Pub. 9 2020 Issue 3

11 F A L L | 2020 F E A T U R E Webinar series continues: ICBA Securities and its exclusive broker-dealer Vining Sparks are hosting three webinars covering a range of topics in September, October and November to conclude its 2020 Community Banking Matters series. One free hour of CPE for each event is offered. To register visit viningsparks.com or contact your Vining Sparks sales rep. does not target the receiver being covered.” To the community banker, this means owning assets that cannot be called away or converted to cash when interest rates are not favorable (e.g., now). The way to lock down your assets is to buy “bullets,” which have no call features, or securities such as multifamily mortgage-backed securities (MBS) that have prepayment penal- ties or yield-maintenance provisions. Man in motion This entails sending one or more offensive players running par- allel to the line of scrimmage prior to the snap to better position them for the play. In investment management, its equivalent is the purchasing of newly issued bonds that have extended original settlement dates, which further coincide with upcom- ing maturities of bonds currently in the portfolio. This play has been especially beneficial in recent months, as the amount of maturities and calls have outpaced new issuances, creating something of a scrum among investors. Nickel back Sometimes a team will insert a fifth defensive back into the lineup on obvious passing downs to give it a better chance of covering the potential pass receivers. This “nickel pack- age” appears in balance sheet management in the form of match-funding assets and liabilities. If a community bank stra- tegically adds assets through an acquisition or an outright le- verage, thought must be given to balancing the altered interest rate risk. Tools such as Vining Sparks’ Performance Architect can quantify the new dynamics of the balance sheet, including the impact on capital, margins and earnings. Fourth-quarter rally The third quarter of the calendar year for broker-dealers is often a period of low volume. Some of it has to do with portfolio managers not taking time to identify beneficial portfolio op - portunities until the figurative two-minute warning. This year especially, there are plenty of good reasons to be distracted. The bad news is that there are a lot of community bankers who operate in a last-second mode. Late December is rarely a good time to be selling securities; it can, however, be a buyers’ market. Make decisions early — 10 minutes to go in the game is still relatively early. Late fourth-quarter comebacks are hard to pull off. Go team! Jim Reber (jreber@icbasecurities.com ) is president and CEO of ICBA Securities, ICBA’s institutional, fixed-income broker-dealer for community banks. The third quarter of the calendar year for broker-dealers is often a period of low volume. Some of it has to do with portfolio managers not taking time to identify beneficial portfolio opportunities until the figurative two- minute warning.