38 MAY / JUNE 2022 1 newyorkfed.org/medialibrary/media/newsevents/events/ markets/2020/credit-sensitivity-letters.pdf 2 banking.senate.gov/imo/media/doc/Giancarlo%20Testimony%2011-2-21.pdf sets forth operating standards for financial benchmarks – a highly regarded set of standards that includes transparency, verifiable audit trails and third-party oversight. We are a community bank. Which benchmarks should we offer? As a community lender you might not hold Treasury securities and other risk-free collateral. Rather, you lend against relatively illiquid collateral of plant and equipment liens, property mortgages, auto leases and personal guarantees. In effect, you take on real risk. These vehicles are highly credit sensitive.2 For your bank, a credit component in an index is key to your survival. When the inevitable next “black swan” event occurs, there will be a flight to highly secured assets, Treasury rates will drop significantly, and credit spreads will widen. This could have HONORABLE MENTIONS Four member organizations of the Indiana Bankers Association have been named to the 2022 Best Places to Work in Indiana list compiled by the Indiana Chamber of Commerce: Community First Bank of Indiana, Kokomo Centier Bank, Merrillville* MCM CPAs & Advisors LLP, Indianapolis Merchants Bank of Indiana / Merchants Capital, Carmel * Centier Bank has been on the list for 16 consecutive years, earning Hall of Fame designation. Several Indiana Bankers Associationmember banks and holding companies were included in a list of America’s Best Employers published by Forbes in February. Forbes partnered with market research company Statista, which surveyed 60,000 Americans working for businesses with at least 1,000 employees. The respondents were asked to rate factors including likelihood of recommending their employers, working conditions, development opportunities and compensation. Large employers (5,000+ employees): No. 98 – Huntington National Bank, Columbus, Ohio No. 167 – Chase Bank, New York No. 227 – Bank of America, Chicago No. 297 – PNC Financial Services Group Inc., Pittsburgh No. 334 – Regions Financial, Birmingham, Alabama No. 363 – KeyBank, NA, Cleveland No. 412 – Fifth Third Bank, Cincinnati Midsize employers (1,000 to 5,000 employees): No. 48 – WesBanco Bank, Wheeling, West Virginia No. 80 – Northwest Bank, Warren, Pennsylvania No. 162 – Old National Bank, Evansville No. 325 – 1st Source Bank, South Bend Four Indiana Bankers Association-member banks were named to the Ethisphere Institute’s 2022 World’s Most Ethical Companies list: BMO Financial Group, Chicago Fifth Third Bank, Cincinnati Old National Bank, Evansville US Bank National Association, Minneapolis HB Experts in the Business of Investment Securities Institutional Investment Professionals and Trading Desk Experts • Bank-Qualified Municipal Bonds • Municipal Bond Underwriting • Investment Portfolio Analytics • Asset/Liability Management Reporting • Portfolio Accounting • Municipal Bond Credit Support • Mortgage-Backed Securities, Government Agencies, Corporate Bonds, and Brokered CDs PROVIDING DIRECTION PRODUCING RESULTS 608-476-6001 | 800-851-2920 Visit us at www.NorthlandSecurities.com 958 Liberty Drive, Suite 202 | Verona, WI 53593 Corporate: 150 South 5th Street, Suite 3300 | Minneapolis, MN 55402 Member FINRA and SIPC, Registered with SEC and MSRB Community Bank Specialists Casey Poole Garrett Marr Steve Schnering Partnering with Community Banks for 20 years! a negative impact on loan yields and net interest margin if you have loans priced off a risk-free rate. Using a credit-sensitive index for lending minimizes the mismatch with the bank’s funding base. HB
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