Articles

Do You Have the Loan Pricing Discipline Needed to Respond to your Rising Cost of Funds?

Essential Concepts in Pricing Loans Many financial institutions experienced record earnings in 2018.  The one-time impact of the new tax law coupled with continued improvement in both asset quality and loan yields more than offset the rising cost of funds banks experienced in the second half of the year. In 2018, The Federal Reserve continued

Read More

So, What Should Lenders Be Doing Now?

Essential Concepts in Pricing Loans Current Lending Environment The US banking environment is in a new, more unpredictable phase as we begin 2019.  Economic growth continues to chug along nicely, poised to achieve a 3% plus GDP growth rate on an annual basis for the first time in many years.   However, all major US stock

Read More

Credit for Funding on Non-Maturity Deposits

Relationship profitability is an important metric within most pricing models. While it is important to understand the profitability impact of individual new loans, it is crucial to understand how the pricing decision on a new credit will impact the profitability of the entire customer relationship. These relationships often include deposit accounts.

Read More

Are Your Loan Yields Keeping Pace? – Essential Concepts in Pricing Loans

The Federal Reserve continues to gradually tighten monetary policy and increase the Fed Funds Rate. At the same time, the long end of the curve, while flattening over the last 12 months, has increased substantially as well. This has helped increase loan yields, but not nearly to the same magnitude as market yield curves.

Read More

Adjusting Your Tax Rate – Essential Concepts in Loan Pricing

With the recent passage of the Tax Cuts and Jobs Act of 2017, now is the appropriate time to review the tax rate assumption in your loan pricing model. It is easy to update this key assumption, but you should also carefully consider the impact of a tax rate change on the other configuration areas within your model.

Read More