Dustin Allen
Apr 1, 2020

Preparing for a recession usually includes steps that banks take to maximize interest spread and fee income, offload expensive deposits, and prepare for loan losses that are on the horizon—all while maintaining relationships and liquidity. To provide guidance for those who have responsibility for deposits and deposit pricing in the current environment, I’ve interviewed a number of […]

As the likelihood of the Fed raising interest rates looms ever larger, it’s time for banks to consider the strategic implications of their time deposit funding portfolios, commonly referred to as certificates of deposit (CDs).

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What to do about overdraft (OD) fees, or the loss thereof? For banks with assets over $10 billion, service charge income on deposit accounts, with OD income being the largest component, fell by almost half between 2010 and 2013 and at a rate twice as fast as for smaller competitors.

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In the Bourne series by Robert Ludlum, Jason Bourne, the main character, is a highly trained (or mentally programmed) assassin for the United States who was highly successful at taking out targets.

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Deposit pricing is challenging because it involves making assumptions about tomorrow.

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It’s not a stretch to say the typical experience for a customer getting a consumer loan through their trusted community bank is only slightly more appealing than working with the sleazy finance desk at the local car dealership.

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In a recent article for BAI Banking Strategies, I broached a theory that deposit rates start rising prior to an anticipated increase in the Fed funds rate because of our tendency to try to outdo the competition.

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Ahead of any rise in interest rates, financial institutions continue to hunt for new revenue sources, first from retail fees and second by increasing minimum deposits on time accounts.

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Twice in the past twenty years we experienced a cycle of decrease and increase in the Fed funds rate.

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The Federal Reserve has signaled that rising interest rates might be on the way, raising the risk that community banks’ margins will be squeezed in the future.

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As the economic downturn that began in 2008 deepened, credit tightened, consumers switched to other payment methods and credit losses reached historically high levels.

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