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Predicting Community Bank Cost of Funds

South State Correspondent

Community bank cost of funds is jumping up. As shown in the graph below, the net interest margin (NIM) for community banks declined 22bps in Q1’23. The question is – what will happen to community bank’s cost of funds from here?

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How community banks can address cybercrime

Independent Banker

Community banks have a choice about addressing the problem: Remain vulnerable or be vigilant. Fraud and cybercrimes continue to increase, causing challenges for community banks. But there’s plenty community banks can do to meet this challenge. Here are some ideas for strengthening fraud defenses.

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Using A Commercial Step-Up Loan to Increase NIM and Fees

South State Correspondent

Community banks are striving to increase loan yield and maintain their cost of funding (COF). We have created and used a novel structure to take advantage of the inverted yield curve to allow community banks to increase net interest margin (NIM) and fee income on these existing fixed-rate loans.

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How QT will Impact Cost of Funding in 2024

South State Correspondent

The graph below shows the Fed’s balance sheet and projections for the middle of 2025. QE is the process of increasing assets and liabilities on the Fed’s balance sheet – the Fed buys securities and creates a liability, and that liability is reserves or cash balances that banks hold at the Fed.

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How Banks Can Better Use Grid-Based Pricing

South State Correspondent

Community banks can maximize profit and increase loan balances using innovative grid-based pricing for their commercial clients. Therefore, attracting long-term, stable, and lower COF deposits is paramount for community banks. However, grid-based pricing can also be used to increase deposit balances.

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Charles Potts: Innovation trends for 2023

Independent Banker

Much like we saw with some concentrated initiatives in 2020 with the Paycheck Protection Program (PPP) and the CARES Act, 2023 will bring a more granular focus to community banks’ lines of business. Expect increased demands from business customers and new revenue-generating opportunities for community banks.

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Higher Rates – Faster for Longer

South State Correspondent

Most importantly, because the Fed does not forecast its preferred measure of inflation to reach its 2.00% target rate until 2025, this rate hiking cycle will likely be longer than any of the previous five cycles. Application to Community Banks. A second significant risk for community banks is repricing risk.