The Rate Environment and Your Bank
It’s a well-known phenomenon that the current low interest rate environment is compressing margins at banks and hurting profitability. Loan growth is a challenge, loan to deposit ratios have decreased, securities portfolios have grown and banks are flush with liquidity.
On the macro front, investors, bankers and other banking industry participants are looking for clues about the direction of the economy and monetary policy. The Federal Open Market Committee (FOMC) plans to taper their asset-purchase program, but there is debate on how quickly that tapering should take place. In addition, when the Fed will begin to raise the targeted federal funds rate is unknown.
So, what does this all mean for bank financial performance? How can banks prepare for an eventual rise in interest rates? What are current economic indicators telling us about the state of the economy and interest rates? How will Janet Yellen’s appointment to the Federal Reserve Chair affect the direction of monetary policy?
Join SNL and industry experts from PIMCO and StoneCastle Partners as we examine the current economic and rate environment and what this means for bank fundamental performance, with an emphasis on community banks.
March 13, 2014