Pub. 9 2021 Issue 3

12 The Community Banker mibonline.org difficult to do, as most securities that have any seasoning to them have already been repriced to a longer expected maturity. Prepayment “speeds” have slowed from their peaks in the spring, and most models are predicting relatively consistent speeds for the near future. Nonetheless, not all MBSs are created equally. Collateral with 10- to 20-year finals typically can continue to prepay with some consistency even if interest rates rise. Of course, the scheduled principal repayments will be much greater for shorter pools than for 30-year pools, independent of prepays. A variation on this theme is to buy “structure,” which usually means a CMO. Recently issued CMOs have low pass-through rates (“coupons”) relative to the borrowers’ rates on the underlying collateral. This allows investors to keep their book prices closer to par, which will preserve book yields if prepayments were to kick back into high gear. So, there you have a revisiting of the portfolio changes during 2021. By being on top of the changing complexion of your community bank’s investments, you can minimize your disappointments. Avoiding Bond accounting solution ICBA Securities’ exclusive broker, Vining Sparks, provides state-of-the-art bond accounting services for nearly 400 community banks at competitive prices. For more information, contact your Vining Sparks sales rep. the constant sorrow of portfolio management — with apologies to the Soggy Bottom Boys — can be your milestone accomplishment of the year. Jim Reber (jreber@icbasecurities.com) is president and CEO of ICBA Securities, ICBA’s institutional, fixed-in - come broker-dealer for community banks. • Down payment assistance • 30-year, low-interest rate mortgages • Quality in-state servicing • Ask your lender about Montana Housing loans HOUSING.MT.GOV Continued from page 11