Balance Sheet Pricing Strategies
We can provide the tools you
need to form a rational and
comprehensive Pricing System
for both Loans and Deposits...
Perhaps the most effective, but sometimes least appreciated, Asset/Liability tool is a rational and comprehensive Pricing System. At many financial institutions, we have found that Deposit Pricing can be based primarily on an assessment of "what the competition is paying." At the same time, Loan Pricing is often based upon similar market pressures, further influenced (in some cases) by the discretionary judgment of an individual Loan Officer. Unfortunately, in today's Interest Rate environment and the possibility of poorly managed competition, this often fails to produce an adequate profit margin.
To combat this problem and to manage the inherent Interest Rate Risk in any financial transaction, our Firm can assist your Bank's Management in developing coordinated Balance Sheet Pricing Strategies designed to improve Net Interest Margins.
These Pricing Systems are comprehensive and rational. They place Pricing Policies appropriately in the control of Senior Management, and closely coordinate Loan Pricing to the Bank's Cost-of-Funds to assure proper profit margins.