Taylor Advisors is leading the pack when it comes to finding creative solutions designed to increase profitability and promote sustainable growth. Learn more about the waves we’re making and industry happenings in our blog.
Taylor Advisors is leading the pack when it comes to finding creative solutions designed to increase profitability and promote sustainable growth. Learn more about the waves we’re making and industry happenings in our blog.
The London Inter-bank Offered Rate (LIBOR) has been the preeminent reference rate in the financial markets for assets, liabilities, and derivative contracts, with an estimated $200 trillion in notional value currently referencing various tenors of LIBOR. Coming out of the financial crisis, it was widely reported that global banks had been manipulating the LIBOR survey,…
Over the past year, financial institutions across the country have seen an acceleration in funding costs. Historically, institutions have been successful in delaying rate increases on deposits during the initial stage of the rate cycle, then slowly increasing deposit rates for the second third of the cycle. From late 2015 through 2017, institutions enjoyed the…
Rising interest rates have certainly been on the minds of many bankers over the past year. The Fed has hiked the Fed Funds target rate eight times in its current effort to tighten monetary policy and the FOMC’s Dot Plot telegraphs several more rate hikes through 2020. With credit conditions generally strong, (despite some challenges…
Investment Guide for a Flat Yield Curve Treasuries yields started 2018 moving higher across the yield curve. Continued U.S. GDP growth, an optimistic Fed, and very early signs of increasing inflation have all contributed to the run up. Longer-dated Treasuries took a breather during the summer months mostly moving sideways. However, Labor Day kicked off…
Accelerating Deposit Costs At the beginning of the Fed’s march to higher rates, depositors had become numb to near-zero rates on deposits. Memories of 5% 1yr CDs from 2007 faded along with the 1st iPhone. Since December 2015, Fed’s initial target rate increase, the frequency of rate changes has gone from an annual adjustment to…
During the 2008 Financial Crisis liquidity conditions tightened for the entire banking industry in a very short time span. Many financial institutions were caught off-guard as the impact was far greater than they had modeled. Various liquidity counterparties shut off funding lines in an effort to preserve their own balance sheets. Unlike commercial banks and…
Margin Depression From the end of 1992 to the beginning of 2018, net interest margins in the Banking industry have declined about 100 basis points, with earning asset yields declining from 8.1% to 4.2%, and funding costs falling from 3.8% to 0.5%. This margin compression has been offset by either lower credit losses and/or lower…
Treasuries kicked off 2018 trading lower with yields rising across the yield curve. Expanding U.S. and global economies, optimistic Fed, and very early signs of increasing inflation have all contributed to the run up. The Federal Reserve is projecting three increases in the Fed Funds rate for 2018 taking the rate to 2.00-2.25% range by…
With Tax Reform signed into law in December, we discuss its impact on the municipal market, specifically for bank investors. Summary of Relevant Tax Law Changes: Corporate tax rate cut to 21%, down from 35% Top individual tax rate will be lowered to 37%, down from 39.6% 20% deduction for pass-through entities (e.g., S-Corp banks)…
A draft of the Tax Reform proposal was released this week by the GOP. Below, we discuss some potential key implications on the municipal market, focusing on investors’ tax-equivalent yields/spreads and market value. All spreads are based on current market yields, and the illustrations assume all else stays equal. For Individuals Proposal: Maintain the top…