CIT dives into the adult pool (joins "big boy" club")

CIT Group to Buy OneWest; Profit Tops Estimates - Deal with IMB Holdco, OneWet's Parent Company, To Bump CIT's Assets to $67 Billion

Excerpt:

CIT Group Inc. agreed to buy OneWest Bank NA's parent company for $3.4 billion in the largest bank acquisition announced so far this year. The cash-and-stock deal with IMB Holdco LLC, which is OneWest's parent company, will bump CIT's assets up to $67 billion, making the bank large enough to be considered "systemically important" by regulators. CIT, a lender to small and medium-size businesses, had $44.15 billion in assets as of June 30, CIT shares rose more than 10% in early trading as investors cheered the company's move, which will add deposits, a presence in California retail branch banking and a stable source of funding. "My first comment was wow," said Sterne Agee analyst Henry J. Coffey Jr. on CIT's earnings call. "This is incredible." CIT Chief Executive John Thain recently told investors he was looking for a significant deal so that his firm jump comfortably over the $50 billion level rather than edge over it by a bit. That is because the avalanche of regulations that comes with topping $50 billion isn't worth it without a significantly bigger earnings engine.

Comment: Love the typo (red box)

For Banks Near Cutoff, Bigger Isn't Necessarily Better - For Banks About to Grow Into 'Systemically Important' Designation, Size Brings a New Set of Headaches

Excerpt:

Mr. Ficalora is CEO of New York Community Bancorp, a lender in Westbury, N.Y., with $47.6 billion in assets as of the end of the first quarter. The bank is projected to reach the $50 billion mark by the end of the year if it continues to expand at its current rate. But with that milestone will come myriad headaches. Once the bank reports assets of more than $50 billion on average for four quarters in a row, NYCB, as it is known, will be large enough to be considered "systemically important" by regulators. That status will require it to comply with stiff rules on capital, submit to yearly "stress tests" and create a road map to wind down the bank in the event of a crisis, moves that will add to its costs. As a result, Mr. Ficalora says NYCB is restraining its lending growth, since loans amount to assets. The rule characterizing bank holding companies over $50 billion as systemically important is part of the regulatory overhaul that followed the financial crisis and is aimed at keeping a closer eye on banks whose potential problems could endanger the broader financial system.

Comment:  Images snipped from articles. NYCB has a 6.4% dividend! Interesting

The Era of Big Bank mergers has passed

Will we ever see another big bank merger?

Excerpts:

Yet banks and other financial companies – usually among the most avid shoppers for deals – have been conspicuously subdued amid the corporate coupling. In prior merger-and-acquisition cycles, bank mergers have produced increasingly gargantuan institutions and progressively more byzantine financial conglomerates. ... A firm regulatory commitment to keep the largest banks from getting any bigger or more complex is keeping this activity in check. The authorities intend for banking to stay boring – and this is how the sector will remain for consumers and investors.

Comment: Image Source. List of bank mergers in the United States.

Kathee and I were talking yesterday at dinner how our entire careers at Wells Fargo have been characterized by M&A activity. Kathee started at the old United Bank of Colorado (acquired by Norwest). Of course the Wells Fargo - Norwest merger and Wells Fargo - Wachovia merger were the largest. We've also been through Y2K (that involved quite a bit of preparation). I see the banking industry in the US as follows:

• You have the nationals (C, BAK, JPM, and WFC). I really think WFC is the strongest. We have stock in WFC and JPM. I've passed on buying stock in the other two.
• You have the regionals: Sun Trust, Regions Bank, US Bank, BBVA and others. 
• You have the credit unions - eg Spire in Minnesota
• You have mini-regionals - eg TCF
• You have large state centric banks: Frost Bank in Texas and First Bank in Colorado are examples.
• And then the pure locals (small but personal). Privately owned by millionaires they may have one or two offices. An example is Bank West in Rockford MN with 3 locations

Some decry the large banks and see that there is little competition. But the industry has a lot of competition. What I like about a national bank:

