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Echo Partners Community Bank Blog

    The community banking advantage

    [fa icon="clock-o"]} [fa icon="user"] Howard Lothrop [fa icon="folder-open'] deposit profitability

    Beautiful dogs sitting down in a row - isolated over a white backgroundThe community banking advantage

    If all your low cost deposits disappeared tomorrow and your entire high rate loan portfolio refinanced what would be left? Wholesale funding and capital markets assets.

    Can you run your bank on wholesale funds?

    Big banks can. In fact that’s the basic big bank business model. Borrow from the market at fed funds and reinvest at libor. There’s a spread but look at FDIC data and you’ll see NIM is skinnier at big banks.

    Wholesale spreads demand efficiency and pricing discipline. That’s where big banks excel. And it’s where community banks most need to improve.

    But community banks have a powerful advantage. We have a relationship with our customers and more localized market areas. Relationships and localized markets are what enable community banks to earn higher loan rates and benefit from low cost core deposits. It’s a more granular micro approach to banking.

    Ever wonder why one market can support multiple community banks?

    It’s because it’s not really one market. Even in specific localities banking is not homogeneous. All customers don’t want or need the same thing. Different banks for different subgroups.

    Deposit profitability gives you detailed insights into your best customer groups so you can focus on your best customers, not someone else’s.

    Do you want to grow your bank profits with little to no risk? Click Here to  Discover How
    Howard Lothrop

    Written by Howard Lothrop

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