Meeting customer demand for long-term fixed-rate financing
Head of Sales
Financial Institutions | Denver, CO
A $2.6 billion dollar community bank in the Midwest wanted to provide their commercial borrower with long-term fixed rate funding through a swap program with a correspondent bank. The correspondent bank denied their request because of a disagreement over loan-to-value proceeds.
- Meet customer demand for long-term fixed rate financing
- Provide loan proceeds that are competitively priced and aligned with the bank’s credit culture
- Generate fee income
- Enabled the bank to offer the swap agreement directly to the customer removing the correspondent bank from the customer relationship
- Delivered a solution that met the customer’s needs and a credit risk profile acceptable to the bank without influence from a third party
- Removed the interest rate risk by executing an offsetting swap with a dealer counterparty
- Established procedures and provided training and a technology platform to manage the swaps
- Leveraged long-term experience working with community banks and presence in capital markets to provide a solution customized to meet the needs of the bank
- Saved a customer relationship and booked a $12.1M 10-year loan
- Generated $100K in additional fee income compared to what would have been earned with the correspondent bank
- Enabled the bank to deliver a streamlined 100% local solution to the customer by removing the correspondent bank from the customer relationship
We’d like to hear from you
Learn how to grow and optimize your interest rate swap program.
Chatham Hedging Advisors, LLC (CHA) is a subsidiary of Chatham Financial Corp. and provides hedge advisory, accounting and execution services related to swap transactions in the United States. CHA is registered with the Commodity Futures Trading Commission (CFTC) as a commodity trading advisor and is a member of the National Futures Association (NFA); however, neither the CFTC nor the NFA have passed upon the merits of participating in any advisory services offered by CHA. For further information, please visit chathamfinancial.com/legal-notices.
Transactions in over-the-counter derivatives (or “swaps”) have significant risks, including, but not limited to, substantial risk of loss. You should consult your own business, legal, tax and accounting advisers with respect to proposed swap transaction and you should refrain from entering into any swap transaction unless you have fully understood the terms and risks of the transaction, including the extent of your potential risk of loss. This material has been prepared by a sales or trading employee or agent of Chatham Hedging Advisors and could be deemed a solicitation for entering into a derivatives transaction. This material is not a research report prepared by Chatham Hedging Advisors. If you are not an experienced user of the derivatives markets, capable of making independent trading decisions, then you should not rely solely on this communication in making trading decisions. All rights reserved.20-0367
Our featured insights
Big banks report strong Q3 earnings
Building on the previous week’s gains, the major U.S. equity indices finished the week in the green, while short and mid-term Treasury yields moved notably higher as investors digested the latest economic data releases, the minutes from the latest FOMC meeting, and Q3 earnings releases.
Long-term yields continue march higher
After falling substantially in the final week of the third quarter, the major U.S. equity indices started the fourth quarter on solid footing, each moving higher last week, while long-term Treasury yields continued their march higher, as investors digested mixed economic data releases, primarily...
Jessie Kelley, banking veteran, joins Chatham to advise financial institutions on interest rate risk management
Jessie Kelley joins Chatham’s Financial institutions team with 15 years of banking experience. She will lead business development efforts in the Southeast and portions of the Midwest and will advise financial institutions on interest rate risk management through the use of hedging strategies....
Hawkish FOMC meeting sends yields higher
In yet another eventful week, the major U.S. equity indices ended flat to modestly higher while Treasury yields saw significant increases on the back of strong economic data and a hawkish FOMC meeting.
Debt ceiling talks take center stage in Washington
The major U.S. equity indices moved lower for the second consecutive week and long-term Treasury yields increased modestly as market participants digested the latest inflation readings, political wrangling on Capitol Hill, and the continued spread of the COVID-19 delta variant.
Supply chain disruptions send prices higher
In a holiday-shortened week, the major U.S. equity indices moved lower while long-term Treasury yields ticked modestly higher as signs of firming inflationary pressures, hawkish comments from Federal Reserve officials, and the latest legislative developments in Washington dominated headlines and investors’ attention.
Enhance yield with swaps
Excess liquidity in the financial system creates challenges for financial institutions. Balance sheets demonstrate greater sensitivity to short-term rates and NIM compresses.