Summary:  Many Community Financial Institutions are finding themselves in the middle of a liquidity crunch -- a near complete reversal to the picture of just one to two years ago. Be it tight capital ratios that risk borrowing, loss of deposits to a tightening economic environment, reduced ability to fund loan demand, and or a combination of all three in unison. On the opposite side of the banks ledger unrealized losses in the securities portfolio, and an opaque environment as to rate directions at best, make discerning how to best use a portfolio that is likely long in the tooth in low coupon bonds and MBS facing possible extension risk. For many decisions this created a quandary not faced in recent memory.

There are tools available to help ferret out and identifying liquidity producing solutions.

With loans yielding more for institutions given the higher rate environment, liquidity needs to maintain capital ratios, upgrading securities from longer duration and lower yields, the need to understand securities portfolio options abound in many cases. With current Fed Funds at 4.50 to 4.75 percent, is it worth selling some underperforming securities to increase liquidity for other more pressing needs? Opportunities? When does it make sense, and from which securities?

Ask the current advisory or risk management firm at your disposal. Consider a second opinion, and/or explore new tools that can help provide the insights needed to chart the best possible solution path. At SB Value we have a suite of tools we use for our clients to help do just that. Be it our Portfolio Transparency Analysis tools, our Risk Monitor tools, and/or our strategic planning tools. For us, we run your current portfolio through them to show you your institution through our lenses at a complementary basis -- it's a great test drive and likely second opinion to help in your decision making -- especially with when stuck with 1 & 2% YTW on longer end of the curve maturities, or MBSs with extension risk.

Questions a Financial Institution should ask:

• Most important, determine how much of a loss tolerance you may want to assume this year on your books?
• Build out your future value of income spread, savings, reinvestment opportunity?
• How does decreasing duration factor into the conversation?
• Cost of fund sources to fund new loan demand?
• How do todays earnings factor into future savings, and income generation? What's the time value of money flows for the institution?
• How does the Muni to treasury yield ratio factor into the decision making process. See the chart below for a snapshot to the Treasury market volatility of late.

We would be happy to give you a complementary review using our tools on your portfolio. Compare it against the best practices we see, even look for incongruent outliers, and confirm the data you see, or identify new options you may not have considered.

Consider SB Value Partners. At least look under the hood and kick the tires.

We’ve been supporting community financial institutions for almost 30 years. We tend to save our clients a significant amount of money, help them make better trades (through their current relationships), provide improved portfolio transparency, provide aggregated risk tools, in-parallel analytics reporting and bond reporting, through seasoned traders and analytics, among other things. We think that you will be impressed by insights coming directly from an institutional trading desk.

Complementary is great value. Take advantage of it.

At SB Value, we are fiduciaries. Fiduciaries are bound to do what is best for their clients. It really does not get more straight forward than that. We demonstrate to our prospects our value up front with live analysis of their portfolio from many different angles. Take advantage of our SB Value Portfolio Analyses and look to better meet Dodd-Frank and the OCC guidance while striving to improve your performance.

As always, consider a first, second, or even third opinion from SB Value Partners by eMailing or calling us back today. Let SB Value help you examine all these, and other methodologies, to build out your future pathways to optimizing your success.

Questions? ASK US HOW to start a complementary comprehensive analysis now from just a few easy to find documents you have readily at hand. It’s a great time to get some additional clarity. Learn some additional truths on the front end. It may position your bank for added improvements into 2023 and into a better positioning for 2024. Listen to what a few thought leaders have to say who have written white papers on the topics at hand. Take a read through a few Fact Sheets and SME articles on the subject that we would be happy to provide.

As fiduciaries we see quite a lot – in fact we have recently reviewed just over 18,000 data points from Community Financial Institutions – likely just like yours. We look forward to sharing with you some of what we have learned over the last three decades. In the meantime, we thought we would help with some general information that you and your team can consider right away to round out what you are already doing. There is a lot that’s beneficial, starting with cost savings, yield improvements, potential risk reduction, and likely better balance – even protection. To find out more please click here or go to our website.