Banker To Banker

Bank Sales Persistence

One reason why your bank is not selling more loans and building more deposits is likely your bankers may be giving up too quickly. While banks may know all the data about their balance sheet, when it comes to selling, most banks could use a crash course in focus. When it comes to bank sales, it is often not the bank that offers the best rate or the best product, but the banker that puts in the work to get the sale over a long period of time.

Virtual Reality and Banking - Picture of Fortnite on Cell Phone

If you don’t have a teenager in your house, you might have missed one of the largest events ever held last week. Nope, not Super Bowl, but on Saturday, D.J. Marshmello held a virtual concert in the game Fortnite. The event altered human trajectory and every banker should take notice for the ramifications to our industry, particularly for marketing and product development. In this article, we recap the event and analyze the potential.

 

Background

 

Enhancing CRE Underwriting -Picture of a industrial building

In one of our blogs last week, we discussed why real estate loans originated today at 1.20X DSCR and 75% LTV may quickly become substandard credits if cap rates normalize, interest rates rise to long-term averages, or NOI is stressed in an economic downturn.  We argued that community banks should be favoring 1.50X DSCR credits, as that is the minimum cash flow required to withstand a standard recession.  We also stated that lenders must incorporate a minimum debt yie

Take a second to think about how much of your operating, sales and marketing effort is spent acquiring new customers versus growing your existing customers. If you are like most banks, 95% of your effort is directed at new customer acquisition and not at increasing product usage. This is an area where banks can improve as when you look at conversion rates for bank products, the highest probability of sale is in those loyal customers that already use a product, just not to its fullest extent.

 

Setting Bank Fees - Woman staring out from an ATM

When was the last time you changed your fees? Most banks, when setting fees on bank products and services start and end by taking a look at what selected competitors are doing. This method, while not a bad start, will almost always result in a suboptimal setting of fees. The reason for this is not only is your bank very difficult to compare to your competition, but your competition is likely doing the same thing. In this article, we look at practical considerations for banks looking to set or revise their current fee structure.

 

Adding Customer Value

Financial planning is like working out; we all know we should do it, but we probably don’t do enough of it. What if your bank was that financial personal trainer? Banks are in an ideal position to offer financial advice, and your bank can start on the most basic level.

More Profitable Commercial Real Estate Lending

Many banks today are satisfied to underwrite real estate secured loans on just two metrics: debt-service-coverage ratio (DSCR) and loan-to-appraised value (LTV).  Banks typically approve credits above 1.20X and below 75% LTV – with many loan-specific factors that may skew these acceptable levels either way.  For competitive reasons, we see some banks who are dipping to 1.10X DSCR, and some deals are approved at 85% or even higher LTVs.  However, in today’s business c

Housing and Credit

Home prices and trends are thought to be a leading indicator of bank credit, and so we pause to analyze what 2018 is telling us and how it could impact our future in the banking industry. December existing homes sales came in at 4.99 million units or below the 5.24 million units expected. That continued the trend of weaker demand in 2018. Luckily, we can correlate much of that drop in demand and pricing to higher interest rates and inflated home prices against a backdrop of flat income.

Better Relationship Management

On the path to becoming a “trusted financial advisor,” many bankers don’t know where to start or even what being a trusted financial advisor means. At a minimum, it means knowing your banking products and their application. However, that’s table stakes. To deliver distinguishable value to the client, bankers need to take more of a leadership role on items such as business growth, M&A, crisis management, and general operations.

Structure Risk In Lending - Man and women looking at building plans

One thing that is underappreciated in our industry is the difference between loan structure risk versus credit risk. While these are intertwined, the two risks are different as we will explore.

Pages