Profitability of Commercial Loans at banks
2014 was a year that many bankers around the country found challenging, as they steered their institutions through a myriad of government regulations, and the obstacles provided by a still struggling economy. Despite this difficult environment, there are signs that commercial lending is beginning to increase in parts of the country, and that commercial loans are becoming an increasing source of revenue and profit for banks.
A recent article in the Omaha World Herald reports that the Profitability of Commercial Loans at banks in Nevada rose sharply in 2014. First National Bank of Omaha, for example, posted a profit increase of 23 percent year-over-year, with much of this profit attributed to the bank increasing the number and amount of its small business loans.
While this is certainly good news for this particular bank, and the banking industry as a whole, the report also pointed out that smaller banks in Nevada and elsewhere continue to struggle to make a profit when they are unable to offer commercial loans that can match the offers a small business might receive from a larger bank.
What this news means for you and others in the commercial lending industry is that now, more than ever, you need a loan pricing model that enables you to offer the best terms to your commercial borrowers so that you can compete with larger banks, while maximizing the potential profit for your firm. As the economy continues to improve nationwide, and credit becomes more freely available to business owners, the need for bankers to have a loan pricing model with a sound, reproducible methodology becomes more important than ever.
As a banker, you are already aware that small changes in the way a commercial loan is structured can greatly affect just how profitable a loan will be for the bank that issues it. Our PULPS system makes it easy for lenders to price loans by making it easy to visualize how various structures will affect the profitability of the loan, as well as the profitability of your firm’s entire portfolio. In this way you can ensure that you are offering your customers the best pricing and terms while optimizing your profit potential and remaining competitive with banks of all sizes.
Contact us today to find out more about how the PULPS system can help you reach your firm’s profitability goals while remaining competitive with lenders of all sizes.