Pricing Manager

Increase Net Interest Income With A Loan Pricing Tool

March 5, 2025/in Banks, Financial Services, Markets, Pricing Manager, Sales/by Mike Sobba

Many community banks net interest income is well below the 50th percentile compared to peers when looking at year-end UBPR numbers. It doesn’t have to be that way. The key is to price loans competitively but also consider the risk of the borrower, the term of the loan and the SIZE of the loan. Yes, size does matter when pricing commercial loans.

When analyzing the commercial loan portfolio of community banks we almost always see very little difference in the yield of loans under $100K compared to loans over $500K or $1M. Why is that? Doesn’t it cost a lot more to underwrite and service a larger loan than let’s say a farm equipment loan?

When making commercial loans the three most important factors of loan profitability are 1) size of loan; 2) credit risk of the borrower; and 3) term of the loan. It is hard to make money on a small loan that pays off in a short period of time. Likewise it is hard to make money on a small line of credit that rarely gets used.

Strunk’s loan pricing tool will ensure your lenders price new loan opportunities that meet both the customer’s needs and the bank’s profitability target. It factors in deposits and other loans as well.

To increase net interest income contact Strunk at 800.728.3116 or info@strunkaccess.com to learn more about Strunk’s affordable loan pricing solution.

Strunk at the ABA’s Conference for Community Bankers 2025

February 26, 2025/in Banks, Financial Services, Markets, Overdraft Privilege, Pricing Manager, Risk Manager, Sales/by Kristi Daly

This year, the American Bankers Association hosted the Conference for Community Bankers in Phoenix, Arizona at the beautiful JW Marriott Desert Ridge Resort and Spa from February 16-18. Attendees kicked the event off with a golf tournament, some educational sessions and an exciting reception where they were able to reconnect.

Speakers discussed topics such as the future of community banking, the age of digital transformation and a variety of sessions focused on lending. Both bankers and vendors alike enjoyed a reception on Monday evening toasting to community banking.

Strunk was excited to have the opportunity to discuss and demo, Pricing Manager, to several clients as well as to many new faces. Pricing Manager is a full-featured loan and deposit pricing solution that will provide banks with the ability to set loan and deposit pricing consistently and profitably. Commercial loans can be priced consistently by every lender – creating options for customers that all achieve the bank’s profitability targets. Additionally, rate sheets for consumer loans, residential mortgage loans, and deposits can easily be created that are also based on established profit objectives. Not only will Pricing Manager drive consistent achievement of profitability targets – it will also help banks win more quality deals! Pricing Manager integrates with any core system, so lenders can see the value of the full relationship when making each pricing decision.

Strunk’s goal is to continually provide value-added SaaS solutions that help community banks increase profitability, while controlling operating expense. In addition to their latest offering, Strunk highlighted their overdraft service and best-in-class governance, risk and compliance solution, Risk Manager.

For more information on Pricing Manager or any of Strunk’s other solutions, visit https://strunkaccess.com/ or contact Strunk at info@strunkaccess.com.

Grow Your Loan Portfolio with A Loan Pricing Tool

February 5, 2025/in Banks, Financial Services, FINSYNC, Markets, Pricing Manager, Sales/by Mike Sobba

Competition for “A” rated commercial loan customers is tough in many markets and a loan pricing solution might be the answer to win more deals. How many times has your financial institution lost a loan customer or have been told that “I can get a better deal down the street or from Farm Credit”. It doesn’t have to be that way.

Pricing loans that meet your profitability target can come with many different strategies that meet the borrower’s needs as well. What is the interest rate; what is the term; is it an adjustable or fixed; are there fees involved or not; what about deposits the borrower may have and are they interest bearing or in a operating account; does the borrower have other business with you. Why not give your prospective customer several choices that have the same financial result to the bank?

I have heard about everything…that our bank is “too small” or “Farm Credit’s interest rates are way too low” or “we can’t compete with the larger regional banks on rates”. Really? Why not look at a loan pricing tool that will help you price loans based on the entire banking relationship including other loans and related deposits. They are easy to use, easy to implement and your lending officers will like the flexibility they afford.

Start competing for larger loans, make smaller loans more profitable and get a handle on who your best customers are from a profitability standpoint…they are likely NOT the customer who has multiple loans with you as most lenders think.

