We have not changed our pricing and have in fact made a conscious effort to avoid doing so, though I fear other competitors may not be adjusting their ROE loan profitability models to avoid giving the tax rate advantage back to the borrower. Our view is that the tax rate may not be permanent, but reduced loan spreads tend to be harder to win back after you've competed them away. Let's hope the industry is not giving away the benefit of the lower tax rate, but rather changes its loan pricing models to hold pre-tax returns constant.
Will Matthews
Vice Chairman and CFO
National Bank of Commerce/National Commerce Corporation
813 Shades Creek Parkway, Suite 100
Birmingham, AL 35209
205-313-8122
wmatthews@nationalbankofcommerce.com
------Original Message------
I'm curious how the impact of lower tax rates has been considered in your loan pricing. Did your institution implement the lower tax rates without changing loan rates? In other words, did the lower tax rates result in higher modeled returns? Conversely, did your institution use the lower tax rates to reduce modeled required loan rates and hold required returns at their pre-tax reduction levels?
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Jeff Manser
EVP & CFO
Bank of Idaho
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