Independent Banker - February 2020 - 42

PORTFOLIO
Portfolio Management
By Jim Reber, ICBA Securities
Munis for all
S
o, you say your community bank doesn't
own any municipal bonds? And you don't
need to read a column about an investment sector
that has no relevance to your investment
strategy? Because your bank is an S-Corp and
passes through its earnings to the shareholders?
Or because your bank is eff ectively owned by an
employee stock ownership plan (ESOP)? Please
don't say it's because your bank doesn't have any
income, which was the circa-2009 reason, but is
thankfully a rare event today. Nonetheless, please
keep reading because this column probably does
have import for your community bank.
42 Q ICBA Independent Banker Q February 2020
No need for tax-free bonds? Check out the value in taxable munis.
Whatever the reason, a good number of community
banks have no need to shield income
from income tax liability, even if the organization
itself is profi table. Unfortunately for these institutions,
tax-free munis are the most effi cient-if
not most profi table-way to avoid payment of
income tax. It's been documented here that the
amount of tax-frees in a portfolio has a strong
correlation to its performance. So, as my associates
from Vining Sparks and I write and speak
about high-performing investments, we eventually
have to declare that a bond portfolio without
tax-free munis is probably going to wind up in the
Jim Reber, CPA,
CFA (jreber@
icbasecurities.com),
is president and CEO
of ICBA Securities,
ICBA's institutional,
fixed-income
broker-dealer for
community banks

Independent Banker - February 2020

Table of Contents for the Digital Edition of Independent Banker - February 2020

Table of Contents
Independent Banker - February 2020 - Intro
Independent Banker - February 2020 - Cover1
Independent Banker - February 2020 - Cover2
Independent Banker - February 2020 - Table of Contents
Independent Banker - February 2020 - 2
Independent Banker - February 2020 - 3
Independent Banker - February 2020 - 4
Independent Banker - February 2020 - 5
Independent Banker - February 2020 - 6
Independent Banker - February 2020 - 7
Independent Banker - February 2020 - 8
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Independent Banker - February 2020 - Cover3
Independent Banker - February 2020 - Cover4
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