There is many ways the current interest rate environment is impacting banks. The balance sheets of community banks, for instance, are very sensitive to short-term interest rates. Short-term rates drive the cost of funding, loan and securities yields.
A good banker can sometimes tell that a number set is wrong just by looking at it. Today, we are going to teach you a trick that all bankers should know in order to help stop fraud, help in credit analysis and will be invaluable in M&A. We have even attached a calculator at the end to help you put it into practice. It doesn’t matter if the banker is a loan officer, a teller or a CEO.
Banks have been using a “teaser,” or an artificially low, introductory interest rate on mortgage loans and credit card for years. While various banks have flirted with them for commercial loans over the last ten years, it is now becoming more common place.
A tool that every banker should have at their disposal is the ability to figure out what a statistically valid sample size is from a given population (link at the bottom). A simple everyday example is in the case where examiners are coming in and you want to be sure all your wires are BSA compliant. Do you have to check all of them or can you accomplish the same analysis with less work and just take a sampling of the data? Maybe you want to know what your customers think and want to know how many surveys to email out.