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May 11, 2017 10:30:00 AM

Planning and Investing in a Fluid Interest Rate Environment

As promised, the Federal Reserve’s monetary policy committee raised interest rates by a quarter of a percentage point at its March 15 meeting. Chair Janet Yellen had suggested the hike would be appropriate if economic markers—in particularly GDP rates, jobs, and consumer spending—improved over a slight slump from at the start of 2017 determined to be mostly ‘transitory.’

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Topics: Interest Rates, Regulations

Dec 20, 2016 10:30:00 AM

Is Your Bank Prepared to Profit From Higher Interest Rates?

On December 14, 2016, the Federal Reserve boosted its benchmark interest rate by 25 basis points to a range of 0.5 percent to 0.75 percent. While this is still incredibly low by historical standards, it is notable because it’s only the second time since the financial crisis of 2008 that the Fed has raised this rate.

The move continues to support economic growth and sustains a friendly environment for borrowing and risk-taking. It also recognizes that the U.S. is enjoying strong employment and price stability, and healthy inflation, as well as positioning the economy to ride the expected acceleration that will occur as a result of the new Trump administration.

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Topics: Interest Rates, Regulations

Dec 22, 2015 10:00:00 AM

7 Ways Banks Should Respond to the Fed Rate Hike

The last time the Federal Reserve increased rates was 2006. After predictions and discussion of a rising rate environment for a while, a unanimous vote brought the interest rate up a quarter-point this past week. While Chairman Janet Yellen says that future rate hikes will “come slowly” and such a minimal increase is unlikely to move the needle much, it warrants community banks taking the time to consider how it will impact balance sheets – in light of how it will influence customer behavior.

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Topics: Interest Rates

Mar 25, 2015 9:32:20 AM

Survival of the Fittest - Key Considerations for Successful M&A

For about nine years, analysts have predicted two game changers for the banking industry – an M&A boom and an interest rate hike. The M&A prophecy came true in 2014, with the highest transaction volume since 2006. Based on year-to-date transaction activity, this trend will continue through 2015. The prevailing factor that’s driving the M&A boom? Growth. Buyers and sellers seem to agree that bigger is better. Survival of the fittest tends to be predicated on asset size. In almost every bank, it seems that leadership is weighing their options – buy or sell. So many variables influence the success of a deal. Besides size, they can include culture, geography, regulatory challenges, cost savings, earnings and (perhaps the most sensitive factor) pricing.

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Topics: Interest Rates, M&A, Growth

Dec 23, 2014 7:58:00 AM

Banking on the Future – Key Considerations for Bank Growth in 2015

2014 saw more than a few big developments in banking, from the launch of Basel III regulations to issues with cyber security and increasing use of big data as a strategic planning tool. Along with new regulations, capital requirements and technology advancements, 2014 saw a proliferation of growth efforts start to reshape the banking landscape.
 
Factors like improved acquisition multiples, robust capital reserves, and a shrinking gap between valuations and actual purchase prices have created an environment that is more favorable to banks pursuing growth through efforts like branch expansion, mergers & acquisitions (M&A) and initial public offerings (IPO).
 
As we look toward 2015, the HORNE team has compiled a few key considerations to help you prepare to act with agility and confidence when opportunity arises.

 

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Topics: Interest Rates, Basel III, IPO, M&A

Jun 13, 2014 2:24:00 PM

Interest Rate Risk - Burden or Opportunity?

Interest rate risk presents a unique challenge for the banking industry in today’s economy. The questions that most frequently arise are when will we actually experience a rising rate environment and how will interest rates react in the meantime?  

While we lack a crystal ball, the lingering fear among economists is that a weakening U.S. and global economy will continue to damper interest rate growth. Signs also point to the possibility that another recession could occur before interest rates and the economy fully recover. 

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Topics: Risk Assessment, Regulations, Interest Rates

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