Pub. 1 2021 Issue 6

20 | The Show-Me Banker Magazine By Jim Reber ICBA Securities BILL SHAKESPEARE, COMMUNITY BANKER The Bard had Some Thoughts on Balance Sheet Management. Although I don’t remember it, it’s possible my high school English teachers pointed out to us that William Shakespeare, the greatest playwright of all time, actually had a side hustle. It doesn’t take too much of an imagination to hear some sound advice, wise counsel and seasoned commentary in the Bard of Avon’s writings. And, as it turns out, a lot of the material can pertain to community banking. So as a courtesy to all the Shakespeare fans out there, here is a compilation of some of the more pertinent banking-and-finance passages, with some possible interpretations for their application to our industry. Who would have thought that Mr. Shakespeare dealt with some of the same issues that face community bankers in 2021? As we heard in Richard III, “Wear it, enjoy it, and make much of it.” “If money go before, all ways do lie open.” — The Merry Wives of Windsor I believe it’s internalized by ICBA members that creative yet safe lending practices have served their customer bases well. Custom-built financing benefits many parties. Of course, there’s the small business or the consumer who receives capital, and then there are the employees of the small businesses and the vendors. The SBA’s Paycheck Protection Program (PPP) of the last two years has redirected many thousands of businesses toward community banks and away from those that are Too-Big-To-Fail. “For his designs crave haste, and his haste good hope.” — Richard II The average community bank’s bond portfolio is nearly 50% larger than pre-pandemic levels. Most, but not all, ICBA members have exercised discipline while building up their security holdings to remain compliant with their risk tolerances. ICBA Securities’ exclusive broker, Vining Sparks, offers a number of complementary tools to take the guesswork out of investing and thereby be less reliant on hope and more on design. “This is no time to lend money, especially upon bare friendship without security.” — Timon of Athens I think the banking regulators in the 17th century (and the 21st, for that matter) would agree. Lending is generally good. Unsecured lending, unless to a full faith and credit institution like our federal government, not so much. “Unbidden guests are often welcomest when they are gone.” — Henry VI, Part I Could it be that 1597 saw a stock-market crash and a flight-to-quality pattern by the good lords and ladies in England, resulting in a flood of liquidity into the banking system? In the U.S., deposits have grown by over 20% in the last year, and I’ve yet to speak with a community banker in 2021 who was seeking additional funds. Try as you might, it could be that these “guests” will be around for a while longer. Which leads us to … “All that glitters is not gold, often have you heard that told.” — Othello Faced with lots of liquidity, sketchy loan demand and shrinking margins, many Education on tap Balance Sheet Academy replays available Weren’t able to participate in last month’s ICBA Balance Sheet Academy? All eight segments of the program have been recorded and posted to the Vining Sparks website. You can view topics from interest rate derivatives to effective bond swaps by visiting viningsparks.com. Act soon for best 2021 results The fourth quarter of the year is a popular time for portfolio managers to execute strategic repositioning in the security inventory. Often, market liquidity will begin to decline as year-end approaches. To maximize efficiency in these time-sensitive transactions, we recommend that you act early, preferably this month.