Mike Bilello brings decades of experience in credit, lending, derivatives, and capital markets to our financial institutions team

Can you summarize your experience within derivatives and the capital markets?

Throughout my career, I have always enjoyed providing hedging solutions to my financial institution clients so that they could offer the lowest cost financing option to their end-user clients.

I started my career in credit and lending, where I realized the importance of a good loan structure at the right risk-adjusted price. From there, I moved into Capital Markets in the Structured Finance space where an optimized securitization structure could save many basis points — and embedding a swap in the structure could save many more. Working on the swap desks of a couple of large investment banks, I placed those swaps into asset-backed securitizations. More recently, I worked for a derivative provider that had a narrow focus of only assisting community banks and credit unions with their commercial loan hedging needs.

Whether the financial institutions are Fortune 500 specialty finance companies engaging in asset securitizations or community banks offering fixed-rate CRE loans, I have a sense of accomplishment knowing my services enabled those institutions to provide the lowest cost solutions to their customers as a result of employing a hedging solution.

Why is Chatham the right fit for you?

Chatham is known as the industry leader in providing a full breadth of derivative advisory and technology services to some of the biggest and most profitable banks. Clients have consistently praised the support that Chatham provides.

In addition to finding a highly respected firm within the debt and derivatives space, I wanted to find a company that genuinely cares for its employees. A firm that is transparent, shares information, honestly manages employees’ performance, recognizes important milestones, and openly cares for each individual. It sounds simple and inexpensive, but a company’s culture is invaluable.

Why do financial institutions partner with Chatham?

Chatham can deliver so much for so little. We empower our clients with our efficient product delivery process that allocates experienced consultants in compliance, accounting, operations, and loan structuring for just a fraction of the cost compared to some other providers. Our strong team with deep banking expertise speaks our clients’ language, so we present solutions our clients clearly understand.

What is the key to having a strong derivatives program?

Derivatives can be complex, and no one person knows everything. So, it is vital to work alongside a trusted partner to launch and grow a derivatives program — one that is backed by a team of financial experts and advisors. This leaves time for a financial institution to focus on their primary responsibilities, be it loan generation, credit analysis, legal documentation review, loan administration, or financial accounting. In order to reach the full economic benefit of a successful hedging program, it is important to find a solution that is dynamic enough to provide the people, process, and technology to expertly handle all aspects of your organization’s derivatives program, including structuring, origination, and servicing.

What is important for financial institutions to understand about interest rate hedging and installing a traditional interest rate hedging program?

Traditional hedging programs are very prevalent in the industry and are now easier than ever to adopt. In addition, the FASB and FDIC encourage proper interest rate risk management and have allowed for simplified documentation and accounting for derivative transactions. While alternative providers address a portion of your interest rate risk, they can subject your financial institution to increased costs and additional risks.

What is important for financial institutions to consider over the next three to five years?

The old saying that hindsight is 20/20 immediately comes to mind. Many non-hedgers feel that predicting future interest rate levels is very simple. When I ask them, however, where the 10-year Treasury rate will be at year-end over the next five years, I get a wide spectrum of answers, especially more recently. Political influences drive markets now more than at any other time I can think of going back to 1980. This adds another “wild-card” variable to predicting rates that has proven unpredictable at best, especially considering recent strong price inflation. Hedging interest rate risk over the next three to five years is an inexpensive insurance policy against an unexpected, significant interest rate move in a direction that was not foreseen.