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Financial institutions looking to manage interest rate risk may want to consider an interest rate collar.
As the world struggles to make sense of the fact that short-term rates are currently higher than long-term rates, we provide some insight.
Many community banks tell us that in this rate environment, plenty of commercial customers seek the stability of a fixed loan coupon.
Yield maintenance can be confusing.
Valued for their flexibility, forward rate lock agreements can be customized to fit the requirements of both your bank and your borrower.
Financial hedges are a bit like shock absorbers on a car.
This gives the customer a locked in fixed rate (less credit risk) and the bank has positioned itself for higher interest rates (less interest rate risk) through a floating rate structure.
PCBB has an interest rate swap hedging solution designed specifically to assist community banks with loan hedging.
With a flat yield curve, certain tools can provide customers with the products they want while mitigating risk for the bank.
The bank was seeking to protect itself against interest rate risk using interest rate swaps, as it served its business clients by offering them fixed rate CRE loans.