• Stores or branches available across the country (although none have the entire US footprint). I think about going into a Wells Fargo store in Marquette MN or in North Carolina. 
• A credit card. TCF for example does not offer one
• A brokerage service. For example I can instantly transfer money from my checking or savings account to my brokerage account
• A mortgage service (don't have one now but potentially could  in the future)
• A robust platform. Think about the old Hiberia bank that was completely taken out by Hurricane Katrina when both their production and their BCP site flooded.
• A 24-hour phone bank. I called another bank on behalf a relative. It was a holiday and I received the message "call back during business hours"

Wells Fargo tops in Colorado Market Share

U.S. Bank ranks third in Colorado deposits, passing JPMorgan Chase

 Excerpt:

In the back-and-forth battle for depositors in Colorado, U.S. Bank overtook JPMorgan Chase for third-best on a list perennially topped by Wells Fargo Bank, according to a federal survey. Though Wells' market share slipped to just under 25 percent, it still held the lion's share of deposits in the state — $24.7 billion as of June 30 — more than double the amounts held by FirstBank branches, the Federal Deposit Insurance Corp. analysis released last week shows. Coloradans continued to head toward banks, increasing deposits by about four percent from last year and 16 percent from 2009. The real battle is for third place, between U.S. Bank and Chase. No bank below them holds more than a 3.6 percent share. U.S. Bank overtook Chase, registering a 9.7 percent market share in Colorado — 12.5 in Denver alone — a significant uptick from the 8.6 percent it held last year.

Comment: Kathee started at the former United Bank of Colorado (acquired by Norwest). I started at Norwest. We moved to Minnesota in 1996.

Fed regulatory rules squeeze banking employees

Low-level workers fired because of new banking standards

 Excerpt:

Richard Eggers doesn't look like a mastermind of financial crime.

The former farm boy speaks deliberately, can't remember the last time he got a speeding ticket, and favors suspenders, horn-rim glasses and plaid shirts. But the 68-year-old Vietnam veteran is still too risky for Wells Fargo Home Mortgage, which fired him on July 12 from his $29,795-a-year job as a customer service representative.

Egger's crime? Putting a cardboard cutout of a dime in a washing machine in Carlisle on Feb. 2, 1963.

"It was a stupid stunt and I'm not real proud of it, but to fire somebody for something like this after seven good years of employment is a dirty trick when you come right down to it," said Eggers of Des Moines. "And they're doing this kind of thing all across the country."

Big banks have been firing low-level employees like Eggers since the issuance of new federal banking employment guidelines in May 2011 and new mortgage employment guidelines in February.

The tougher standards are meant to weed out executives and mid-level bank employees guilty of transactional crimes, like identity fraud or mortgage fraud, but they are being applied across-the-board thanks to $1 million a day fines for noncompliance.

Banks have fired thousands of workers nationally because of the rules, said Natasha Buchanan, an attorney with Higbee & Associates in Santa Ana, Calif., who has helped some of the banking workers regain their eligibility to be employed. "Banks are afraid of the FDIC and the penalties they could face," Buchanan said.

The regulatory rules forbid the employment of anyone convicted of a crime involving dishonesty, breach of trust or money laundering. Before the guidelines were changed, banks widely interpreted the rules to exclude minor traffic offenses and some other misdemeanor arrests.

Comments: First of all, I work for said bank but I don't believe this article is about that bank but rather federal regulations. Secondly it explains why the charge "intent to evade taxes" was such a serious issue for me! (And why HR was tracking the results).

Banking - In 5th Place

Capital One: We're No. 5!

Excerpt:

The credit card bank's planned purchase of online banker ING Direct will make it the fifth-biggest U.S. deposit gatherer.

So says SNL Financial, which notes Thursday that the $9 billion deal will vault Capital One (COF) past PNC Financial (PNC), U.S. Bancorp (USB) and the TD Bank unit of Toronto-Dominion (TD) on the list of the biggest U.S. banks by deposits (see chart, right).

