In these challenging times, both bankers and bank customers are stressed and exhausted. Typical schedules are disrupted, work environments are upended, and business models are challenged. Because this pandemic shock has brought us into new territory, there has never been a better time in modern banking history than now to enhance your value as a banker. This environment is precisely when good bankers differentiate their service and outperform their competition to win new business, and further solidify existing relationships.
Banker To Banker
While we discussed our framework for deciding WHEN to call bank employees back to the branch lobbies and workplace (HERE), in this article, we cover HOW. The two decisions are interrelated since the sooner you look to reopen, the more risk you take, and the more resources you have to invest in a reopening plan.
The rate that the Federal Reserve pays on bank deposits, called the Interest on Excess Reserve Rate (IOER), is currently at ten basis points and will be the subject of an interesting discussion at the upcoming Fed Open Market Committee Meeting this week. At the end of last week, the Fed Funds effective rate was four basis points which could be a problem.
If we are going to “reopen America,” it helps to have a quantitative approach to make sure we are making the right decision. Since we are dealing with people’s lives and livelihood, this will be the most critical decision that most of us will ever have to make in their entire professional careers. Everyone wants to get America back to normalcy and recall our employees back to the workplace, but the debate is over when.
Community bankers are busy serving their customers and protecting their balance sheets as we respond to the Coronavirus pandemic and the resulting economic havoc. Just as prudent bankers were strategically planning for the next recession before any signs of this downturn, forward-thinking community bankers will very soon be contemplating their strategy for doing business after the current recession. We cannot pretend to know precisely how the medical development of
If you are in the military or public safety and have participated in a tactical operation center, you are likely familiar with the "Planning P." The Planning P is a national framework that helps quickly assimilate information and drive to decisions. This is exactly what is needed in any fast-moving event, such as if your bank has been involved in the production of Paycheck Protection Program (PPP) loans. It is also a great tool for any leader or manager to have, as many of these concepts are applicable to everyday business activity.
The Coronavirus is simultaneously disrupting supply and demand in the world economy. The shock to the economy will have a profound effect on the US economy, and community banks will not be immune from this disruption. It appears that a global recession is inevitable, but the full extent of damage to the banking industry is unclear. However, there are some troubling signs that many banks may be unprepared for the severity and length of this recession and the exten
We have often characterized banks as being “manufacturers of credit.” Like any manufacturing process, banks need to produce a product, in our case loans, to meet the customer’s demand. Loan production takes inputs such as capital, analysis, and documents and combines them in a standardized process to produce an end product. The Paycheck Protection Program (PPP) has presented a tremendous challenge for banks. After three days of manufacturing credit, we have honed ten essential concepts that may help your bank do more than its fair share of getting America going again.
We have been writing on the various strategies available to community banks when structuring commercial loans in this current challenging business and credit environment. With the flat and low yield curve, we have discussed how banks may offer commercial loans through the ARC hedge program using two different strategies: 1) embedded floors, and 2) forward starting floaters.
Go to any Trader Joe's market and then go to a competing market, and you will be likely to find a significant difference. Trader Joe's has produced a COVID-19 response that is thoughtful, practical, relatively inexpensive, and caring.