To grow your loan portfolio by winning more deals contact Strunk at 800.728.3116 or info@strunkaccess.com to learn more about Strunk’s affordable loan pricing solution.

Strunk Helps Banks Make More Money

December 4, 2024/in Banks, Credit Unions, Financial Services, Markets, Overdraft Privilege, Pricing Manager, Sales, Secure Checking/by Mike Sobba

For the past 31 years, Strunk has helped financial institutions make more money by providing services to their customers that they want and need. The Strunk Overdraft Privilege program was implemented in over 1,800 banks across the country and it provided a much needed service. Banks typically charge the same fee whether they pay or return an insufficient funds item. Who would want their checked returned to the merchant? Our hosted ODP solution helps with collections and tracking the success.

Since 2011, Strunk’s Secure Checking program has helped hundreds of banks provide features to their consumer checking accounts for a small monthly fee. Here again consumers like the benefits offered and they don’t mind paying for them. In many cases those same consumers are paying quite a lot more elsewhere. Much like the Overdraft Privilege strategy, Secure Checking generates a considerable amount of customer loyalty and goodwill while the bank increases fee income by at least $50 per account per year.

Pricing commercial loans to meet the customer’s needs and to meet the profitability goals of the bank is yet another way Strunk helps banks make more money. Most banks typically price loans on risk, term and type of loan. But, should the size of the loan and fees be considered? Having a tool to help your bank win more deals and price smaller loans to ensure profitability can increase net interest income by 25 bp or more.

Contact Strunk at 800.728.3116 or email at info@strunkaccess.com to find out more about our proven strategies to increase income. Our solutions are easy and inexpensive to implement. Have a great holiday season and may 2025 be a great year for banking!

Community Banks Compete with “Non Banks” as Well

November 6, 2024/in Banks, Credit Unions, Financial Services, Markets, Pricing Manager, Sales/by Mike Sobba

For decades community banks have competed with credit unions for deposits and consumer loans and other “non banks” like the Farm Credit System for larger land and agricultural loans. Often times you hear bankers say they look down the street when pricing their loans but does that really provide a good way to determine what the interest rate should be?

The Federal Government has been “helping” farmers out for years on agricultural related lending and community banks have to compete for that business. Many times the interest rate on those types of loans seems unreasonably low and hard to compete with. Also, many times the “government” entity might waive fees or not require the borrower to open up a deposit account for the new loan.

Having a loan pricing tool that incorporates fees, rate, repayment term, and credit risk may give you a competitive advantage when competing with these entities. Can you lower the rate if the borrower brings deposits with them? Can you waive the fee and still receive a return that is competitive and meets your profitability target? What terms give both you and the borrower the best deal? How do you know that your lenders are working for the borrower and the bank?

These questions can easily be answered with a loan and deposit pricing tool that many regional and large banks have used for years. To gain a competitive advantage, contact Strunk at 800.728.3116 or email at info@strunkaccess.com to learn about how Strunk’s loan pricing tool will increase net interest income by at least 25bp.

Top 10 Reasons to Implement Strunk’s Pricing Manager

October 30, 2024/in Banks, Financial Services, Markets, Pricing Manager, Sales/by Kristi Daly

Is your financial institution using a pricing solution to consistently and more effectively price your commercial loans and deposits? If not, you should be and of the many reasons that your FI should consider implementing a pricing tool, here are the top ten:

