Tag: Loan Structuring

How Your Bank Can Pick Up 40 Basis Points of Margin

Improving Net Interest Margin
IMPROVING MARGIN

Community banks face intense competition from different institutions and various industries.  There is currently a market phenomenon that is creating an unusually challenging environment for community banks that compete for real estate financing. This phenomenon is creating an advantage for some lenders in the amount of seven to 42bps, and community banks must be aware of this aberration if they want to win more quality borrowers.

 

Swap Spreads

 

How To Use The Hybrid Loan Structure To Win More Profitable Clients

Profitable Loan Structures - Man staring

It sometimes pays to be opportunistic in marketing your community bank’s products. There is currently an exceptional market opportunity for community banks to win profitable business from larger competitors. The recent decrease in interest rates presents an opening for smart bankers to poach good quality clients and lock them in as customers for a decade. Our bank recently did just that, and in this article, we would like to share this strategy through a case study.

 

Interest Rates Dip

 

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.

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.

How To Generate More Revenue and Satisfaction with an Inverted Yield Curve

a LOAN TACTIC TO IMPROVE REVENUE AT YOUR BANK
A LOAN TACTIC TO IMPROVE REVENUE

You cannot read a financial paper, business feed, or watch financial television without someone mentioning yield curve flattening and inversion. Google searches for “yield curve inversion” are at their highest level ever. What is all the fuss about, and why should bankers care? We will explain an innovative way that bankers are using the current yield curve to protect existing relationships, increase yield and generate non-interest income, and we will use a recent case study to highlight the specifics loan terms and results.

 

Background

 

Why Commercial Loan Prepayment Provisions Matter

Protecting Commercial Loan Profitability

In an article two weeks ago, we discussed why community banks should desire prepayment provisions in their loans.  We also acknowledged that in this very competitive banking market banks are unable to negotiate a meaningful prepayment provision.  In this blog, we will identify techniques that some banks may use to obtain a meaningful prepayment provision, and we share a video explaining how CenterState Bank lenders use these techniques with commercial borrowers to negotiate a powerful prepayment provision. 

 

Why Loan Prepayment Provisions Matter

INCREASING LOAN VALUE - Loan prepayment provisions
INCREASING LOAN VALUE

In a competitive lending market, as the case today, banks are looking for an edge to win quality loans.  For quality credits, many community lenders are eliminating loan origination fees and prepayment provisions to differentiate from the competition.  Since it is easy for an institution to reduce fees and prepayment provisions, that competitive advantage quickly becomes commonplace, and no lender retains an advantage.  In this article, we take a quantitative look at the benefits of loan prepayment provisions. 

   

Four Reasons for Prepayment Provisions

Four Attributes And Five Steps For A Service Brand In Banking

Improving Customer Service -Picture of woman walking
IMPROVING CUSTOMER SERVICE

Most community banks believe that they can differentiate themselves from competitors by offering better service.  However, the empirical data shows that the majority of banks fall into the trap of competing on price and credit structure, and neither of these competitive attributes is aligned with long-term bank success.  Why is there such a disconnect between many bankers stated objective of competing on service and the reality of competing on price or credit structure?  One reason is that while management and employees would like to offer a better level of service to their customers, few b

The Flat Yield Curve is Frustrating Bankers

Loan Structuring - A guy holding his head in frustration

A flat yield curve has us scratching our heads – should we be originating fixed or floating rate loans?  If bankers believe that the current shape of the yield curve is a harbinger of an impending recession, then booking fixed rate loans may be a winning strategy.  However, if you believe, as we do, that there simply isn’t enough data as yet to point with a moderate degree of confidence to an economic recession in 2019 or 2020 then booking floating rate loans may be a better strategy.  We have developed a technique and loan structure to assist bankers who espouse the former scenario and are

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