What Bankers Think of the Rate Increase
December 16, 2015 4:00 PM
The banking industry had mixed opinions of the Fed's decision to boost rates. Most believe 25 basis points will do little to move the needle financially, but they are apprehensive about the impact more increases will have on deposits, lending and credit quality. Here is a sampling of what bankers have said in recent days.
Covering Our Bases
"Our approach has been to ensure we are well positioned for all potential rate environments," says Dorothy Savarese, CEO of Cape Cod Five Cents Savings Bank.
Deposit Costs to Rise
"The other thing we have to consider is the depositors' perspective," says Luanne Cundiff, president of First State Bank of St. Charles. "Once word of [an increase] hits the paper, they are absolutely going to expect a rate increase."
Symbolic Move
"In this volatile environment, no one can plan for the future because of the uncertainty that has been created by Congress and the Fed," says Dick Evans, chairman, president and CEO of Cullen/Frost Bankers.
Worst-Case Scenario
"The market would likely need to see an unexpectedly high increase or strong signal regarding near-term future increases to catalyze any immediate change in behavior," says Jim Cherry, CEO of Park Sterling.
Lending Could Change
"Low rates have allowed for a different style of lending," says Bob Braswell, CEO of Carolina Bank Holdings. "Certain loans have been creditworthy at [near-zero] levels but they may not be at a 200+ basis point increase."
No Shocks Please
"The good news is that, with a gradual increase, we're not going to see liability costs spike," says Gilda Nogueira, CEO of East Cambridge Savings Bank. "But it is going to have no effect on the long end [of the yield curve].
Low Rates Aid Credit Quality
"We don't think [the increase] is material to our business," says Chris Marshall, chief financial officer at Capital Bank Financial. "The more important message is what the path forward with future interest rates may be, though we may not hear that. That's what's important."
Low Rates Benefit Credit
"The low rate environment has worked to our clients' advantage, keeping their funding costs low," says Peter Benoist, president and CEO at Enterprise Financial Services. "This has been beneficial to us in terms of our credit quality."
