Banker To Banker

Remote Selling - Ideas for banks

In a recent training, the recording of which is below, our Bank participated in an intro class on how to get better at remote selling and coaching put on by Jack Hubbard of St. Meyer & Hubbard. Given the pandemic and the fact that we believe remote selling is here to stay, we found it was a critical gap in our selling skill set that we wanted to fill.

Lender Compensaton

We have blogged about how low-interest rates, COVID-19 credit strain, and tough competition for quality commercial loans create a challenging environment for community banks.

The Future of Office Commercial Real Estate Loans

Office lending for banks has been one of the better-performing sectors of commercial real estate (CRE) for banks for some time. Even during the pandemic, the credit on office loans is doing surprisingly well. The question arises, what happens in the future? Will it be business as usual post-pandemic? Will companies take more space to provide for social distancing, 25% of the space as they go mainly to remote workers or 50% of the space to handle a hybrid remote work culture?

The Advantage of Loan Hedging

Between low-interest rates, the concerning rise in COVID-19 cases, and tough competition for quality commercial loans, community banking is a tough business.  While there has been a nominal deterioration in credit quality thus far, a deterioration in the business environment related to the pandemic and lack of fiscal stimulus may change that. Net interest margins at community banks are declining, and the trend is likely to continue through 2021.

Virtual Selling and Sales Training

Being able to adapt and pivot is the hallmark of success in 2020. There are many new skills that we picked up, how to work various video conferencing applications, how to do remote check-ins, and, of course, how to run your entire bank from your home dining room table. One skill that still can use some work is our approach to training, coaching, and conversations.

CRE Underwriting During a Pandemic

It may seem counter-intuitive, but many banks are loosening CRE underwriting standards instead of continuing to tighten them. With a new presidential administration, it is likely that we will face more stringent pandemic mitigations in the near future. While this is likely good for public health, it increases the short-term risk for commercial real estate (CRE). Offsetting this risk is the possibility of a vaccine and therapeutics.

Satellite imagery and machine learning in banking

In the last five years, one of the new disciplines in banking that has emerged is the combination of machine learning and satellite imagery to gather bank intelligence on fraud, credit, and bank marketing. While this sounds daunting, in this article, we will show you some relatively simple applications of both artificial intelligence (A.I.) and satellite (sat) imagery to improve bank performance. In the last several years, bankers have learned that they have access to inexpensive imagery that is often free.

Hedging and the Libor Fallback Language

On October 23, 2020, the International Swaps and Derivatives Association (ISDA) published the Fallback Protocol (Protocol) that allows firms that use LIBOR to transition to SOFR if LIBOR becomes unavailable in the future. CenterState Bank’s ARC program allows community banks to offer up to 20-year fixed-rate loans to customers, but retain an adjustable asset priced at 1-month LIBOR plus a credit spread, and CenterState (not the community bank) carries the derivative and converts the fixed rate that the borrower pays to the adjustable-rate that

Using Machine Learning to Improve Bank Marketing

In the olden days, if you wanted to market deposits, the head of Retail would come to Marketing and say something like - “We need to raise deposits,” or “We have a new account opening platform that we need to market.” Marketing would then put together some ideas for a print or digital campaign; Retail would sign off on it, and then they would roll it out. Maybe it worked, perhaps it didn’t, but the reality is it likely was successful at some level, and everyone was happy. Unfortunately, this approach is quickly fading and highly inefficient.

Converting from Libor to SOFR

On October 23, 2020, the International Swaps and Derivatives Association (ISDA) published the much anticipated IBOR Fallback Protocol (Protocol).  Firms that sign up for the Protocol agree to the spread adjustment and the fallback rates if LIBOR becomes unavailable in the future.  Most community banks have some loans or deposits tied to LIBOR, and many community banks have used LIBOR hedges to help borrowers manage interest rate risk.

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