Save with Strunk’s Effective Risk Management Tools

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Strunk is best known for our fee income improvement programs, including Overdraft Privilege, Rewards Checking and Value Checking. Strunk is also well known for assisting community financial institutions with their risk management and compliance processes using our software.

Strunk offers five comprehensive, easy-to-use, and affordable compliance management tools:

Risk Assessor helps prepare comprehensive risk assessments consistent with regulatory or other requirements, in days, not weeks.

Policy Manager organizes all policy documents into a single database, mapped to the relevant standards and control procedures.

Controls Manager schedules tests of policy compliance and tracks test results.

Vendor Manager is a specialized tool for managing vendor risk that standardizes risk assessment methodology and organizes all vendor related documentation.

Issues Manager is a centralized database for tracking all compliance issues and incidents across your entire organization.

According to Dan Roderick, CEO, “Strunk’s Risk Manager solution brings efficiency to the process and allows our clients to focus on their highest areas of risk. The solution is comprehensive but simple to use, which is something I wish I’d had access to in my days as a banker.”

All our tools are securely and reliably hosted with Amazon AWS, making them available on a variety of devices from anywhere. Risk Manager facilitates remote work and will greatly enhance your internal control and risk management processes and save time – all for one low annual fee.

If you are paying another vendor an annual fee for any one of these tools today, invest just 30 minutes to review our solution suite. We can add valuable services – and may be able to SAVE you money as well! Check out our tools today: https://strunkaccess.com/compliance-software/

Strunk’s Loan Pricing Solution Will Increase Income

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Over the past 30 years Strunk has helped over 1,800 community financial institutions increase income with a variety of innovative products and services. Their most recent solution is a loan and relationship pricing tool that will increase your bank’s net interest margin.

Starting in 1993, Strunk was the pioneer in overdraft privilege programs which turned out to be the best fee income idea in the history of our industry. Bankers would say “How can we increase fee income with a formal overdraft program without raising prices?” Our strategy substantially increased fee income while consumers benefited at the same time by not paying the retailer’s fee for returned checks.

Then in 2007, Strunk became an original investor in BancVue which later changed their name to Kasasa. Bankers would say “How can we afford to offer 6.5% on a checking account without cannibalizing all of our accounts and increase our debit card transactions at the same time?” Guess what, the reward checking program (Kasasa) doubled debit card transactions, increased the number of accounts using online statements, and new deposits far outweighed cannibalized accounts.

Prior to Dan Roderick’s, Strunk’s CEO, group purchasing Strunk in 2013 he ran the largest loan pricing solution in the market. It was very expensive yet very popular. Working with over 400 banks across the country, he helped them their net interest margin with very little effort.

Strunk’s loan pricing solution is very inexpensive, easy to use, and will increase your bank’s bottom line, just like what we have been doing for our industry since 1993.

Contact Strunk 800.728.3116 or at info@strunkaccess.com to learn more about our loan and relationship pricing solution.

Know the Importance of a Relationship’s Profitability

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Pricing can be a challenge for all community financial institutions. Most CFIs overprice their largest, most valuable customers and underprice their smaller, least profitable customers. This can be an alarming prospect, since as a result we end up giving the best deal to those who contribute the least to the bottom line and at the same time run the risk of losing our most profitable relationships.

Understanding the drivers of profitability on commercial customer relationships and making decisions based on that knowledge is of the utmost importance. Strunk’s Pricing Manager solution provides a robust relationship profitability feature to assist with determining the profitability of each customer quickly and easily.

The solution contains ROE targets that are used to determine the return on capital. ROE is what really matters most to our shareholders. These targets are customizable by product type and not only drive profitability, but also consistency across all loan types and lenders. Additionally, utilizing these drivers effectively will allow you to structure deals that work for the bank while at the same time, work for the borrower as well.

Strunk’s Pricing Manager also allows users to model the deposit relationship associated with each borrower and will illustrate whether that deposit brings any pricing power to the overall relationship. Positive profitable deposits add value for the bank and a pricing tool prevents lenders from using deposits as an excuse to price down a loan.

Pricing Manager is a powerful tool, it is affordable, and comes with a Money Back Guarantee! Contact us today at 800-728-3116 or info@strunkaccess.com for a demo of the all-new Pricing Manager or click here to learn more.

Time to Implement a Loan Pricing Solution

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When pricing commercial loans most bankers say they have to match the competition or they use some benchmark such as the prime rate. Others say they use the “flinch method”. They throw out a rate and see if the customer “flinches”.

Bank CEO’s often wonder if commercial lenders work for them or for their customers when it comes loan pricing. Lenders want to get the deal and many times they don’t consider the bank’s costs associated with making the loan when offering the rate/terms. Do lenders have the tools to offer a rate that meets both the borrower’s needs and bank’s profitability goals?