So the deal makes Capital One a lot bigger,

PNC to buy RBC Bank (USA), move up to fifth-largest U.S. bank

Excerpt:

PNC Financial Services Group, parent to the Philadelphia region’s third-largest bank by deposits, said Monday it will acquire RBC Bank (USA), the U.S. retail banking subsidiary of Royal Bank of Canada, for $3.45 billion.

The deal would be for 97 percent of book value, or a $112 million discount of RBC’s tangible book value, and will give Pittsburgh-based PNC a significant footprint in the Southeast.

RBC has roughly $25 billion in assets and 424 branches in North Carolina, Florida, Alabama, Georgia, Virginia and South Carolina. After the deal’s expected close in March 2012, the combined company will have 2,870 branches, ranking it fifth among U.S. banks, up from the No. 7 spot.

Comment: Capital One was last week ... PNC over the weekend. About Royal Bank ... on my potential buy list.

First article ranks the # 1-4 banks as:

1. Bank of America
2. Wells Fargo
3. JPMorgan Chase
4. Citigroup
   
   

Canada: Conservative Banking

Canadian Exceptionism

Excerpt:

Canada is one of the few countries without a major banking crisis. Weirdly, this was also true in 1930. I've seen this list of the success factors for Canadian banks in several places. I want to believe it, but . . .

..it doesn't seem to be as simple as "Canadian banks are more tightly-regulated".

1. We never had restrictions on interstate banking, so Canadian banks spread their assets and liabilities across Canada. (So it doesn't matter if a local housing market goes bust).
   
2. We don't have Glass-Steagal. The investment banks joined the retail banks some years ago.
   
3. We don't have mortgage interest deductibility from taxes. So paying down your mortgage is a tax-free investment. So most people want to pay down their mortgages.
   
4. (Except in Alberta), mortgages are fully recourse. You can't just walk away from a negative equity home and hand the keys to the bank; the bank will come after you for the difference.
   

I wouldn't describe those differences as "Canada is more regulated". But we do have higher capital requirements. And mortgages over 80% must be insured (mostly by the government-owned CMHC).

Comment: HT: Why are Canadian banks left unscathed?

We have stock in Bank of Montreal (BMO). Other major Canadian Banks:

• Canadian Imperial Bank (CM)
  
• Royal Bank of Canada (RY)
  
• Toronto Dominion Bank (TD)
  

You don't see these every day!

Woman Brings Fake $10,000 Bill to Mass. Bank

Excerpt:

A $10,000 bill? The staff at a Massachusetts bank just wasn't buying it.

The suspicious staffers quickly determined that the bill a woman brought into the Lowell bank was a fake.

Michael Gallagher, risk management director at Enterprise Bank, tells The Sun of Lowell that it is believed there are only about 300 $10,000 bills left, and most are in the hands of collectors.

The bank called police, who in turn notified the U.S. Secret Service, the agency that investigates counterfeiting.

Comments: Wiki with images: Large denominations of United States currency. The largest bill I've ever seen is a $ 100. A couple of times a year my neighbor gives me a $ 50 (I mow her grass and plow her driveway! (By the way ... not required! What a dear neighbor I have!)).

Top 5 Banks

Top 5 U.S. banks

Excerpt:

Assets Total equity Tier 1

in billions ratio*

Bank of America $2.3 trillion $233 11%
Charlotte, N.C.

J.P. Morgan Chase $2.0 trillion $171 12%
New York

Citigroup $1.9 trillion $155 12%
New York

Wells Fargo & Co. $1.2 trillion $121 10%
San Francisco

U.S. Bancorp $283 billion $29 10%
Minneapolis

*Compares bank capital to risk of its assets. Well-capitalized banks have a Tier 1 Capital Ratio of 6 percent or more.

Comment: More on US Bank

Big deal ahead for U.S. Bancorp?

