business hedge-funds 
South State Correspondent
JANUARY 10, 2024
Community banks’ use of swaps (banks’ primary tool to hedge interest rate risk on loans) has increased substantially over the last ten years. This article will discuss how national, regional, and community banks may use loan hedging programs in 2024 to face earnings challenges. Only 304 banks (or 6.7%
South State Correspondent
FEBRUARY 12, 2023
The average community bank’s cost of funding is highly correlated to Fed Funds and SOFR (for the industry, the correlation has been 94% with a six-month lag over the last 20 years). A Solution – A Loan Hedge How should banks respond to this pressure and achieve an optimized solution?
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South State Correspondent
JUNE 13, 2023
On our loan hedging desk, we work with hundreds of banks ranging in size from just over $100mm in assets to some national banks with over $1T in assets. Our job at Loan Command and on the ARC hedge desk is to help bankers win business, offer borrowers competitive structures and pricing, and maximize bank profitability while reducing risk.
South State Correspondent
JUNE 9, 2022
The majority of fees generated by larger banks is related to deposit and loans – business lines that community banks already maintain. However, the larger banks generate a small fraction of fee income from business lines that community banks do not maintain. Loan Hedging Fee Income For Community Banks.
South State Correspondent
JULY 26, 2023
The bigger risk to community banks’ business model is not a moderate recession induced by aggressive interest rate increases by the Federal Reserve. The Fed may be nearing the end of its hiking cycle, but given the high threshold for interest rate cuts, there may be no changes in the Fed Funds rate until well after 2024.
South State Correspondent
MAY 3, 2023
The other fundamental concept that makes sense for all banks to adopt is fund transfer pricing (FTP). Fund Transfer Pricing We have written about FTP and how it related to the risk issues we witnessed as the Federal Reserve pivoted to fight inflation and how some banks did not respond sufficiently or quickly.
South State Correspondent
MAY 2, 2023
The other fundamental concept that makes sense for all banks to adopt is fund transfer pricing (FTP). Fund Transfer Pricing We have written about FTP and how it related to the risk issues we witnessed as the Federal Reserve pivoted to fight inflation and how some banks did not respond sufficiently or quickly.
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