Many factors should be considered when making pricing decisions on commercial loans: Type of loan, amortization term, usage of a line of credit, fees, cost to underwrite and service the loan, risk, fixed, adjustable or floating rate, borrower’s other business with the bank and most importantly the size of the loan.

Relationships matter and we have to value that in the pricing equation. What other loans or business does the borrower have with the bank? Do they have a deposit relationship and is it in interest or non-interest bearing? What we typically find is banks over price their best customers and under price their smallest least profitable customers.

Now is a great time to look at an inexpensive, easy to use loan pricing tool to see if it is a fit for your financial institution. Increasing your Net Interest Margin is easy. Contact Strunk at 800.728.3116 or at info@strunkaccess.com to learn more about our loan and relationship pricing solution.

How Does a Formal Overdraft Program Benefit Consumers

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Formal overdraft programs are prevalent in community banks and consumers have benefited from them for over 30 years. Many articles have been written about the pitfalls and risks that consumers face from overdrafts and some of them are true. In reality, providing a consistent methodology to paying items that create an overdraft benefit both banks and their customers.

Consumers create overdrafts…banks do not. Banks are faced with decisions each morning to either pay a customer’s non-sufficient fund item or return it to the merchant. They also have to decide whether or not to charge a fee or waive the fee. Thirty years ago when formal overdraft programs started, the NSF or Overdraft fee was $15-$20 nationwide. The idea was to charge a fee to deter consumers from writing a check that would overdraw their account. This was a time when debit cards were not used much and checks and ACH items dominated the payments system.

Beginning in 2010, debit card transactions that would overdraw an account could not be authorized at point of sale unless the consumer “opted in” for this service. This was a great idea that came from the Federal Reserve. So, how do formal overdraft programs benefit consumers?

• Allows consumers to decide how they want their bank account handled when it comes to overdrafts
• Reduces returned check charges from merchants
• Allows consumers to take home the groceries or prescription drugs when otherwise their debit card transaction would be denied
• Keeps a bank from discriminating on daily pay and don’t pay decisions
• Keeps a bank for discriminating on waives and refunds

Contact Strunk at 800.728.3116 or email at info@strunkaccess.com to learn more about setting up a formal overdraft process at your bank.

Update on Agencies Final Guidance on Third-Party Risk Management

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On Tuesday, June 6, 2023, Federal bank regulators issued final guidance outlining the guidelines and factors to consider when managing third-party relationships for financial institutions. The joint final guidance was issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC). Planning, due diligence and third-party selection, contract negotiation, ongoing monitoring, and termination are the steps in the life cycle of third-party relationships that are covered by the final guidance on risk management strategies. The final guidance was released to hopefully improve consistency in the agencies’ supervisory approaches to third-party risk management and replaces each agency’s previous general third-party guidance. Based on the agencies’ consideration of public comments on the proposed guidance announced in July 2021, the final guidance has been simplified and made clearer. The final guidance rescinds and replaces the FDIC’s Guidance for Managing Third-Party Risk issued in FIL-44-2008. The FDIC also withdraws the 2016 proposed guideline on Third Party Lending (FIL-50-2016), which was released for comment on July 29, 2016, because the final guideline covers all third-party interactions, including lending arrangements. The final guidelines want to make clear that business relationships with third parties engaging in lending, payment or deposit activities for the financial institution are evaluated by the financial institution using both the third-party risk management guidance and various risk management processes and rules that apply to the lending and deposit relationship.

The joint guidance was designed to assist financial institutions, especially community banks, in matching their risk management procedures with the type of risk profile of their third-party partnerships, while giving example scenarios. The agencies intend to start working with community banks right away and to create more tools soon to help them manage important third-party risks. Like previous guidance, the complexity, size and size of the financial institution, as well as the nature of the third-party relationship, are all factors considered in the third-party risk management. The final guidance continues to make it clear that if a financial institution uses a third-party, then the third-parties risk falls back to the organization and the financial institution is responsible that the third-party performs all activities in a safe and sound manner.

The guidance also states that the agencies’ routine supervisory procedures will include examining a financial institution’s third-party relationship risk management measures. Supervisors typically evaluate a financial institution’s management’s capacity to supervise and manage its third-party relationships, as well as the impact of those relationships on the bank’s risk profile. They also carry out transaction testing to assess the third party’s performance and compliance with applicable laws and regulations.

In creating and executing risk management procedures for all phases of the life cycle of third-party partnerships, financial institutions may consider the sound principles provided by the guideline, which supports a risk-based approach to third-party risk management. A vendor management software can help with that and also help a company operate more efficiently. A vendor management software assists financial institutions to build better vendor relationships by improving engagement and transparency while reducing risks. Having the most comprehensive solution like Strunk’s Vendor Manager software helps streamline your end-to-end vendor due diligence workflow.

