South State Correspondent
JUNE 5, 2023
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?
South State Correspondent
NOVEMBER 29, 2023
Community banks are striving to increase loan yield and maintain their cost of funding (COF). Unfortunately, pressure on COF is expected to remain, and loans will reprice slower than expected as borrowers with below-market rates will wait until the last maturity day to refinance their credits.
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South State Correspondent
DECEMBER 13, 2023
Most market participants are focused on just one monetary policy tool available to the Fed – short-term, federal funds rates. The graph below shows the Fed’s balance sheet and projections for the middle of 2025. The graph below shows COF for the same three groups of banks. Increase product engagement and duration.
South State Correspondent
OCTOBER 23, 2022
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.
Independent Banker
DECEMBER 31, 2022
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. Embedded finance is expected to increase exponentially over the next few years, opening up new markets and enhancing customer experiences.
South State Correspondent
OCTOBER 18, 2023
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.
South State Correspondent
JUNE 20, 2023
The futures market forecasts one additional hike in 2023, but more importantly, no interest rate decreases this year. Equally important are the Fed’s 2023, 2024, and 2025 projections for inflation, GDP, and unemployment – all pointing to a hotter economy for a longer period. The post What a Hawkish Fed Pause Means for Banks?
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