March 16, 2023

Winning Your “Interest Rate” Bracket

Up until a few days ago, when someone alluded to “March Madness,” I immediately thought of basketball.  When I hear the term today, however, my mind turns to banking. Even with decades of experience, our team is hard-pressed to figure out which banks will be left standing and make it to the “Big Dance,” let alone the Elite Eight.

We are seeing a period of uncertainty within the banking sector as funds stream out of some regional and local institutions into larger national ones. On one hand, certain of these banks may be trying to push this newfound capital out while others are hunkering down by tightening underwriting or increasing spreads (bank profit). It’s tough to know what to expect from banks when they can’t quite figure it out for themselves. There is, however, one solution.

Cast a wide net! Putting an RFP in front of only two or three local or regional lenders may be far too limited in scope. To assure your group of the best terms, you must reach demographically diverse banks. CMAC has found success in Oregon with a Carolina-based bank and optimal terms in Florida with a Canadian bank. Then again, you might find that the local bank will work extra hard to protect its turf and deposits. We continue to find excellent rates and terms for physician groups from the most unexpected lenders by issuing an RFP to more than 20 banks simultaneously for every loan request.

Bottom line – there is still a path to the finals, but you may need to play several overtimes to make it there.