Category: Jumbo Rate News | Page 36

Fed to Raise Interest Rates Next Month

Last week we reported that, depending on asset size distribution, net interest margins (NIMs) were making gradual headway with help from the Fed’s rate hikes over the past two years. As we look forward to a quarter point increase next month (Sept. 26th) let’s delve into that a little deeper.

Last week we intentionally left Big Banks out of the discussion. The business model for these behemoths is very different from that of community banks, which is our primary focus. But …

No Rate Increase, and That’s Okay

The Federal Reserve held interest rates steady at the FOMC’s two day meeting last week (between 1.75% & 2%) but the six quarter-point increases since December 2016 have slowly and steadily been making their presence known. Net interest margins (NIM) at FDIC-insured banks increased 30 basis points between the first quarter 2015 and first quarter 2018.

While smaller banks are overshadowed by the largest banks, it’s interesting to see that even the smallest community banks have seen improvements in NIM, which for banks with assets less than $100 million went from 3.58% to 3.75% in the past three years.

Soybeans as Trade War’s Weapon of Choice

Our concern is what happens to the banks—the unintended consequences. What matters to Bauer is that our community banks can continue to supply credit where it’s needed and that the credit extended continues to be done so prudently.

It Can Take a Long Time to Make a Quick Buck

Mutual conversions were once a way to make an easy buck. In the ’80s and ’90s it was common for depositors to open accounts at any mutual that would allow them. Then they’d sit back and hope the mutual would decide it was time to convert.

Depositors on record would get first crack at any stock offering and there was good money to be made. And it was easy money. But those conversions fizzled out after the turn of the century. Last year we reported that they were beginning to heat up again (JRN 34:12 & 32). But they’re different now.

New Hope for Distressed Communities

If the Community Reinvestment Act (CRA) were a person, we may be inclined to agree with Congressman Week’s assessment that CRA is experiencing a midlife crisis… but it’s not. It’s old and outdated and needs to be rejuvenated.

Out of State Branches, Responsibilities

Remember when banks couldn’t cross state lines? We do. Federal regulations prohibited the practice. Although, as the country stumbled its way through the Savings and Loan crisis in the 1980s, many states passed their own laws permitting out-of-state bank holding companies to acquire banks in their state under certain circumstances.

All Credit Union Star-Ratings Now Updated

Shares and deposits increased by $65.5 billion (5.8%) from March 31, 2017, ending the first quarter 2018 at $1.204 trillion. While that number pales in comparison to the nation’s banks (roughly 10%), it has been growing steadily for years. In fact, the largest three U.S. banks each have deposits totaling more than the entire credit union industry.

Regulation: How Much is Enough, Too Much?

On June 5^th, Jelena McWilliams was sworn in as the 21st Chairman of the FDIC. As head of one of the nation’s bank regulatory agencies, she has a tough road ahead of her. Arguably the most crucial topic today, as Dodd-Frank is being dismantled, is where should regulation draw the line?

Nationwide is (No Longer) on Your Side

As a depositor, that is. The $7.1 billion asset 5-Star Nationwide Bank, Columbus, OH is exiting the retail banking business in favor of more lucrative insurance and retirement operations.

Nationwide Bank was chartered in 1998 and added to our rate pages ten years ago (JRN 25:28). Over the years it has frequently been listed on our Top Rates chart. But no more.