Independent Banker - January 2023 - 28

PORTFOLIO PORTFOLIO MANAGEMENT
Shop talk 2023
To start the year, let's listen in on a conversation with our
consummate community banker. By Jim Reber, ICBA Securities
" T
his is Jim Reber speaking. "
" Hi Jim, this is Charlie
Brown from Community Trust Bank
calling. Do you have a minute? "
" I sure do, Charlie! I recall we last
talked in 2021. How did 2022 go for
the bank? "
" Well, once again, we were
somehow able to keep the bus out
of the ditch. We surpassed all of
our expectations, and even our
examiners are pleased with the
shape of things. And that's one of the
reasons I'm calling. We think we're
going to have another decent year,
but I'm nervous. "
" So, on the surface, the interest
rate scenario should play to your
advantage, right? "
" I think so, Jim, but our funding
costs are starting to go up. We also
don't have as much liquidity as we
did in the last couple of years, just in
time for Fed Funds to start yielding
4.5%. And, our cash flows from our
bond portfolio, as you are probably
aware, have slowed to a trickle. "
" Well, Charlie, let's think about
this. Maybe, just maybe, loan
demand is going to moderate, or even
slow this year, if the higher rates
actually have their intended effect.
That means the slowdown in bond
cash flows, or even some deposit
runoff, won't be too problematic.
Another consequence of this broadbased
inflation business is that
almost all collateral has gone up
in value, so the borrowers have
additional equity, which increases
the likelihood they'll continue
to perform. "
" You're starting to make it
sound like we've got a reasonable
chance this year, even without any
government programs such as the
PPP. And although we don't have a
pile of idle cash, our asset/liability
model shows we're still positioned
OK for rising rates. "
28 // ICBA Independent Banker // January 2023
Illustration by Dariia/Adobe

Independent Banker - January 2023

Table of Contents for the Digital Edition of Independent Banker - January 2023

Table of Contents
Independent Banker - January 2023 - Cover1
Independent Banker - January 2023 - Cover2
Independent Banker - January 2023 - Table of Contents
Independent Banker - January 2023 - 2
Independent Banker - January 2023 - 3
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Independent Banker - January 2023 - Cover3
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