Time to Consider a Loan and Deposit Pricing Tool?

Many community bankers “look down the street” when pricing commercial loans to see what the competition is doing. Ironically, those bankers are looking at your bank as well to see what rate to offer! What if neither bank knows how to ensure the loan nor the borrower’s relationship is profitable?

In the mid 2000’s large and regional banks used pricing tools to help them win more deals and to ensure the loan/relationship met their profitability target. Community bankers were left out due to the complexity and cost of the pricing solutions.

Then from late 2008 until March 2022 the prime rate was so low that any loan a bank would make was better than investing in Fed Funds. Therefore, loan pricing tools weren’t much of a benefit to community banks. However, in the past two years rates have risen due to inflationary concerns and we are now faced with a prime rate of 8.5%.

There are many factors that go into a pricing decision and an inexpensive, simple to use loan pricing tool will give your bank an advantage in today’s interest rate environment. Size, term, fees, fixed or floating rate, balloon, collateral, and of course the borrower’s creditworthiness are all important factors.

2024 is the year to look at giving your loan officers a simple program to use to win more deals while meeting your profitability goals. Just like loans, size matters when it comes to deposits as well. Strunk’s loan and deposit pricing tool can make your bank a lot of money. Contact Strunk at 800.728.3116 or info@strunkaccess.com to see how it works.