The SBA and phlegmatic

phlegmatic

(fleg-MAT-ik)

1. Having a sluggish temperament; apathetic.

2. Calm or composed.

From Latin phlegmaticus, from Greek phlegmatikos, from phlegm (inflammation, the humor phlegm supposedly as a result of heat), from phlegein (to burn).

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TIP OF THE WEEK 

Don’t be phlegmatic about SBA lending!

According to the FDIC’s quarterly banking profile, there are 7,307 banks still surviving in this country.  Many of them are starting to thrive.

The first quarter of 2012 saw net income in the banking industry rise to its highest level since the second quarter of 2007.  One of the biggest contributors to net revenue has been gains from loan sales, which were up 132 percent from a year ago.

According to the FDIC’s Insights on SBA Lending, the gain from the sale of a SBA guarantee loan can now be recognized as immediate fee income.

If your bank is not a SBA lender, you should ask them why.

If your bank would like to become a SBA lender, ask us how.

If your bank would like to become a better SBA lender, ask us how.

If you would like a copy of either the FDIC’s quarterly banking profile or their insights on SBA lending, send me an email.

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Indices:

PRIME RATE= 3.25%
SBA LIBOR Base Rate June 2012 = 3.24%
SBA Fixed Base Rate June 2012 = 4.58%

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504 Debenture Rate for June  

The debenture rate is 2.47% but note rate is 2.46% and effective yield is only 4.50%. 

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AHEAD OF THE YIELD CURVE 

Sooner or later, interest rates are going to go up, right?

More like later or much later.

This phlegmatic attitude was reflected last week when $13 billion of 30 year Treasury bonds were sold to help pay for all the wonderful things the government is doing to us.  The long bonds yielded 2.72 percent which is a record low for a 30 year bond sale.  The previous record low at a long-bond auction was 2.925 percent at the Dec. 14 sale. Last month’s sale drew a yield of 3.09 percent.

Keep your eyes and ears open for this week’s meeting of the Federal Open Market Committee.  The last time the Federal Reserve met they said that they would be keeping interest rates exceptionally low at least through late 2014.

Exceptionally low at least through late 2014.  Those are their exact words, not mine.

So where then are interest rates going?

Eurodollar futures settle at a three- month lending rate that has averaged about 22 basis points more than the Fed's target over the past 10 years.

Here is a summary of what the market expects for Eurodollar futures based upon the pit-traded prices at the Chicago Mercantile Exchange:

DEC12- 0.53
DEC13- 0.60
DEC14- 0.83
DEC15- 1.28
DEC16- 1.82
DEC17- 2.28
DEC18- 2.62

DEC19- 2.85

What does all this mean?

I don’t know.

The market seems to think that interest rates won’t be going up any time soon, and when they do, it won’t be by much.

You can be phlegmatic about interest rates.

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OFF BASE

Talk about phlegmatic; I’ve got nothing.