ABA Banking Journal
No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
SUBSCRIBE
ABA Banking Journal
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
No Result
View All Result
No Result
View All Result
Home Commercial Lending

Tips for Repricing Commercial Credit Deals

April 22, 2019
Reading Time: 2 mins read
Tips for Repricing Commercial Credit Deals

By Evan Sparks

About 57 percent of banks’ commercial credit renewals for terms of three years or longer are being rolled over at existing prices rather than being repriced, according to survey research released today by PrecisionLender. The share of repriced deals is smaller for shorter maturities. Meanwhile, just over half of the largest deals — valued at $25 million and up — are being repriced.

Special Report on Business Banking

  • How a digital commercial loan gets made
  • How banks fuel America’s export economy
  • How a North Carolina startup became the nation’s largest SBA lender
  • How RDC produces productive data for businesses
  • How banks help medical professionals grow their practices
  • How businesses can help consumers save up for their well-being
  • How industry sectors get tailored expertise

What’s more, notes PrecisionLender SVP Gita Thollesson, many deals are rolled over at existing pricing even when the credit becomes riskier. “About three-quarters of downgrades were rolled over at existing pricing levels,” she says. “Quite often, when renewal spreads are changed, often they’re moved in the opposite direction of risk migration.”

Indeed, for credits on which risk ratings remain unchanged, many lenders are reducing spreads — 21 percent for deals of less than $5 million and 35 percent for deals valued at over $5 million, according to the survey. “Pricing has eroded in the market,” Thollesson says. “Customer retention is the main issue.”

The choice of index also has something to do with repricing trends. Just 23 percent of prime-based loans were repriced, while 49 percent of Libor-based credits were. This was driven by a preponderance of auto-renewals on smaller prime-based deals and a greater focus on larger deals, which tend to be priced in Libor. Thollesson notes a “higher incidence of performance-based pricing on the larger deals,” adding that “it’s those smaller business banking credits that tend not to get repriced too often.”

Tips for a repricing conversation

Proposing performance-based pricing is one tip that relationship managers use to renew at risk-appropriate rates. Other tips Thollesson recommended include explaining the repricing rationale, including changes to the borrower’s financial performance, and making modest pricing adjustments.

“The banks that had the most success in repricing their downgrades upward actually had very modest increases,” she explains. “The banks that didn’t have much success were asking for more than a point. Whenever the increase was 25 basis points or less, the borrower accepted the pricing adjustment or negotiated the rate down.” Using non-standard pricing increments — say, 18 basis points instead of 25 — can show precision and the science behind pricing rather than seeming like an arbitrary percentage, she adds.

Thollesson advises bankers to start conversations early. “Often when a relationship manager waits till the last minute, they have no choice but to roll the deal over at existing pricing,” she says. And she encourages bankers to place the repricing and the overall deal in context, emphasizing the quality of the offer even if the price is high and explaining how relationship pricing works. “Put the borrower in the driver seat,” she suggests — if a deal’s pricing was based on the borrower bringing additional business to the bank, but that didn’t materialize, a relationship manager can explain that the borrower can choose to move that ancillary business or be repriced into a higher rate.

 

ShareTweetPin

Author

Evan Sparks

Evan Sparks

Evan Sparks is editor-in-chief of the ABA Banking Journal and senior vice president for member communications at the American Bankers Association.

Related Posts

Building optimal risk and compliance teams

Marketing budget and staffing considerations for 2026

Retail and Marketing
October 7, 2025

Banks that balance proven tactics with forward-looking strategies such as AI will be best positioned for sustainable growth.

Co-creating the future

Co-creating the future

Technology
October 7, 2025

An ABA Banking Journal special report on how bankers are rethinking innovation with new tools to accelerate change.

CFPB claims ‘complex’ pricing drives up cost of financial products

CFPB finalizes extended compliance dates for small-business lending data collection

Commercial Lending
October 2, 2025

The CFPB has finalized a rule extending the compliance dates for its small-business data collection. The bureau first extended the new deadlines in June in an interim final rule.

What good looks like in Small Business Lending – and how to get there

What good looks like in Small Business Lending – and how to get there

Commercial Lending
October 1, 2025

SPONSORED CONTENT PRESENTED BY MOODY’s Small businesses are more than a market segment—they're engines for growth for local economies. They create jobs, fuel innovation, and often serve as a backbone for their communities. Yet access to capital remains...

How banks are reinventing the product design paradigm

How banks are reinventing the product design paradigm

Technology
September 30, 2025

An evolution has spurred new approaches to innovation that emphasize speed and iteration.

Study: Customer loyalty increases when banks resolve fraud

Study: Customer loyalty increases when banks resolve fraud

Compliance and Risk
September 26, 2025

Bank customers who experience fraud are more likely to stay with their institutions if the bank is able to identify the perpetrator, according to a recent study.

NEWSBYTES

Survey: Most people want financial education taught as ‘core’ course in school

October 8, 2025

FOMC minutes show divide on rate cuts

October 8, 2025

ABA Foundation, FICO announce new partnership for Get Smart About Credit Day

October 8, 2025

SPONSORED CONTENT

Rethinking Outsourcing: The Value of Tech-Enabled, Strategic Growth Partnerships

Rethinking Outsourcing: The Value of Tech-Enabled, Strategic Growth Partnerships

October 1, 2025
What good looks like in Small Business Lending – and how to get there

What good looks like in Small Business Lending – and how to get there

October 1, 2025
The Connectivity Dividend

The Connectivity Dividend

September 1, 2025
Building Trust with Every Transaction

Building Trust with Every Transaction

September 1, 2025

PODCASTS

Podcast: AI and the future of BSA risk management

October 2, 2025

Podcast: The real difference between stablecoins and tokenized deposits

September 24, 2025

Podcast: The ‘capacity crisis’ in leadership today

September 17, 2025

American Bankers Association
1333 New Hampshire Ave NW
Washington, DC 20036
1-800-BANKERS (800-226-5377)
www.aba.com
About ABA
Privacy Policy
Contact ABA

ABA Banking Journal
About ABA Banking Journal
Media Kit
Advertising
Subscribe

© 2025 American Bankers Association. All rights reserved.

No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive

© 2025 American Bankers Association. All rights reserved.