Banks, start boosting your loan yields

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BANKERS, RAISE YOUR LOAN YIELDS WHERE YOU CAN: In the first quarter of this year, the average loan yield at regional banks was 5.36% and the daily average fed funds rate was 4.52%, for a spread of just 84 basis points. At the end of the last interest-rate-tightening cycle, from the fourth quarter of 2018 through the second quarter of 2019, bank loan yields averaged 5.08% and the fed funds rate averaged 2.34%, for a spread of 2.74%. The low spread now is bad news, but loan repricing going forward is a huge opportunity. Bankers must be aggressive with loan repricings when it is possible.