Interest Rate Swaps

Interest Rate Swaps

One of the overwhelming trends in banking that lenders have had to deal with over the last several years is the mass exodus away from variable rate financing. With rates at generational lows across the globe, any borrower worth his salt is asking for (and getting)...
Prepayment & Maintaining Yield on Commercial Loans

Prepayment & Maintaining Yield on Commercial Loans

Most commercial loans have a stated term. While there are some “Demand Loans” where the bank can demand payment at any time, borrowers generally prefer the certainty of knowing when their loan is due. However, borrowers may want to repay some or all of the remaining...
The Siren Song of “1 More Report”

The Siren Song of “1 More Report”

The 1999 cult-classic movie Office Space really seemed to capture the frustration felt at businesses all across the country. Why did it resonate with so many? Perhaps because, as over the top as it tried to be, it somehow managed to land squarely in the realm of...
Why is Interest Rate Risk a Regulatory Priority?

Why is Interest Rate Risk a Regulatory Priority?

Yesterday, Dallas Wells from Asset Management Group posted the most insightful article on the state of community banking I’ve read in a long time. In the article, Dallas points to a rather alarming trend… Over the last four years, smaller community banks...
Slow but Steady Loan Growth at Community Banks

Slow but Steady Loan Growth at Community Banks

Janet Yellen, Federal Reserve Chair, gave an encouraging speech yesterday at the Independent Community Bankers of America (ICBA) – 2014 Washington Policy Summit. She highlighted the fact that community banks have started to increase the pace of lending, and she...

Loan Pricing & Profitability Modeling – Books

If you’ve ever considered building your own loan pricing / profitability model, you should have a pretty good idea about what’s involved. There are many factors, but the bulk of the profit is driven by credit risk and interest rate risk. To address credit...