Tag: Growth

How To Compete Against GSE Multifamily Lending

Multifamily Lending

Government-sponsored enterprises (GSEs) have been lending to borrowers for many decades.  The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) have popular multifamily lending programs so much so that they now control the bulk of the market. For example, Freddie Mac’s total multifamily finance activity for 2018 was $77.5B, and Fannie Mae’s was $65.4B which means that if you have to compete, your bank needs to do so carefully as you have a high probability of getting adversely selected. 


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.


Strategy & Bank Growth

As your bank heads into strategic planning this year, it is likely that one of the first, and most important, questions to answer is  - What level of growth should the bank set as a target for next year?  While seemingly a simple question, the answer trips up many bankers. In fact, some bankers get it wrong by 180 degrees. In this article, we look at some factors to think about when deciding your growth targets.


Getting Asset Growth Directionally Correct


Why Banks Are Using The Growth Efficiency Ratio

Bank Growth Efficiency

As we have said in the past, you have to “buy” growth past the normal expansion in the marketplace. If your regional economy, as measured by production, is growing at 5%, then to achieve growth beyond that you need to “purchase” the incremental business with marketing dollars, sales effort, and risk. Growth doesn’t come free. We have taken this concept to the next level and utilize the “Growth Efficiency Ratio” in addition to the “Growth Efficiency Differential Ratio” for looking at potential M&A transactions.

What Is Your Bank’s Rate of Entropy and Required Minimal Velocity?

Financial Entropy

A couple of weeks ago we published our equation for bank growth (HERE). We broke down bank revenue growth into its component parts and discussed the number of ways to achieve growth beyond “just adding assets and liabilities.” We received a slew of comments from bankers and it occurred to us that the three major missing components in the discussion were the concepts of buying growth, net income entropy and the minimal velocity of margins.

4 Uncommon Ways Banks Can Take Advantage Of Brexit Uncertainty

Brexit and Strategic Planning

UK referendum vote to leave the European Union was unexpected by the markets and caused some dislocation and a large amount of volatility.  For most community bankers, the outcome of the vote and the implications for the long-term prospects for the European Union are of some importance and interest, but the long-term implications for US banking system and US business are relatively minor.  Properly understood, marketed and explained, the immediate impact of the Brexi

How To Better Engineer Bank Growth

Creating a High Growth Bank Model

Growth doesn’t happen by accident. You have to put energy into it. If you don’t, the laws of business entropy take over and your customers go elsewhere, move, pass away or just plain forget about you. Most all banks understand this and try hard to gather new customers and retain the ones they already love. However, bank growth is more than a two-dimensional puzzle – it is multifaceted. More importantly, energy must be invested not only at the customer and product level but at the strategic level as well.

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