Interest Sensitive Stock

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Interest Sensitive Stock

A stock whose value is likely to increase or decrease substantially due to changes in interest rates. Most interest sensitive stocks represent publicly-traded companies with high rates of long-term debt. These companies' stocks decrease in value when interest rates rise because the higher cost of borrowing may result in lower profits and dividends. Conversely, their stocks rise on lower interest rates. For this reason, utility companies tend to have interest sensitive stocks.
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Although Ares Capital, like all BDCs, is asset sensitive, it has several levers to cover its dividend.
BMO Names Ares Capital As Top Choice Among BDC Peers, Upgrades To Outperform
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.
Fitch Affirms Independent Bank Corp. at 'BBB'; Outlook Stable
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.
Interest rate rise could challenge US community banks
Second, if you are too asset sensitive, consider reducing your existing holdings of fixed rate bonds.
Don't look too far ahead
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).
What explains low net interest income at community banks?
He also finds that banks are slightly asset sensitive; that is, profits increase with rising interest rates.
What does the Federal Reserve's economic value model tell us about interest rate risk at U.S. community banks?
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.
First Interstate BancSystem, Inc. reports net income of $41.7m
Our asset sensitive position is positioned to actually take advantage of a mildly rising rate environment quite nicely."
Interest rate risk concerns may be exaggerated
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.
Fitch: Wells Fargo Reports Lackluster Core Earnings
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 Affirms Trustmark Corporation's Ratings at 'BBB+'; Outlook Stable
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 profile.
Fitch Upgrades First National of Nebraska to 'BBB'; Outlook Stable
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.
IBERIABANK Corporation announces financial results

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