Contributor : Bob Newman
Derivatives remain essential tools for banks to manage net interest margin even after the Federal Reserve’s sharp and rapid rate increases in 2022.
Rather than simply accepting their fate and holding onto low-yielding floating-rate assets, banks can use swaps to improve their net interest margin.
Interest rate derivatives help banks trade uncertainty for certainty and capture every basis point to defend margins.
Community banks looking to enter the derivatives “waters” have three methods available to them.
Often viewed as risky and dangerous, interest rate derivatives can be powerful tools for banks when they use these five safety tips.
As commercial borrowers seek long-term funding, it’s time for risk-averse community banks to examine commonly-held phobias about using swaps.
An independent investment advisor on the bond portfolio can keep strategic decision making inside the bank, while increasing efficiency and performance.
Community banks stand to benefit from FASB’s new hedging guidance.
This article poses four common questions that board members ask about derivatives.