Jun 2019 by Andy Morgan Essential Concepts in Pricing Loans Imagine this scenario. You’ve purchased loan pricing software. Your team is excited to implement the model to help drive commercial relationship profitability. You install the model, login for the first time, and then the questions start popping up. Where did these assumptions come from? Why don’t…
read article →Essential Concepts in Pricing Loans Relationship profitability is an important metric within most pricing models. While it is important to understand the profitability impact of individual new loans, it is crucial to understand how the pricing decision on a new credit will impact the profitability of the entire customer relationship. These relationships often include deposit…
read article →The Federal Reserve continues to gradually tighten monetary policy and increase the Fed Funds Rate. At the same time, the long end of the curve, while flattening over the last 12-months, has also risen. This has helped increase loan yields, but not nearly to the same magnitude as market yield curves. A while back, we…
read article →With the recent passage of the Tax Cuts and Jobs Act of 2017, now is the appropriate time to review the tax rate assumption in your loan pricing model. It is easy to update this key assumption, but you should also carefully consider the impact of a tax rate change on the other configuration areas…
read article →Commercial lending executives often identify two perceived barriers to implementing state‐of‐the‐art commercial loan pricing systems. Cost ranks as the primary objection followed closely by a lack of familiarity with the software’s benefits. Like many other challenges and barriers that may be encountered, there are effective solutions to overcome your concerns with attaining an appropriate Return…
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