Every time we run to the grocery store or pharmacy for household staples like baking soda or ibuprofen, we’re faced with a choice – to buy the name brand or the store brand. On the one hand, there’s something reassuring about purchasing a nationally-recognized brand; after all, if they can afford to advertise during the Super Bowl, surely they must have a quality product! On the other hand, why should we pay three times the amount for cough syrup when the store brand has the exact same list of ingredients? In truth, we often use brand recognition as a proxy for quality, whether or not that conclusion is valid. If we consumers had perfect information, we would only buy name brands if the cost premium were clearly justified by higher quality or value. This implies that subject-matter experts, such as…

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Financial Institutions Case Study: Asset Liability Management Our Client: A regional bank with a newly issued brokered CD portfolio. Situation: Our client was asset-sensitive and had just issued 5yr brokered CDs that paid a fixed rate of interest. The client lends to borrowers at a floating rate of interest plus a credit spread, with a nominal floor. The net interest margin (NIM) would benefit from rising rates in the future, but in the short-term NIM was compressed by the long-term funding rate relative to the floored variable rate loan portfolio. Summary: Chatham Financial assisted the client with alternative hedging scenarios to reduce the impact of its relatively high, fixed-rate long-term funding. The client was considering a receive-fixed swap vs. a floating rate with sold floor based on the Prime rate, with the intention to designate the combined swap/floor against its…

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Success with a customer back-to-back swap program Focus more time on: Winning profitable long-term fixed rate deals Growing revenue through product line diversification Building stronger customer relationships Spend less time: Managing complicated compliance processes Adapting to rapidly-changing technology Managing multiple service providers Helping commercial customers make informed financing decisions by offering market-based, flexible and transparent fixed rate solutions. Keys to achieving program success Defined program strategy, institutional alignment and execution Responsive and scalable product infrastructure Efficient risk management and compliance coverage Product delivery at any scale Turn-key derivatives platform from Chatham Chatham offers the most comprehensive back-to-back solution available to community and regional banks. Our platform, RateManager, is designed by bankers for bankers. Service: One team dedicated to helping your bank and your customers succeed Scale: Efficiency regardless of deal volume, from one trade to hundreds of trades Technology: Modern…

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Chatham works with financial sponsors at many of the largest firms globally. Our spectrum of deals over the years gives us a rare perspective on how to add value to maximize their investment goals. Chatham’s holistic strategies reflect a deep currency, rate and hedge accounting expertise and allow us to devise optimal economic and accounting hedging options, pricing transparency and efficient market execution. We also relieve the administrative burdens associated with hedging, hedge accounting or regulatory compliance. With offices around the world, we can support our clients 24/7 and give clients the benefit of our global perspective on world markets. Our success-based fee structure is tied to deal execution, eliminating dead deal or additional out of pocket costs. Even after a deal is concluded, we often partner with the portfolio company team to offset any ongoing hedging or regulatory burdens,…

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As sequels go, very few movies have been hyped as much as this one. Catching Fire, the latest installment in the Hunger Games franchise, opened this past weekend to throngs of teens, tweens, and giddy parents, scoring $161.1mm in box office receipts for the 4th best domestic movie opening in history, as well as the best November opening weekend ever. Fans couldn’t wait to get a second helping of Peeta Mellark and Katniss Everdeen, giving director Francis Lawrence a bona fide blockbuster going into the Thanksgiving holiday weekend. The latest offering picks up with the stars’ triumphant return to District 12 on their victory tour, having survived a vicious fight-to-the-death tournament, only to realize that they will have to do it all over again. While sequels can sometimes leave a bad taste in your mouth, fans have judged their second…

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Analyzing risk and designing programs for private equity firms As an investor in companies that involve foreign entities, currency risk becomes an inevitable factor. Private equity investors need to consider these risks in the context of currencies involved. This includes market liquidity and optimal structure of the debt as well as debt of the underlying operation. Analyzing these factors to determine the most favorable scenarios is key to the entire investment process. Chatham Financial Risk Analysis and Program Design Services Scenario analysis and strategy: Chatham partners with private equity investors to develop scenarios and alternative models to determine the ideal risk management strategy. We consider whether the debt can be offset synthetically and, if so, we develop an optimal investment structure. Designing the optimal program: Chatham is in the markets every day. This gives us a very practical and informed…

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It’s an all-too-familiar scenario: after an altercation between a civilian and a police officer, the department receives a complaint alleging officer misconduct or excessive use of force. The officer in question responds that the situation required that level of force. But without witnesses or a serendipitously placed security camera, it’s generally impossible to know for certain who is telling the truth, and mistrust between the citizenry and the officers sworn to protect them can fester. Given a number of complaints against his police officers, the Rialto, California police chief decided on a novel approach; he equipped half of the force with miniaturized video cameras to record their interactions with civilians. Although the police officers initially expressed misgivings, the program’s results were unmistakable – complaints against police officers fell by 88%, and police officers were 60% less likely to use force…

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Ok, so maybe we haven’t seen a run up in rates like this in, oh, almost three years, but that doesn’t mean it’s time to panic. After all, we are still in a period of extraordinary accommodation, in zero-interest-rate-policy land, still enjoying the lowest rates of our lifetimes. The economy is thought to be doing pretty well right now – not the best that it can be, but growing steadily and generating jobs at a modest clip – and apparently that’s the problem. If the economy is doing better, then maybe we no longer need so much stimulus, and if we reduce said stimulus, we are surely one day closer to stopping it altogether, and reversing course. So, what exactly did we witness last week? Plain and simple, market participants are anticipating the end to quantitative easing and transitioning to…

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An especially bitter New England winter led humorous writer Charles Dudley Warner, a contemporary and friend of Mark Twain’s, to quip that “everybody talks about the weather but nobody seems to do anything about it.” Doubtless Warner would have appreciated the efforts of Russia’s Atmospheric Technologies Agency, reputedly ordered by President Putin to prevent rain during the 2003 St. Petersburg summit, to create a sunny perimeter fifty kilometers around the city center by bursting clouds with dry ice. At last somebody was doing something about the weather! Yet while the vast majority of us lack the military resources or budgetary authority to produce eternal sunshine above our heads, we all benefit from the forecasts offered up by meteorologists to help us plan correctly. Those in the United States Deep South, directly in the path of potentially devastating hurricanes each year,…

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