Midwestern community bank with sub-$1 billion in assets

Actively looking to find low cost funding solutions and ensure good balance sheet risk management

Had existing portfolio of brokered CDs and other instruments on their balance sheet that included interest rate derivative contracts with Bermudan optionality


Community Bank Utilizing Derivatives for Funding Solutions and Risk Management


  • As a community bank, they only had 1 existing Swap Dealer relationship.

  • They did not have the internal resources to fully manage their derivative program going forward.

  • They wanted to be able to continue to utilize derivatives to help them achieve better balance sheet risk management and find low cost funding solutions.

  • Their existing hedging positions required hedge accounting support.


  • The Bank retained Derivative Path, Inc. and immediately began to onboard their existing portfolio of balance sheet trades onto DerivativeEDGE trading platform.

  • DPI onboarded many existing, complex derivative contracts, such as step-up Bermudan cancelable swaps, that the Bank had previously executed to achieve cheaper funding.

  • Bank’s credit and risk management policies were reviewed and updated by DPI.

  • DPI expanded access to trading liquidity and negotiated an ISDA with a new Swap Dealer.

  • DPI provided hedge accounting support for all existing and new balance sheet hedge transactions.

  • DPI provides ongoing assistance with full trade lifecycle processing.

  • The Bank continues to utilize DPI team to evaluate new funding alternatives and to keep funding options that involve derivative transactions.