 

Bankers: It’s Time to look at a Loan Pricing Solution

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Pricing commercial loans for community banks can be daunting especially in areas where they compete for loans with larger institutions. With a yield curve that has changed dramatically over the past 18 months, isn’t it time your senior commercial lender looked at a loan pricing solution?

Commercial lending comes all shapes and sizes and borrowers are more sophisticated now more than ever. What should the interest rate be? For what term? Is there a fee involved? Is the rate floating or fixed? And lastly, will the borrower keep deposits with the bank?

Loan pricing solutions have been used by larger institutions for years and community banks sometimes just “throw a dart” to see what a borrower will pay. Generally, costs associated with underwriting and servicing the loan is not considered since it is hard to determine what they are. With interest rates at historically high numbers (last 15 years) maybe community bankers should look for an affordable loan pricing program.

Strunk’s loan and relationship pricing solution is designed to model all types of commercial loans factoring in costs associated with the loan, pricing for risk, and providing a return that is satisfactory to the bank. The program takes into account deposits the borrower may have with the bank as well as other loans.

The loan pricing model is easy to use and training the lending staff is paramount to getting buy-in for the solution. The goal is to increase net interest margin while also giving bankers a tool to understand why you may have lost a deal.

Contact Strunk at 800.728.3116 or email at info@strunkaccess.com to learn more about loan pricing solutions offered by Strunk. You will be glad you did.

High Performing Banks Look Outside the Box

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As interest rates rise and the cost of doing business increases, bankers are challenged to figure out where we go from here. Many community banks face a huge loss in their bond portfolio due to the substantial increase in rates on US Treasury securities. Liquidity can be a problem as we have seen in some mid-sized banks. Community banks haven’t seen a run on deposits although there is pressure to compete for deposits from non-bank competitors.

Service charge and fee income has increased some since the 2020 pandemic but still are near historical lows. As banking regulators continue to scrutinize “junk” fees including overdraft fees, what alternatives does a bank have? Large banks have a multitude of ways to create service charge or fee income but smaller community banks aren’t so lucky. Banks with assets over $10B have to report NSF/OD income on their quarterly call report. Any bank with a concentration of income from this source is being criticized by the CFPB. Now community banks in some states are being asked the same question. More, not less regulation is coming.

What can you do? Strunk was the pioneer for the Overdraft Privilege program beginning in 1993 and it was the best fee income idea in the history of our industry. We have several other fee income programs that many financial institutions have implemented. High performing bankers are always thinking outside the box.

Contact Strunk at 800.728.3116 or email at info@strunkaccess.com to learn more about fee income programs offered by Strunk. You will be glad you did.

 

Strunk introduces Pricing Manager, a commercial loan, deposit pricing, and relationship profitability tool for CFIs

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Strunk is proud to announce its newest solution, Pricing Manager. Pricing Manager is a fully hosted, web-based solution that allows community financial institutions (CFIs) 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 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 a year and a half ago, pricing was fairly straight forward for most community FIs, given historically low interest rates and record high liquidity. However, that has changed dramatically, as should an FI’s approach to pricing. Liquidity, which only several months back was far from a consideration, is now becoming a concern for many community FIs. 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. At no point in history has proper loan pricing been more important.”

With Pricing Manager, Strunk offers a full featured loan and deposit pricing tool that will:

  • Arm lenders with the tools needed in an increasingly competitive environment.
  • Include a relationship profitability module.
  • Allow instant adjustments to a shifting rate environment and ensure pricing consistency.
  • Increase profitability.
  • Produce rate sheets for consumer loans.
  • Provide clients with pricing offers that will win more deals.

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

Does Your Bank Need More Fee Income?

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Community bankers across the country are holding their breath hoping they won’t have to pay increased FDIC insurance premiums to pay for the recent $23B drain on the fund by the two large failed banks. A FDIC special assessment is coming but whether all banks will have to pay their proportionate share is still up in the air. Certainly it is not fair for community banks who are not “too big to fail” to share the responsibility of maintaining the FDIC Insurance fund at regulatory levels. Regardless, expenses at community banks are not going down.

Another concern that should be on community bankers’ minds is the percentage of service charge income they derive from non sufficient fund and overdraft fees. Since 2015, the CFPB has required banks with over $10B in assets to report their income from NSF/OD fees on their quarterly call report. Now, several states are asking smaller community banks for the same data. Banks that obtain over 50% of their fee income from NSF/OD fees are being criticized by the regulators. Some bankers are keenly aware of what is going on…others have not caught on to what they can do to mitigate this from happening. Bottom line is all bankers need to diversify their sources of fee income.

Strunk’s value added checking program will generate significant amounts of fee income while keeping free checking for those customers who want it. Since 2011, over 1,200 banks have offered the benefits added checking account to their offerings. You can expect fee income to go up by at least $40 per checking account per year. The program is easy to implement and easy to manage.

Contact us at 800.728.3116 or email at info@strunkaccess.com to learn more about fee 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.