Finance expert Mike Periu on the upcoming profitability challenges small banks will face in 2013.
Small banks—those with less than $10 billion in assets—tend to outperform larger banks when it comes to customer service and personal attention. But they also face greater risks in the current economic environment: Quality loan demand is weak; net interest margins – the difference between what a bank pays depositors and what it makes on loans—are low; new regulations increase costs and limit profit-making opportunities especially with fees. As a result smaller banks, who have less cushion than larger institutions to deal with these problems, are trying to make up for lost profits by investing their capital in riskier, longer-term investments. This presents a serious problem, because when interest rates go up, these investments will lose value, forcing the bank to sell them at a loss or keep their money tied up in the investments in lieu of funding better opportunities.
About Mike Periu
Mike is a seasoned executive with experience in small business finance and management. He is the founder of Proximo, LLC a leading provider of corporate, consumer and small business education and training services with an emphasis on finance and technology.
Mike Periu is also a leading national voice for individual empowerment through financial education and entrepreneurship. He has been interviewed over 500 times in national and international media, including NBC, Univision, CNN en español, Telemundo, HITN, TVE, RTE, SBS, MegaTV and others.
Mike writes regularly for American Express OpenForum, Yahoo! Finanzas and is a Huffington Post contributor.
Mike has degrees in Finance and International Business from Georgetown University. He is on the Board of Directors of the Council for Economic Education and was a Fellow at the Kauffman Foundation’s Labs for Enterprise Creation.
