Capital Funding Compass August 2023

August 17, 2023

June / July saw no new reported Capital Markets transactions in the community bank subordinated debt market. With one more bank failing in July, Heartland Tri-State Bank, potential investors are going to be extremely cautious in their evaluation and purchase of bank debt and are closely watching the price movements in the regional bank index (KRE), and pricing in bank issued debt in the secondary markets, which is active. Regardless of pricing and low activity, some items that investors will still be focusing on are credit quality, loan and deposit concentrations, adverse impact of negative AOCI on balance sheet (Tangible Common Equity), percentage of uninsured deposits, and contingency funding levels. For assistance in positioning your bank properly in these areas, please feel free to reach out to us and we will have a member of our Performance Management Group arrange an initial consultation.

We are seeing some transactions in the bank M&A space, but it is unclear at this time when the bank sub-debt market will be active and healthy enough to re-emerge. Our team is watching the markets and announcements closely and will keep our clients up to date on any new developments.

Additional Resources

Deposit Funding Compass Week of December 6, 2023

December 6, 2023 »
The ADP employment report showed that 103,000 jobs were added in the private sector in November. This was below the consensus expectation for today’s report and also below the consensus expectation for Friday’s BLS report (headline: 187k, private: 160k). Rate markets priced for deep cuts in early 2024 may get a shock next week if…
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CU Funding Compass Week of December 6, 2023

December 6, 2023 »
The ADP employment report showed that 103,000 jobs were added in the private sector in November. This was below the consensus expectation for today’s report and also below the consensus expectation for Friday’s BLS report (headline: 187k, private: 160k). Rate markets priced for deep cuts in early 2024 may get a shock next week if…
Read More...

Deposit Funding Compass Week of November 8, 2023

November 8, 2023 »
The bond market is betting on a “dovish pivot” for the seventh time since the Fed embarked on its current tightening cycle. Treasury yields turned sharply lower as bonds rallied in the wake of last week’s FOMC meeting, at which Chair Powell hinted that the current rate-hike cycle may be near an end. Markets now…
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CU Funding Compass Week of November 8, 2023

November 8, 2023 »
The bond market is betting on a “dovish pivot” for the seventh time since the Fed embarked on its current tightening cycle. Treasury yields turned sharply lower as bonds rallied in the wake of last week’s FOMC meeting, at which Chair Powell hinted that the current rate-hike cycle may be near an end. Markets now…
Read More...

CU Funding Compass Week of November 2, 2023

November 2, 2023 »
Federal Reserve Chair Jerome Powell hinted the US central bank may now be finished with the most aggressive tightening cycle in four decades after it held off on raising interest rates for a second consecutive policy meeting. Federal Open Market Committee left its benchmark rate unchanged Wednesday in a range of 5.25% to 5.5%. Officials…
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Deposit Funding Compass Week of November 2, 2023

November 2, 2023 »
Federal Reserve Chair Jerome Powell hinted the US central bank may now be finished with the most aggressive tightening cycle in four decades after it held off on raising interest rates for a second consecutive policy meeting. Federal Open Market Committee left its benchmark rate unchanged Wednesday in a range of 5.25% to 5.5%. Officials…
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CU Funding Compass Week of October 25, 2023

October 25, 2023 »
With the Federal Reserve shrinking its portfolio of government securities, Treasuries experienced their worst sell off on longer terms in nearly four decades. With 10-year yields surging past 5% for the first time in 2007 this week the Fed may come under pressure, as ever-increasing borrowing costs bring with it the risk of a harder…
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Deposit Funding Compass Week of October 25, 2023

October 25, 2023 »
With the Federal Reserve shrinking its portfolio of government securities, Treasuries experienced their worst sell off on longer terms in nearly four decades. With 10-year yields surging past 5% for the first time in 2007 this week the Fed may come under pressure, as ever-increasing borrowing costs bring with it the risk of a harder…
Read More...

Deposit Funding Compass Week of October 18, 2023

October 18, 2023 »
Treasuries tumbled, driving two-year yields to a 17-year high, after a surprisingly large jump in retail sales last month increased speculation that the Federal Reserve will raise interest rates again. Yields rose across the maturity spectrum led by the five-year, which rose as much as 17 basis points to the highest level since 2007. The…
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CU Funding Compass Week of October 18, 2023

October 18, 2023 »
Treasuries tumbled, driving two-year yields to a 17-year high, after a surprisingly large jump in retail sales last month increased speculation that the Federal Reserve will raise interest rates again. Yields rose across the maturity spectrum led by the five-year, which rose as much as 17 basis points to the highest level since 2007. The…
Read More...