Jim Reber (jreber@icbasecurities.com) is president and CEO of ICBA Securities, ICBA’s institutional, fixedincome broker-dealer for community banks. And for all you S corps, this strategy works even better as your higher marginal tax rates allow you to avoid more income tax liability. Look around you If you’re inclined to sell out of some losing positions but need to limit the impact on this year’s earnings, remember there may be other pieces of your balance sheet that can be sold at a profit. Not the least of these are floating rate assets such as SBA 7(a) loans. The guaranteed portion of a 7(a) loan will likely adjust each quarter based on prime, which is 100% correlated with fed funds. They command large premia in the secondary market; it’s not uncommon to see a bid of over 110 cents on the dollar. Plus, the lender/seller is required to retain the unguaranteed portion of the loan and to service it as well. SBA lender service providers can guide a community bank through the secondary market process. Far frommaking up lost ground, using some of these ideas can more correctly press your advantages into 2023 and beyond. In a year of positive earnings pictures and solid credit quality, the fourth quarter could be the ideal time to set the stage for robust future periods. This holiday season, community bankers may be donning their rally caps. ■ December 2022 | 25
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