Banker To Banker

Economic Principals

Now that college graduation is upon us, we are reminded of one of the best graduation speeches we have every heard and by far the one with the highest return on time invested. We replay it here as the speech offers some basic common sense rules that many borrowers, bankers and business leaders forget.

 

OK - This is a little true...

 

Banker Hours

How Branch Smell Effects Sales

Of all the human senses, smell is the oldest and happens to be hardwired directly into the hippocampus, or the place in your brain that handles memory and emotion. This is why certain branch smells can unconsciously make customers want to leave or put them in the state of mind to share information and explore different products. If you doubt the power of sensory stimulation, take our test below and watch sales increase.

 

FDIC Assessments

Last week the FDIC released the FDIC assessment trends for insured depository institutions. The data shows that fees across the industry are dropping due to improved capital and asset quality measures. During the first part of 2013, 2,514 banks (19% of the assessment fees) were assessed fees between 5bp and 7.5bp. By the start of 2014, 2,895 institutions (72% of the assessment base) were assessed deposit fees in that range, equating to an average FDIC fee of a less than 8bp annualized.

Bank Board Governance

The FDIC holds bank board of directors accountable for their actions, as they should. Every action and every lack of action, absent of some specific fraudulent circumstances, is the result of board oversight, governance and cultural tone. For that matter, so is the bank’s relevance to various stakeholders. Boards that are rubber stamps are not doing anyone any favors, particularly management and shareholders.

Deposit Innovation

We talk to more than 4,000 banks nationwide and sometimes that is not enough. Last week we had to go out of country in order to get the scoop from Alfa Bank, Russia’s largest private bank ($82B in total assets) and learned something new. The Bank introduced a new deposit account that has a rate of interest tied into an activity tracker.

 

C&I Loan Sales

Let’s say you are a bank. Let’s further say that your preference is to make loans to profitable customers in your community. We are also going to go out on a limb and speculate that you are trying to grow earnings and that you would like more loan volume rather than less. How is our fortune telling prowess? Pretty good, huh? Thank you. Since we are on a roll, we will also speculate that you might like our National-to-Local loan program to help with all the above.

 

Bank Social Media

Here is something that most banks overlook on social media – what will start off as a marketing effort will evolve into public relations and then morph into a customer service channel. This is a natural evolution that most banks should realize upfront before starting or expanding social media. If you are not ready for this, think twice before going down the social media road as our opinion, a halfhearted social media attempt is worse than no social media presence at all.

 

The Upside

Channel Delivery

JP Morgan Chase’s new branch in the Texas Medical Center in Houston is special because of what is not in it – teller stations. Instead of a teller line, the new branch features an express banking kiosk or “EBK.” Basically a giant 21.5 inch iPad that customers can swipe, point and click to dispense cash in increments of $1, make deposits, pay bills, withdrawal up to $2,000 and even issue a new, permanent debit card.

 

Data on Loan Bank Performance

When is the right time to refinance an existing commercial real estate loan on your books? Refinance too early and you most likely forgo a larger credit spread. Refinance too late and the borrower seeks additional competition. In previous analysis we showed that the average spread between refinancing with and without competition is about 40bp. Thus, we advocated putting a retention program in place that covers any loan above 1.2x debt service coverage that does not have some form of prepay protection.

Pages