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Commercial Lending – Improving Commercial Loan Pricing and Profitability-Fa23


Additional information

Ols date


Recording available



Richard Hamm


Advantage Consulting & Training

Target Audience

assistant relationship managers, branch managers that lend to business owners, commercial lenders, community bankers, Consumer lenders, credit analysts, loan review specialists and others involved in business and commercial lending, portfolio managers, private bankers, small business lenders, special assets officers

Program Time

1:00-2:30 p.m. CT

Ols duration

90 minutes

With intense competition to capture loans, now more than ever it is important to have a strategic approach to loan pricing. This includes adequately covering your bank’s costs and meeting profit objectives. It also includes differentiating loan interest rates to reflect relative risk, plus knowing that you CAN win the borrower’s business on a basis other than the lowest price. So, improving your banks loan pricing and profitability has three key steps:

1. Understanding how your bank’s financial structure and performance creates advantages and disadvantages. It all starts with the loan-to-deposit ratio, then extends to the various metrics that drive calculating the profitability of loans, in terms of return on equity (ROE).
2. Knowing these key variables, the next element is scouting the competition. Uncertain times bring confusion to a competitive market. We’ll cover several ways to do this. No more complaining that the competition did something foolish, because usually they did not.
3. Sharpening your bidding skills comes next. Most pricing situations effectively are bid situations, whether you know it or not. We’ll cover several strategies to use.

Topics to be covered include:
• The key variables that determine loan profitability, plus a simple calculation example
• Using each variable to uncover possible advantages and disadvantages your bank may encounter with your competitors
• Understanding that it is not a “level playing field” when you compare to non-bank competitors
• Obtaining premiums (yes, you can)
• Options, options, options are your friend
• Being proactive
• Keeping the economic cycle in mind