Excerpt:

Since Davis took the helm of U.S. Bancorp in 2007, the Minneapolis-based bank has acquired four small banks and thrifts with combined assets of $35 billion -- far less than some of his big-bank counterparts. Davis avoided a major deal while Bank of America, J.P. Morgan Chase, Wells Fargo & Co. and Pittsburgh-based PNC Financial Services all made headline-grabbing acquisitions that, in some cases, enabled them to double in size.

Yet even Davis, a CEO known for his caution, seems to be warming to the idea of a larger transaction. At a conference last week, Davis promised investors he would not miss an opportunity to do a deal if a good one came along. "If it's small or big, if it's bank or payments or trust, we will not miss a single opportunity," he declared.

Though Davis later tempered his remarks, saying he would "be just fine" if U.S. Bancorp did not do a major deal, his comments set off speculation that a large transaction might happen by year's end. Wall Street analysts rattled off a long list of banks with depressed market values that would make for likely takeover targets. They include SunTrust Banks Inc. of Atlanta, Regions Financial Corp. of Birmingham, Ala., KeyCorp of Cleveland, Fifth Third Bancorp of Cincinnati and Zions Bancorp of Salt Lake City.

Comment: We've had 2 banking relationships with US Bank. 1st was a Visa Buxx card that we used to give money to our daughter when she was in college; 2nd was our mortgage. Positive experiences with both.

Machinations in the Vatican Bank

Money Laundering Inquiry Touches Vatican Bank

Excerpt:

Italian monetary authorities said Tuesday that they had impounded $30 million from the Vatican bank and placed its top two officers under investigation in connection with a money-laundering inquiry. The announcement amounted to another potential storm confronting the papacy of Benedict XVI, who is struggling with the effects of a priestly abuse scandal.

In a statement, the Vatican expressed “perplexity and surprise” that the bank’s chairman, Ettore Gotti Tedeschi, and its director general, Paolo Cipriani, had been placed under investigation. It added that it had the “greatest trust” in the two men and that it had been working for greater transparency in its finances.

The investigation is the first into the Vatican bank since the early 1980s, when it was implicated in the collapse of an Italian bank whose chairman, nicknamed “God’s banker,” was mysteriously found dead, hanging from Blackfriars Bridge in London.

Italian authorities have historically shied away from investigating the Vatican’s finances — owing as much to a sense of deference to the church as to the complex relationship between Italy and the Holy See, a sovereign state.

“The era of omertà is over,” said Gianluigi Nuzzi, the author of the 2009 best seller “Vaticano S.p.A.,” using the Italian term for the code of silence. S.p.A. stands for joint-stock company in Italian.

The investigation was undertaken because of a new practice by the Bank of Italy. Aimed at preventing financing of terrorist groups and money laundering, it requires all foreign banks operating in Italy, including the Vatican bank, to provide detailed information about the origins of the money they transfer.

Officials said Mr. Gotti Tedeschi and Mr. Cipriani were under investigation for having failed to adequately explain the origins of funds transferred from one account held by the Vatican bank to two others it holds. They said that the seizure of money was preventive and that neither man had been formally charged or placed under arrest. In the coming months, a judge is expected to rule on whether to proceed with the investigation.

Comment: Life imitating art - Godfather 3. Plot point:

Michael busies himself with the biggest deal of his career: he has recently bought up enough stock in Immobiliare, an international real estate holding company known as "the world's biggest landlord", to control six of the 13 members of the company's board of directors. He now makes a tender offer to buy the Vatican's 25% interest in the company, which will give him majority control. Knowing that Archbishop Gilday, who serves as head of the Vatican Bank, has run up a massive deficit, he offers to pay $600,000,000 to the Bank in exchange for the shares.

Shrinking Banks

A Capital Mistake

Excerpt:

... the nation’s banks are shrinking. At the end of 2008, Federal Deposit Insurance Corporation data showed that the American banks it insured — around 8,000 of them — had $13.84 trillion in assets. At the end of the second quarter of this year, they held a total of $13.22 trillion — a decline of $620 billion.

