Loan and Deposit Pricing Solutions
FARIN’s Loan and Deposit Pricing programs offer a complete interactive pricing solution. They are designed to assist your Institution to succeed in today’s competitive markets. FARIN will partner with management in their efforts to increase accounts and balances, grow and retain business, monitor and track deposit and loan programs and offerings, and manage margins.
They are flexible solutions designed to meet the Institution’s internal resources, and to be a strategic business tool used to optimize income and streamline the decision making process
The iPrice process is comprised of three key components:
- Custom Consulting
- Data Management
- Interactive Software
Your data management and process is performed using the iPrice software housed on FARIN servers and available via the web. FARIN’s education and consulting is delivered via the web, on-site, at FARIN or at a FARIN Consulting workshop.
FARIN iPrice Set-Up and Operating Process
The iPrice LoanEdge and Deposit Pricing Program begins with an assessment, or an Initial Strategic Review (ISR), of the current offerings, marketing efforts, and other pricing factors.
Upon completion of the review, you are armed with pricing disciplines and options for attacking markets and implementing proven practices. Training is provided to the Institution’s management team to fully utilize the iPrice software tools. These tools will allow management to test pricing options, measure the profitability of strategies, and serve as management tracking tools, and assist with constructing loan deals.
The use of the iPrice model allows the Pricing team or ALCO to test new ideas and strategies while tracking the progress and assessing the success of plans during implementation. To stay on track throughout the process, FARIN staff is available as a consultant to your team in building consensus, reviewing or making critical changes, evaluating options, and helping to communicate the bigger picture issues in daily decision making.
Lending today requires walking the EDGE between finding the right combination of rate and terms for customers while managing institutional profitability and risk goals. Building a loan proposal is about finding a balance between the cost/benefit factors important to both the borrower and lender.
The necessity to focus on pricing risk is leading more loan officers and risk managers to realize that many pricing models miss critical issues in determining what is best for your institution. Reliance on a model for the answer assumes the model knows your financial situation and plans. Effective loan pricing is more than just calculating an offering rate with a spreadsheet from a third party model. Effective pricing depends on all involved parties understanding institutional goals and plans and how a pricing model helps to create the results.
Can you afford to extend fixed rate loans at lower returns and maintain the profitability of the institution? Your choices seem to be to make the loans and hope you’re right, or pass on the loans, giving up yield and hope for rising rates. Some institutions look into their loan pricing crystal ball for “the answer” only to find that the question they are asking may be the wrong question and the wrong time. “Oh crystal loan pricing ball, can I make this loan? At this rate?” If you are looking for these types of answers, you need an EDGE, FARIN LoanEDGE.
FARIN’s LoanEDGE solution begins with a face-to-face meeting of key decision makers including the institution’s Chief Lending, Risk and Financial officers and an experienced FARIN consultant. During the initial session the team will assess current loan offerings, pricing practices and goals. This team-focused session concentrates on the need to cover risks and costs while meeting market demands. Developing a full understanding of the strategies and products being offered and challenges faced in meeting growth goals will help build a basis for applying the right tools to the issues. Whether you are facing stiff competition and are unsure of how to respond, or have a large market share and are looking to improve profitability, this session will help you tackle the critical issues and help you build profitable solutions to meet competing needs.
During the session, we examine existing loan pricing practices using FARIN LoanEDGE, which combines market rate information with your internal risk and cost assumptions to produce 4 different measures of profitability:
- Spread to investment benchmark
- Return on Equity (ROE)
- Return on Asset (ROA)
- Market value
Based on your financial situation, strategic goals and objectives, we identify which measures are most appropriate in your decision making process, and what conditions may cause those measures to change over time.
The session concludes with offering an understanding between your lending and finance teams on critical assumptions impacting loan pricing and with a set of goals for each lending area. The session sets out the framework for ongoing use of LoanEDGE for ensuring timely pricing actions and evaluation of alternative deals for loan customers. The LoanEDGE solution includes a return visit from your FARIN LoanEDGE consultant to assess goals and assumptions, as well as update plans and metrics, at least annually. This commitment to ensuring the model data and institution goals are in sync helps build the LoanEDGE.
On an on-going basis you maintain updated rates in LoanEDGE and supply us with the loan data so we can help track performance versus goals. LoanEDGE provides ongoing management reporting including information on loan profitability at current offering rates, conformity to pricing strategy, production by officer and more.
Using LoanEDGE via your web browser, deals can be assessed quickly and easily to ensure all offers are made to meet both the needs of the market and institutional profitability goals. Of course, if you are in need of help at any point, your LoanEDGE consultant is there to assist you in gaining the lending LoanEDGE.
LoanEDGE will help ensure that loans are made consistent with the profitability goals of your institution today, and as market conditions change.
To learn more about how we can help you with your Deposit and Loan Pricing or to schedule a preliminary consulting call, please contact us at (877) 400-0037, email us at firstname.lastname@example.org, or click here to complete a product inquiry form.
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