Community banks typically only purchase Bank Qualified (BQ) municipal securities. Those banks with a wholly owned investment subsidiary (“General Market Investment Sub” or “GMI Sub”) are able to purchase General Market Munis which have greater supply and higher yields. KeyState has been managing bank investment subsidiaries for over 25 years.
BENEFITS TO FORMING A GMI SUB:
• Investment subsidiary is NOT a bank, and therefore, not subject to TEFRA haircut on municipal bonds
• Ability to purchase general market municipal bonds, capturing higher yields and liquidity
• Saving in custody and bond accounting expenses due to KeyState’s scale and volume
• Extensive municipal market expertise; Investment officers in muni markets everyday seeing and vetting a large number of muni issues
• Excellent backup to bank’s investment efforts
• Access to larger to larger broker network for new issuance
• Dodd-Frank compliant pre-purchase & ongoing credit analysis
• Potential state tax savings on fixed income portfolio income (banks must work with their tax advisor to evaluate)
THE KEYSTATE ADVANTAGE
• KeyState founded 26 years ago to service bank investment subsidiaries
• Team of 5 seasoned investment officers with combined 100+ years of fixed income portfolio management experience
• Over 150 banking clients across the United States
• KeyState is an independent partner and not a broker dealer
• The KeyState management team works closely with a bank’s existing brokers or portfolio advisors (internal or external)
CONTACT
Larry Wood, EVP – Financial Institutions Group,
[email protected] 702.598.3738