Every community bank is over-pricing their largest, most profitable customers, and underpricing the smallest, least profitable customers. It is potentially the biggest challenge we face as an industry that keeps us from growing, achieving increased profitability and competing as effectively as we possibly can.
Do you know who your most profitable customers are? Do your lenders have easy access to that information in a form that helps them make better pricing decisions? When it comes to making better pricing decisions, it’s critical to look at profitability in the context of the rate environment that existed when pricing decisions were made for each relationship.
Banks that are ‘watching the competition’ are effectively allowing the competition to price their loans or making a rate concession to ‘match the competition’. If we are all paying attention to what our competitors are doing – we’re watching them, they’re watching us – how do we really know if the resulting price makes economic sense for us? Of course, competition is an important factor to consider – but there are other important factors as well… including your bottom line.
Institutions that employ a technology-based empirical pricing solution win more deals, enjoy higher net interest income, and achieve higher profitability. It’s an inescapable fact. Typically, the increase in net interest income equates to 25-50 basis points. That likely equates to a bigger annual impact than any other program you may currently be working on.
If given our preference, we always prefer to get fees on a loan. However, it’s also important to recognize that we are operating in a competitive world. Fees have a much greater impact on profitability for some loans than others. Make sure your lenders consider that fact when structuring pricing proposals – particularly for fee sensitive borrowers. Fees are critical on lines of credit, construction. development and small loans. They have far less impact on profitability of larger term loans.
Deposit balances can provide pricing power on a loan depending on the size of the deposit and rate. Be sure you are accurately reflecting the average balance of a deposit and the current interest rate when evaluating profitability.
Use the Rate Sheet feature in Pricing Manager to build consumer loan and deposit rate sheets that consider the main drivers of profitability to establish your pricing. On loans, size of loan, term and credit risk of the borrower are essential considerations. For deposits, size and term are also the main drivers. Too often we don’t consider the size which is critical to maximize net interest margin.
Run a Pricing Manager loan scenario on every commercial loan opportunity you consider and include the PDF of that scenario in your loan packet. Also, include the Relationship PDF so that you are able to consider the profitability of the customer when making your pricing decision.
Use the reporting feature in Pricing Manager to evaluate lender performance. Reports on average ROE, total loan amount, and loan count are available by product and by lender. Use this feature to make sure your lenders don’t just price to the target and are striving to beat your targets as often as they can by as much as they can.
Use Pricing Manager to ensure your adjustable-rate loans are priced appropriately – not only for the life of the loan, but for the initial fixed period as well as the adjustment periods. Too often, the rate for the initial period is inadvertently ‘discounted’, banking on the adjustment periods to achieve target profitability. But there is no guarantee the customer will keep the loan through those adjustment periods. Using the adjustable feature in Pricing Manager will allow you to ensure your loans are priced consistently and achieve your profitability targets.

Please contact Strunk at info@strunkaccess.com or 800.728.3116 to schedule a demo to learn more. Click here for more information.

Could Lenders use a Loan Pricing Tool?

October 2, 2024/in Banks, Financial Services, Markets, Pricing Manager, Sales/by Mike Sobba

Bank lenders need to know which customers are profitable and which ones are not. Does the type and size of the loan matter and how do you factor in the customer’s deposit relationship into the profitability equation? Do your bank’s lenders work for the customer or for the bank when it comes to loan pricing and whether or not to charge a fee?

These are all good questions and a loan and deposit pricing tool will help banks increase net interest income and win more deals when in a competitive situation. Even though getting fees on loans is always a good thing do they really matter to the profitability of the loan? Of course the answer is it depends on the type, size, and term of the loan. Not many banks factor this into the equation.

Relationship profitability many times comes down to does the customer have multiple loans and deposits with the bank? Or, could I get a deposit account if I make a loan to a new customer. All of this is relevant but the type and size of the loans/deposits are critical. Are the deposits interest bearing or in an operating account? Are the customer’s loans small or large and how many loans are there?

Loan pricing tools have been around for decades and many large and regional banks use them. Strunk’s loan, relationship and deposit pricing solution is easy to use, affordable and your lenders will like the tool. Contact Strunk at 800.728.3116 or email at info@strunkaccess.com to learn about how our loan pricing tool will increase net interest income by at least 25bp.

How to Replace Lost Fee Income for Banks?

August 14, 2024/in Banks, Credit Unions, Financial Services, Markets, Overdraft Privilege, Pricing Manager, Sales, Secure Checking/by Mike Sobba

Strunk has helped over 2000 banks increase their bottom line from a variety of income producing programs that started in 1993 with their Overdraft Privilege program. The service benefited both consumers and banks and although income is down from NSF/OD fees it still remains popular even after tremendous regulatory scrutiny.

In 2010, banks were required to obtain consumer consent before charging an overdraft fee for a debit card transaction that overdrew the account. Service charge income went down significantly. In 2011 FDIC regulated banks had to notify consumers after every 6th overdraft charge in a rolling twelve month period. Service charge income went down again.

