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Interest Rate Risk in 2024: Model Assumptions in a Falling Rate Environment
After a little more than two years and 525bp worth of rate hikes, the Federal Reserve has started to signal that rate cuts are on…
Read More It’s Time to Enhance Your Contingency Funding Plan
The great financial crisis of 2008 brought a slew of new banking regulations and guidance. More specifically, guidance related to best practices for liquidity risk…
Read More Deposit Betas Remain a Challenge in 2024
We do not have to go back very far to remember a time when deposit betas were not even an agenda item in many Asset…
Read More Understanding the Tax Treatment of Discount Municipal Bonds
In a rising rate environment, bonds priced at a discount become more prevalent. Therefore, it is imperative that municipal bond investors consider the tax implications…
Read More Preparing for 2024 for Banks
It’s that time of year when families start getting excited about the holidays and management teams at depository institutions start to worry about budget forecasts.…
Read More Preparing for 2024 for Credit Unions
It’s that time of year when families start getting excited about the holidays and management teams at depository institutions start to worry about budget forecasts.…
Read More The Rise of Municipal Tender Offers
Bond refinancings or “refundings” are used by municipalities to save debt service costs on outstanding bonds or to modify certain bond covenants or financing terms.…
Read More Is Your Balance Sheet Recession Ready?
I recently joked that I have read an article every week for the past year that says a recession is starting the next month. But…
Read More Why Mortgage Rates Remain Stubbornly High Despite Falling Inflation
As most investors know, primary mortgage rates are priced off mortgage-backed securities (MBS). The value of MBS, like all long-term fixed-rate bonds, is influenced by…
Read More Reflections on a Career in Financial Markets
Longtime financial strategist Jeff Caughron is retiring this year from The Baker Group after decades of service in roles including CEO and Chairman. He offers…
Read More Building a More Effective ALCO in a Dynamic Rate Environment
The Asset Liability Management Committee (ALCO) is an integral part in the management of a financial institution. It is the committee responsible for effectively managing…
Read More Liquidity Risk Management: More Than Checking a Box
The recent bank failures of Silicon Valley Bank and Signature Bank have shown that liquidity risk can produce a bank failure instantly versus a slower,…
Read More Thoughts on the Effects of Silicon Valley Bank and Related Events
Overview: The speed and magnitude of Fed rate hikes has been unprecedented, and we have emphasized that if continued it would likely force something to…
Read More What the MIP Cut Means to MBS Investors
The Federal Housing Administration (FHA) recently announced a decrease to the annual premium charged to borrowers with FHA-backed loans. The reduction goes into effect for…
Read More Municipal Finances Persevere During Recessions
As we move through 2023, the possibility of a recession is at the forefront of most investors’ minds. Fortunately, most municipalities are in a good…
Read More ALM in 2023: Revisiting Economic Value of Equity (EVE)
Bank balance sheets were adversely affected in multiple ways by the speed and magnitude of the rising rate environment in 2022. Most noticeable was the…
Read More What Can History Tell Us About Balance Sheet and Margin Management in 2023 for Credit Unions?
The global pandemic set into motion a series of historically unprecedented economic policies. Massive amounts of liquidity and stimulus from policymakers enabled a fast recovery,…
Read More What Can History Tell Us About Balance Sheet and Margin Management in 2023?
The global pandemic set into motion a series of historically unprecedented economic policies. Massive amounts of liquidity and stimulus from policymakers enabled a fast recovery,…
Read More Municipal Credit Update: Inflation Effects on Municipal Finances
In early 2020, municipal credit concerns were abundant and tax revenue plunged due to pandemic shutdowns. Since then, average state and local tax revenue has…
Read More Don’t Fully Bet on One Rate Outcome
As a young aspiring bank examiner in 2009, I first learned about interest rate risk management during a period of zero interest rate policy, which…
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