How Community Banks Can Take Advantage of Rising Interest Rates
As shown in the graph below, we may be witnessing the end of a multi-decade bull run in bonds. After many decades of decline, interest rates may be on the rise for years to come. This development is creating an opportunity for community banks to book longer-term fixed-rate loans with higher profit margins. However, borrower demand is forcing banks to make loans with 5, 10, and even 20-year fixed-rate maturities. How should banks protect themselves from the rising cost of funding and at the same time improve interest margins? CenterState Bank uses a strategy that enables the pricing of