Although Ares Capital, like all BDCs, is asset sensitive
, it has several levers to cover its dividend.
INDB is more asset sensitive
relative to peers, and recent rate hikes have benefitted the company's net interest margin (NIM), which increased to 3.89% in second-quarter 2018 (2Q18) compared with 3.48% at year-end 2015.
The firm said it anticipates the group's earnings will lag the large regional peer group as rates rise, since balance sheets appear much less asset sensitive
based on both quarterly disclosures and regulatory data.
Second, if you are too asset sensitive
, consider reducing your existing holdings of fixed rate bonds.
Banks are said to be "liability sensitive" if an equal increase in all market rates--a parallel increase in the yield curve--causes net interest income to decline and "asset sensitive
" if the increase causes net interest income to increase (Table 2).
He also finds that banks are slightly asset sensitive
; that is, profits increase with rising interest rates.
We are also seeing the positive benefits of our asset sensitive
balance sheet, as our net interest margin continues to expand with additional increases in interest rates.
Our asset sensitive
position is positioned to actually take advantage of a mildly rising rate environment quite nicely."
WFC's asset sensitive
position modestly improved following the unwind of around $30 billion of the company's receive fixed loan swap position by year-end, as well as additional swap unwinds in early 2018.
Should TRMK's earnings fall below the peer median on a consistent basis due to an inability to find sufficient operating scale or due to a truly much less asset sensitive
position relative to peers, Fitch could take negative rating action.
Fitch expects earnings will remain in line with rating peers, as moderately higher credit costs will likely be more than offset by a higher net interest margin (NIM) due to FNNI's asset sensitive
Our team's focus and strategic positioning drove significant improvement over the prior quarter as we continue to reap the benefits of our asset sensitive
balance sheet and start to realize the synergies from the Sabadell acquisition following the conversion in mid-October.