Net interest margin

Past is not prologue, and a successful strategy for becoming a top-performing bank in 2020 is very different from what it might have been just six months ago.

Fallout from the coronavirus pandemic is pressuring banks that have relied on expansion efforts and fee income to produce outsize investor returns.

With rates so low — after steep emergency Federal Reserve cuts in response to the pandemic’s fallout — banks will struggle to generate bread-and-butter interest income and asset-sensitive lenders will face substantial net interest margin contraction this year and next, analysts say.

Even CUs that don’t directly serve the oil and gas industry are likely to be impacted, experts say.

Smaller institutions should prepare themselves for some of what the competition has experienced, including increased provisions for losses and declining net interest margins.

Bankers will be pressed on upcoming earnings calls to forecast how the coronavirus pandemic — and the government's response — will shape credit quality, margins and fee income.

Margins will be squeezed after the Federal Reserve lowered interest rates earlier this month to counteract the economic fallout from the coronavirus.

Credit unions intensified their focus on gathering deposits in 2019 but many institutions are still looking for cheaper core funding.

The Fed’s decision to cut its benchmark interest rate amid growing coronavirus concerns is bound to have an impact on banks, but just how broad and how deep remains to be seen.

The FDIC’s Quarterly Banking Profile said lackluster net interest income, likely resulting from lower short-term interest rates, drove a decline in fourth-quarter and full-year earnings.