Independent Banker - October 2017 - 83

Nuts & Bolts
Diff erence in yields: US Treasury curve
Maturity
in years
2.125%
Federal Reserve Board
median projection for
overnight rates by
December 2018
1
2
3
5
7
10
we're talking about money market
instruments or fl oating rate securities.
For the record, the futures contract
has recently been more accurate than
the Fed's own estimates. To be fair, the
only reason the Fed creates the dot
plot is to increase transparency, and
not because it particularly wants to.
More fun than lately
Nevertheless, as of this writing, a
two-year bond issued by one of the
government-sponsored entities that
has no call feature yields around 1.45
percent. It is not a coincidence that
it's 100 basis points higher than the
yield mentioned in the conversation
earlier in this column, as it has mirrored
the change in Fed funds during
that time.
And recall that if your community
bank's cost of funds is similar to the
national averages, you would now
enjoy a net margin of right around
1 percent by owning our two-year
bullet, versus having a virtual push
several years ago. It wouldn't make
you rich and famous, but it's still a
help to the bottom line.
I would recommend, therefore,
that the next time you are considering
the purchase of some securities,
don't eschew the short-term option.
Yields have improved and are likely
to continue to improve, in step with
Fed actions. Your brokers should be
able to produce some offerings that
offer short maturities, with interest,
and margin.
Education on tap
M&A briefing
Tom Mecredy of Vining Sparks' Community Bank Advisory Group will present
the next segment of our popular Community Bank Matters webinar
series on Oct. 17 at 10 a.m. CST. He will discuss " M&A and Community
Bank Valuation Update. " One hour of CPE credit is available. To register,
visit viningsparks.com.
Tom and Jim Reber will both be making presentations at the 2017 ICBA
Directors' Conference Oct. 15-17. Tom will speak on " Today's Bank Valuation "
and Jim will present " The Great Liquidity Squeeze of 2017. " The event
will be held at the Loews Don CeSar Hotel in St. Petersburg, Fla. For more
information, visit icba.org/education.
independentbanker.org
ICBA IndependentBanker 83
30
06/30/17
1.23
1.38
1.55
1.89
2.14
2.30
2.84
06/30/14
0.10
0.46
0.87
1.63
2.14
2.53
3.36
Change in basis
points
+113.1
+92.5
+67.9
+25.8
+0.6
-22.7
-52.5
Source: Bloomberg

http://www.qmags.com/clickthrough.asp?url=www.viningsparks.com&id=20378&adid=P83E1 http://www.qmags.com/clickthrough.asp?url=www.icba.org/education&id=20378&adid=P83E2 http://www.qmags.com/clickthrough.asp?url=www.independentbanker.org&id=20378&adid=P83E3

Independent Banker - October 2017

Table of Contents for the Digital Edition of Independent Banker - October 2017

Table of Contents
Independent Banker - October 2017 - Intro
Independent Banker - October 2017 - Cover1
Independent Banker - October 2017 - Cover2
Independent Banker - October 2017 - Table of Contents
Independent Banker - October 2017 - 2
Independent Banker - October 2017 - 3
Independent Banker - October 2017 - 4
Independent Banker - October 2017 - 5
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