By now it is pretty well established that community banks’ profits depend on curbing noncredit expenses and boosting noncredit income.

In the good old days a banker could obtain funds at 3%, lend them out at 6%, and be on the golf course by 3 p.m. But volatile interest rates have made this policy dangerous. If CD rates soar while the bank is stuck with fixed-rate mortgages at 6%, then “3, 6, and 3” becomes “9, 6, and who knows when I will get out of here.”

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