Pub. 1 2021 Issue 2

April 2021 | 27 Bond portfolios still have substantial unharvested gains, and net interest margins are at record lows. PPP 2.0 has been launched as a new fiscal stimulus wave about to be unleashed on consumers and governments. the loan portfolio consists of floaters or shorter-duration fixed-rate credits. Com- munity banks’ asset/liability positions are built for rising rates. Do: Stay on top of your portfolio’s effective duration to put your mind at ease about all of the above. We have seen this important barometer of price risk whipsaw over the last year. At last look, most portfolios had returned to their pre-pandemic duration of around 3.0 years, but that’s taken a lot of buying of a lot of longer-maturity bonds to get there. In mid-2020, they had shrunk, on average, to about 2.5 years. That’s a 20% increase in two quarters. Maybe: Invest in some bond education for your staff and you. As the economy (and travel) begins to open back up, some virtual, some live, some hybrid, will be a whole range of investment school options available. There is also plenty of archival information accumulated over the last year as trade associations, brokers-dealers and consultants have figured out digital deliv- ery channels. So ask around your providers for offerings that may suit your needs. And by all means, do continue your due diligence and documentation of your actions. Investment portfolios have grown remarkably in the last year. They are likely to be a substantial driver of bank profits for the foreseeable future. ■ Jim Reber (jreber@icbasecurities.com ) is president and CEO of ICBA Securities, ICBA’s institutional, fixed-income broker-dealer for community banks. Call me at 480.259.8280 Based in Phoenix, Ariz., covering Arizona, Colorado, Kansas and Missouri Tracy Peterson Together, let ’s make it happen. Member FDIC 24870 We do not reparticipate any loans. Leverage our large lending capacity, up to $20 million on correspondent loans. Our lending limits are high enough to accommodate what you need, when you need it. Why choose Bell as your bank’s lending partner? Commercial & ag participation loans Bank stock & ownership loans Bank building financing Business & personal loans for bankers