Commercial Loan and Deposit Pricing Market Update: April 2024

April 8, 2024 Anna-Fay Lohn

Reminder: Our market updates are listed by the month we publish them but are based on the previous month’s data in the Q2 PrecisionLender database. Thus, this April update is based on March pricing data. 
After noting that banking segments had an important impact on the fixed-rate loan pricing story, we then took a closer look at the median loan amounts for these deals – vs. SOFR deals in particular – and uncovered another interesting distinction.  

Meanwhile, pricing volume remained strong so far in 2024, contrary to the expectations many bankers held at the end of last year. 

Read on to get the full story, and updates on other key market metrics.  

2024 Loan Pricing Volume Surpasses Some Expectations     

When we presented our 2024 State of Commercial Banking analysis, we noted that, in fed surveys at the end of 2023, bankers expected commercial lending to slow down in 2024.  

Yet for the third straight month we’ve seen pricing activity bounce to mid-2023 levels and reverse the late 2023 trend. March 2024 posted a 101 on our index, the highest volume of the past 9 months.   

Priced Commercial Loan Volume in $ 

Indexed to July 2023 = 100 

Floating-Rate Spreads Drop; Fixed-Rate Spreads Rise   

We noted a 10 bps drop in spreads to SOFR. This decrease is almost entirely driven by larger deals (>$25M), which posted a 16 bps drop during March, down to 2.37%. That pulled down overall SOFR results by 10 bps, to 2.49%.  

Spread to SOFR on Floating Rate Loans 

by Commitment Amount 

Spreads to Prime also fell, by 11 bps in March to 11 bps over Prime. But fixed-rate spreads went the opposite direction, rising 7 bps during this period.  

Weighted Average Fixed-Rate Spreads 

Floating Rate Spreads Reflected in Coupons 

To explain the drop in floating-rate spreads, we had to look no further than the coupon rates for SOFR and Prime deals in March. SOFR coupons were down 9 basis points, month-over-month – accounting for most of the aforementioned 10 bps drop in spreads. Meanwhile, the Prime coupon dropped 11 bps, the same amount of decline as spreads to Prime in March.  

But banker actions weren’t the cause of the fixed-rate spread increase, as the fixed-rate coupon rose by only 2 bps last month, from 6.61% to 6.63%. In fact, the fixed-rate base COF dropped 5 bps in March.  

Coupon Rate by Month

Rolling Trend

Median Loan Amounts: Fixed vs. SOFR 

We’d been wondering for some time why the coupon discount on fixed-rate structures hadn’t translated to a shift in our mix toward more fixed-rate loans, or to an upward move in the fixed-rate coupon. Instead, fixed-rate deals dropped from 25% of the mix at the end of 2023 to 22% at the end of March 2024.  

We looked at the average size of the fixed-rate and SOFR-based floating rate loans and found that the median fixed-rate loan is approximately $700K, while the median SOFR-based floating-rate loan is approximately $9.0M. The vast difference in deal size suggests that, when it comes to larger deals, fixed and SOFR structures are not fungible. 

We also found these deal size distinctions across banking segments.  

Top-Line Revenue Measures, by Segment 

Last month, as part of our continued efforts to answer questions about fixed-rate coupon pricing, we looked at this metric by banking segment, and found significant variance. 

This month, we tweaked our examination slightly, performing the segment comparison again for fixed-rate coupons, but this time also performing this comparison for spreads to Prime and spreads to SOFR. 

For all three top-line revenue measures, community banks outperform their regional and enterprise banking counterparts, but by varying degrees depending on the structure: +23 bps for Prime, +61 bps for SOFR, and +90 bps for fixed-rate. 

Fixed-Rate Coupons, by Segment 

Spreads to Prime, by Segment 

Spreads to SOFR, by Segment

We then compared median loan sizes at each segment, as well.  

  • Median loan sizes for fixed-rate were similar for the Community ($500K) and Regional+ ($760K) segments. 
  • Prime median loan sizes were even more similar for Community ($550K) and Regional+ ($500K) institutions.  
  • The numbers shifted dramatically upward we looked at SOFR median loan amounts: $6.0M for Community vs. $9.6M for Regional+ 

Stable Funding Costs Reflect Liquidity Adjustments 

Turning back to funding costs, we noted that fixed-rate funding costs have remained largely stable since December 2023 (when they were 4.76%) while the 60-month rate on both the FHLB and SOFR Swap curves has risen considerably. That appears to be an indication that bank pricing managers are aware that overall FI funding costs are not falling and they are using adjustment tools to tinker with their liquidity premiums and keep funding costs stable.  

Trends in Fixed Funding Composition 

Fixed-Rate NIM Rises Above SOFR  

Finally, we checked in on NIM for floating- and fixed-rate structures. While the overall picture has been relatively stable, we did note that fixed NIM rose above SOFR NIM (2.19% - 2.10%) for the first time since we began tracking SOFR in Q4 2021.  

NIM by Month

Rolling Trend

Got Questions?  

Our banking consultants and data scientists are combing through Q2 PrecisionLender pricing data every day. If there is anything you’d like to know about what they’re seeing, please send your questions to   

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