By Andy Arnold, Arnold & Associates MIBA Lobbying Report By the time you read this, the 2026 Missouri Legislative session will be well underway. With 2026 being an election year, during which all state representative seats and 17 state senate seats are up for grabs, we have already seen more legislation filed in the first month of pre-filing than was filed during the last session. As a midterm election, the policies of the current state and federal administrations, along with their effects on voters, are front and center. In the banking world, legislation has already been filed to allow credit unions to reduce membership fees, hold meetings electronically and expand their field of membership. The latter has already been met with fierce opposition from the banking community, leading the Senate bill sponsor to withdraw the bill and refile an updated version that addresses only fee reductions and online meetings. MIBA played an instrumental role in this achievement through its efforts to educate the bill sponsor on the controversy and harm that the expansion of credit union memberships poses to community banks. We will continue to monitor this issue should it appear in the House or later in the session. Additionally, with 10 Senate seats (including SD4-May, SD6-Bernskoetter, SD8-Cierpiot, SD14-Williams, SD16-Justin Brown, SD18-O’Laughlin, SD22-Coleman, SD28-Crawford, SD30-Hough and SD34-Luetkemeyer) and 42 House seats now vacant due to term limits or early retirements, we anticipate being actively involved in vetting candidates for most of the year. With Missouri’s 34 Senate seats and 163 House seats, nearly 30% of the Senate and 26% of the House will have new occupants by the end of the year, so we expect the MIBA PAC to be very active throughout this election cycle. As always, we greatly appreciate the MIBA staff and your continued confidence in our abilities to represent your interests with the Missouri Legislature. Steeper yield curves have all sorts of latent and tangible benefits for the banking industry. The most obvious is that managers can more properly price relative risk into the balance sheets. Thirty-year mortgages are supposed to be priced higher than 15-year mortgages. A ten-year municipal bond is supposed to have a higher yield than a 7-year bond. And a 36-month CD is supposed to pay more than a 24-month CD. All those notions were set on their heads during the two-year stretch of 2022-2024 when yield curves were upside down. Banking fundamentals hopefully will prevail this year, which can only mean more profitability. Bond Swap Prospects Commensurate with the positively sloped yield curve are opportunities for actively managing the bond portfolio. One strategy is to sell certain securities and simultaneously purchase others in a “bond swap.” Lately, since most positions are still underwater, bonds have been sold at losses, with the improved reinvestment yields making up the ground in less time than the remaining average lives. This strategy is known as “loss-earnback.” Two pieces of good news: First, early in the year is a popular time to execute these bond swaps, for the simple reason that the bank has a full year to enjoy the higher yields with which to eat away at the realized loss. Secondly, the steeper the yield curve, the less extension risk needed to make the bond math work. So, my suggestion is to work with your brokers to model such potential trades and document your objectives and rationales. And let me remind readers that the positive forecast for industry profits might make such loss-earnbacks more tenable. Lots to like here as we embark on an ambitious 2026. I look forward to seeing many of you at ICBA LIVE, March 6-9, in sunny (and warm) San Diego. For more information, visit www.icba.org/icba-live. Jim Reber (jreber@icbasecurities.com) is president and CEO of ICBA Securities, ICBA’s institutional, fixed-income broker-dealer for community banks. The Show-Me Banker Magazine | 17
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