Resources

LoanPricingPRO On Demand

Experience the power of LoanPricingPRO® only when you need it and without licensing the software. Submit the details of your deal, and the ProBank Austin LoanPricingPRO® experts will analyze your scenario. The model will be populated with institution specific assumptions based on recent regulatory filings. A sampling of these assumptions include credit loss expectations, product

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What Can Community Bankers Learn from Large Bank CECL Disclosures?

Last week (July 14 – 16, 2020) the four largest US banks began releasing their second quarter 2020 earnings reports and many analysts were focused on their updated estimates for credit losses anxious to see the effects of the Covid-19 crisis on these leading financial institutions. These second quarter 2020 earnings releases represent only the

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Lending Considerations for Community Banks During the Coronavirus Pandemic

The economic impact of the Coronavirus Pandemic is now touching nearly every business and organization in essentially every country around the world. To be able to continue to support your local community, community-based financial institutions need to be able to respond to the evolving financing needs of each customer, including business borrowers.

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Lending Environment Due to COVID-19

Since the rapid onset of the novel Coronavirus striking US and global financial markets, benchmark interest rates have fallen sharply. Over the past month US Treasury rates for 5 and 10-year securities have quickly moved to historic lows. If your institution is using unadjusted US Treasury rates as proxies for market-based cost of funding for loan pricing purposes within LoanPricingPRO®, it is recommended that you override these rate curves in the short term with one of a number of other available rate indices.

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Loan Pricing Strategies in Current Rate Environment

Between the end of 2016 and 2018, the Federal Reserve incrementally increased the target Fed Funds Rate eight times from 0.50% to 2.50%. During this period, community banks took advantage of this rising rate environment by increasing their Yield/Cost spread. Loan yields increased 45 basis points from 4.65% to 5.10%, while deposit costs only increased 30 basis points from 0.43% to 0.73%. Further, the increase in deposit costs lagged the increase in loan yields, providing further margin enhancement.

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