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The Security Analysis Podcast

CHAPTER

How to Invest in Small Banks

The big issue for banks is what are their liabilities costing? In general, higher rates are good for banks. But right now rates have gone from 0% to 5% in the span of 13 months. Their funding costs went up too fast relative to how quick they could pre-price all their assets and loans. They inverted yield curve is usually pretty toxic for banks. It has been. And when they go and make new loans, they can only get 6.5, 7% on the new loans, but to get that incremental dollar of funding, they're paying $5. Right.

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