and others produced a “Culture Doc” (below) that spread like wildfire among the Silicon Valley’s elite.

Do Lenders Deserve Incentive Pay?

Lender Compensation
LENDER COMPENSATION

A CEO of a community bank recently asked us an important question: “why should I pay my lenders any incentive to do their jobs, they already make a good salary?” We hear this question often from different management teams. We believe that part of every lender’s compensation should be variable and that incentive pay should be based on strategic priorities for that specific bank.

How To Give Borrowers 30 Years of Amortization In 25 Years

Loan Structuring Hacks
LOAN STRUCTURING HACKS

One battle currently waged in the banking industry is amortization terms and interest-only (IO) periods.  Borrowers often have legitimate needs to extend the principal repayment on term loans to 30 years.  Banks prefer 20-year amortization terms on real estate-secured loans, but most banks are willing to extend to 25-year amortization terms.

Here Is How The Best Banks In Risk Management Talk About Risk

Risk Management
RISK MANAGEMENT

You can’t be a quality banker unless you have your head straight about risk. For that matter, if you don’t have a clear view and clean language about risk, you really can’t manage risk accurately. Solid risk management starts with having a common and accurate language about risk and the risk you are willing to take. For example, “risk tolerance,” “risk appetite,” “risk target,” “risk capacity” and “risk limit” are often used interchangeably, but they mean different things.

How To Tackle The Basics On Deposit Marketing [Webinar Recording]

Deposit Marketing
DEPOSIT MARKETING

If you are getting up there on loans-to-deposits and you are worried about bringing in more deposits the first question to ask yourself is, are you devoting enough resources to gathering deposits? Do you have a Chief Deposit Officer? Do you compensate for deposits? Do you have an effort around creating new deposit products? Do you have a marketing plan for deposits? The likely answer is “No” to most of those questions, which is why you probably have an issue in deposit generation. In this article, we highlight the webinar that we recently did on marketing for deposits.

Does Loan Amortization Matter? [Plus Free Calculator]

How structure impacts credit
HOW LOAN STRUCTURE IMPACTS CREDIT

Sometimes how we choose to measure something can lead to incorrect conclusions. While mathematically 30 is 50% more than 20, a 30-year amortizing loan is not 50% riskier, or 50% longer than a 20-year amortizing loan. The amortization term is often a poor measure for bankers to use to make credit decisions.  In this blog, we will explain why the amortization term can be a misleading measure, why bankers should be using average life, and we will provide readers with a downloadable average life excel calculator for bankers to use for their own analysis.

Changing Payments and Bank Strategy

Bank Strategy
BANK STRATEGY

One item that should be on every bank’s strategic horizon is how to adapt to the changing face of payments. If you are one of those bankers that say, “Cash won’t go away in my lifetime,” you could be right. However, we would posit that the sentiment is the wrong way to frame the challenge and the rationalization that you don’t have to worry about cash, checks and the payment channel will likely lead you to disaster. In this article, we highlight the newest data from the Fed and what it might mean for every community bank.