Grow Your Loan Portfolio with A Loan Pricing Tool

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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.

The importance of ongoing monitoring of vendor relationships

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A crucial aspect of the Third-Party Relationship Life Cycle that is often overlooked is ongoing monitoring. Regularly monitoring vendors is vital for managing external risks and making sure that third parties adhere to compliance and performance standards throughout the duration of the relationship. The frequency of monitoring your vendor management program depends on various factors, such as the type of business relationship, vendor risk rating, vendor performance, and regulatory obligations.

To effectively monitor your vendors, begin with a risk assessment to evaluate the inherent risks they pose when introduced to your operations. This assessment will pinpoint areas that need careful oversight and establish how often you should conduct reviews, depending on the vendor’s associated risk levels. Next, define your monitoring criteria according to the vendor’s risk level. Establish thresholds and alert mechanisms within your monitoring system to identify any deviations from these criteria, enabling you to respond quickly to potential issues.

When establishing a monitoring process, choosing the appropriate third-party monitoring solution is crucial for supporting continuous oversight. Strunk’s Vendor
Manager software enables you to tailor your ongoing monitoring categories according to risk levels, automating the entire process. This improves efficiency and minimizes missed opportunities. Strunk’s software also helps track deviations and gives feedback on the vendor’s performance.

Ongoing monitoring is crucial for managing vendor risks, ensuring that vendors fulfill their contractual obligations, and adhering to regulatory standards. An effective vendor monitoring process enhances your overall vendor management program. Additionally, it serves as one of your most valuable tools to address minor issues before they escalate into major ones. Click here for more information.

Strategy to Combat Bank Service Charges Under Attack

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Bank fee income has come under attack once again by the regulators and what can you do about it? Four fee income producing products that all banks offer will be curtailed with recent changes to regulatory guidance.

  1. The banking industry has charged fees for returned checks on consumer accounts for as long as most of us have been in banking. Some regulators don’t like banks charging for second presentment of a returned check even though that practice is fully disclosed. Since it is difficult to determine if an item is being presented a second time, some banks have discontinued charging for NSF items.
  2. Getting consumers to opt in for debit card caused overdrafts has been around since July 2010 as required by the Federal Reserve. The nearly 15 year old regulation requires banks to send a confirmation when a consumer opts in. Now the regulators want you to a) get a signature on the A-9 form or b) record all calls where the consumer opts in for the service. Reducing the number of opt-ins will substantially decrease your bank’s fee income.
  3. Now the CFPB wants to limit what your bank can charge for an overdraft or NSF item. The maximum fee is $5 or whatever it costs you to process the item. Most community banks charge $25-$35 per NSF item so this will once again substantially reduce fee income.
  4. Lastly, six months ago there was a Federal Reserve proposal to cap the debit card interchange that your bank receives. Likewise, there is a Credit Card Competition Act that the Senate is currently looking at. The result of these actions would reduce interchange and or swipe fees for banks.

Since 2011, Strunk’s Secure Checking program has helped hundreds of banks provide features to their consumer checking accounts for a small monthly fee. 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.

Contact Strunk at 800.728.3116 or info@strunkaccess.com to find out more about our proven strategies to increase income. Have a great 2025!

Strunk Helps Banks Make More Money

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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!

Working with a vendor like Strunk is the key to establishing a successful vendor management program

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Increasingly, financial institutions are outsourcing to benefit from reduced costs, enhanced flexibility, and improved efficiency while optimizing their resources and expertise. When a financial institution opts to outsource a task, its board of directors must ensure effective oversight and implement adequate controls. To create a robust vendor management program, the board should take into account the following activities.

Initially, the board of directors must define clear goals and objectives for their vendor management program. This includes determining the organization’s specific needs and requirements, assessing potential vendors, negotiating contracts, and overseeing vendor performance. Once established, the financial institution can formulate policies and procedures for the vendor management program. It’s crucial to devise a thorough plan that encompasses the entire vendor management process, from vendor selection to contract termination. Strunk’s Policy Manager software serves as a structured, centralized source of truth for your financial institution’s vendor management policies. Additionally, Policy Manager can document all procedures related to vendor management, encompassing links to policies, assigned responsibilities, automated change logging, and multiple file attachments.

After outlining the goals and objectives for a financial institution’s vendor management program, it is beneficial to employ vendor management software to enhance operations. Strunk’s vendor management software simplifies the automation of vendor management processes. This tool helps you organize your reviews and offers insights into the products and services provided by vendors. Furthermore, it acts as a contract repository and issues reminders for contract renewals. Our software also aids in conducting gap analyses of vendor contracts to identify any discrepancies.

Next, it’s crucial to carry out risk assessments to determine the risks associated with each vendor. Strunk’s vendor manager software will help you proactively manage vendor risk through assessments and tiering. This approach allows your financial institution to prioritize higher-risk vendors, enabling more frequent and thorough monitoring of these vendors. Once your financial institution identifies the risks linked to a vendor, it is crucial to be aware of the controls the vendor has implemented to manage those risks. Strunk’s vendor survey facilitates this process and helps you comprehend the vendor’s potential residual risks.

In a vendor management program, conducting due diligence on each vendor is crucial. You should evaluate aspects such as their financial stability, reputation, understanding of banking regulations, and overall performance. Strunk Vendor Management can streamline this process through our monitoring system and document retention for due diligence.

If it’s vital for your financial institution to collaborate with a skilled vendor who delivers dependable service and comprehends regulatory requirements for your automated vendor management process, reaching out to Strunk is key. We are here to offer consulting and the necessary tools to establish a successful vendor management program.

Community Banks Compete with “Non Banks” as Well

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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

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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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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?

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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.

 

Can Community Banks Compete?

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More than 10,000 banks have vanished in the last forty years and the trend is frightening as we get close to 4,000 banks left in our country.

Some of the reasons for this drop can easily be explained such as bank failures and mergers of multi-bank holding companies. Of course banks in rural markets have sold as bank owners get older and no family member is there to continue the family legacy. But, many banks sell because they think they no longer can compete with larger banks. This is nonsense!

Bank regulations are never ending and continue to hamper the ability to compete. Costs associated with running the bank such as core processing, compliance and employee expense seem to rise each year. What can be done about it? Have you turned over every rock to see what other banks are doing?

Strunk is an expert in delivering fee income and net interest income programs that hundreds of banks have implemented. We have a variety of services that have been time and market tested. Overdraft Privilege is the program we are best known for with over 1,800 bank clients.

Secure Checking is the “overdraft privilege” of the 2020’s. It will deliver similar fee income as ODP did in the 2000’s. Our loan and deposit pricing tool will deliver similar numbers to the bottom line in the way of net interest income.

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

How to Replace Lost Fee Income for Banks?

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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.

An independent certified public accountant has examined Strunk’s operations and found them to be in compliance with the AICPA’s Trust Service Principles. It was determined that Strunk meets the Security, Availability, Processing Integrity, Confidentiality, and Privacy criteria for SOC 2 established by the AICPA.