More recently banks have discontinued charging NSF fees if their core processor can’t determine if the item had already been presented. Some banks have discontinued allowing consumers to overdraw their account and they have eliminated overdraft fees. To total all of these changes up our industry has seen more than a 50% drop in service charge income in the past 15 years.

What can a bank do about it? Strunk’s Secure Checking program allows consumers to get highly sought after services from their bank while paying a small monthly fee for their checking account. Banks see a net increase in income per checking account of $50 per year. Strunk’s Loan and Deposit Pricing tool will help banks increase net interest income by at least 25bp. For a $100M loan portfolio that is $250K per year.

Strunk is here to help banks make more money. Contact Strunk at 800.728.3116 email at info@strunkaccess.com to learn more about income programs offered by Strunk. You will be glad you did.

Strunk is pleased to announce partnerships with several state banking associations across the country

August 7, 2024/in Banks, Markets, Pricing Manager, Sales/by Kristi Daly

Strunk is pleased to announce partnerships with several state banking associations across the country. The Community Bankers Association of Georgia, Kansas Bankers Association, Kentucky Bankers Association, Missouri Bankers Association, Nebraska Bankers Association, Tennessee Bankers Association, and the Independent Bankers Association of Texas have all provided endorsement of Strunk’s latest offering, Pricing Manager.

Pricing Manager is a fully hosted, web-based solution that allows banks to deploy a tool to all lenders to ensure they are armed to price loans profitably and consistently based on target profitability objectives. It also provides the ability to understand the details of relationship profitability so better pricing decisions can be made. Pricing Manager will increase your bank’s net interest income by 25-50 basis points.

Pricing Manager offers lenders the ability to vary rate, fee, risk premium and term structure among other variables, to understand the drivers of profitability and develop pricing options for borrowers that all achieve the target ROE for all types of loans. Deposit relationships can be included to see how much ‘pricing power’ each brings to the loan or total relationship. The solution contains built in assumptions for loan origination, loan servicing and cost of funds which can all be customized.

According to Strunk’s Chief Executive Officer, Dan Roderick “Until about two years ago, pricing was fairly straight forward for most banks, given historically low interest rates and record high liquidity. However, that has changed dramatically, as should a bank’s approach to pricing. Liquidity, which not long ago was far from a consideration, is now becoming a concern for many banks. Also, economists are beginning to predict tightening commercial credit largely due to a downturn in commercial real estate values – particularly for office space and retail properties – which will impact the risk profile of these loans and should have a corresponding impact on pricing. At no point in history has proper loan pricing been more important.”

Pricing Manager will:

Arm lenders with the tools needed in an increasingly competitive environment.
Provide clients with pricing offers that will win more deals.
Increase net interest income by 25-50 basis points.
Allow you to factor relationship profitability into pricing decisions.
Allow instant pricing strategy adjustments in a shifting rate environment and ensure pricing consistency.
Produce rate sheets for consumer loans and interest-bearing deposits.

Strunk is providing free demonstrations of the Pricing Manager solution for interested banks. Please visit https://strunkaccess.com/pricing-manager/ or contact Strunk at info@strunkaccess.com to learn more.

Should Lenders Price Their Own Loans?

July 3, 2024/in Banks, Credit Unions, Financial Services, Markets, Pricing Manager, Sales/by Mike Sobba

Bankers should consider several factors when pricing loans that meet the bank’s profitability target and also win the deal. Often times when asked what the rate is for commercial loan, a banker will give the same rate regardless if the loan is for $2M or for $250K. In other words many banks price their loans based on the type of loan and not the size. This is a mistake.

Size matters. So does the term, fees, risk, return to the bank and cost of funds. Does the customer have other loans or deposits with the bank and are they profitable? Do your lenders know what the cost to originate or service the loan is? How can they price the loan if they don’t know these things?

Competition is fierce especially for the A rated borrowers. Community banks saw finance companies and car dealerships steal installment lending from them in the 1990’s. Farm Credit is a huge competitor for Ag real estate loans. How can a bank possibly compete with rates they offer your customers? The short answer is you can.

With net interest margins narrowing, now is the time to look at a loan pricing solution that takes all of these factors into consideration. Don’t lose another deal due to price before you look at how you can compete and meet your profitability goals.

Contact Strunk at 800-728-3116 or email at info@strunkaccess.com to learn about how our loan pricing tool will increase net interest income by at least 25 bp.