Tom discussed the current economic trends and summarized the key factors affecting the municipal bond market. He expects that 2016 municipal credit volume will decrease marginally compared with 2015 volumes from $398 billion to a range of $325 - $375 billion. Tom believes that overall municipal bond credit conditions are expected to remain favorable during 2016 with no immediate credit crisis looming over the municipal market. Tom emphasized that local government issuers are facing credit quality downgrades at an above-average rate due primarily to continued declines in tax revenues. Tom cautioned investors to monitor the credit profiles of bond issuers for signs of structural imbalance.

Tom answered a series of provocative questions from the financial managers in attendance following his expert analysis and commentary.

The Basics of Interest Rate Derivatives for Community Banks was the topic of the afternoon mini-session presented by Sara Higgins, Managing Director from Sandler O’Neill + Partners, LP. Sara presented the “mechanics” of interest rate swaps and demonstrated practical applications of hedging customer loans and hedging wholesale liabilities. She provided the basis for calculating a swap rate and demonstrated the “logistics” of the interest rate swap process. Sara explained that community banks of all sizes are effectively using interest rate derivatives to hedge exposure to interest rate sensitivity. Sara emphasized that interest rate derivatives can represent an effective method of hedging balance sheet exposure, but cautioned that such activity should only be undertaken when the board and senior management of an institution fully understand the potential risks.

Members and guests also enjoyed a splendid cocktail hour which offered everyone in attendance the opportunity to mingle and relax while enjoying a lavish array of fine appetizers served by the expert staff at the Stony Hill Inn.