Fewer assets means fewer loans. From the summer of 2008, just before the financial crisis, to the present, business loans made by American banks declined from $1.49 trillion to $1.175 trillion, a drop of some $315 billion. Mortgages on one-to-four-family homes declined from $2.155 trillion to $1.874 trillion. Over all, the total value of loans in the American banking system has fallen from $7.996 trillion to $7.395 trillion — a drop of $600 billion.

There are many reasons for this. The size of the credit market is smaller today because banks will no longer make risky loans to marginal borrowers. Additionally, commercial companies have seen their cash flows improve because the economy is still growing (albeit too slowly). Therefore, corporations do not need as many bank loans.

However, the main reason bank lending has declined may be that the banks’ capital requirements have increased, and this encourages them not to lend. They certainly don’t have a shortage of capital. The F.D.I.C.’s data shows that the common equity in the banking system — the amount of money invested — as a percentage of all bank assets is now at the same level as it was in 1937. If one calculates what is called the banks’ “capital ratio,” which is done by adding the banks’ reserves and common equity and then dividing by the assets, it appears that the banking system has more capital than at any time since 1934.

Yet banks are sitting on the money rather than getting it out into the economy. Why? Because ever since the collapse, politicians and policymakers have been insisting that risky lending by the banks was the prime culprit, and have demanded that banks build up a cushion of capital to protect the system.

In the past 18 months, in order to meet these demands for higher capital ratios, banks have raised some $192 billion by selling stock — despite declining prices — and attempting to grow earnings. But this has not been enough for the regulators. The banks have also had to shrink their balance sheets — that is, to have fewer loans outstanding.

The trouble with overcapitalizing banks is that when banks cut back on loans, they start a domino effect. When a loan is paid off, money is subtracted from the overall money supply. And while economists can debate whether a growing money supply is necessary for economic growth, it is very unusual for a nation’s economy to grow when its money supply is shrinking.

Comment: A somewhat technical read but interesting. It's related to Fractional-reserve banking.

The dominance of mega-banks

A City Feels the Squeeze in the Age of Mega Banks

Excerpts:

Bank of America, J.P. Morgan and Wells Fargo now have 33% of all U.S. deposits, up from 21% in mid-2007—the fastest shift of such a large chunk of deposits in U.S. history. Much of the gain came from their acquisitions of Countrywide Financial Corp., Washington Mutual Inc. and Wachovia Corp., respectively.

The three huge banks made 57% of all home mortgages in the first quarter, up from 28% in 2008, according to Inside Mortgage Finance, an industry newsletter.

...

Measured in loans and other assets, Citigroup Inc. and the three other giants had $7.7 trillion as of March 31, up 56% since the end of 2007. Their combined assets are nearly twice as big as the assets of the next 46 biggest banks, according to SNL Financial, a research firm in Charlottesville, Va.

By providing more branches, ATMs and features like free online bill payment, the newly consolidated banks have made many basic services more convenient and cheaper for customers. The banking giants often offer lower mortgage rates and other types of loans than smaller players.

"At the end of the day, consumers and small businesses will benefit" from consolidation, says Bank of America executive Mark Hogan, who runs retail branches on the East Coast.

To keep their costs down, however, the big banks generally pay lower rates on certificates of deposit and other types of savings products than the small players, meaning less interest income for millions of depositors.

Comment: Discerning consumers have options in the IngDirects, LendingTrees and PenFeds. TCF is a good local hometown bank. I work for one of the mega-banks. It's a great place for full banking services. But we did our last home re-finance with LendingTree. We have the bulk of our savings at ING. We have credit card relationships with two other banks. Our last auto loan was with the Postal Credit Union. Consider earlier post Banking oligopoly

Observations on Obama's Bank Tax

Obama calls for bank tax as next step in reform

Excerpt:

Obama wants to slap a 0.15 percent tax on the liabilities of the biggest U.S. financial institutions to recoup the costs to taxpayers of the financial bailout.

"We need to impose a fee on the banks that were the biggest beneficiaries of taxpayer assistance at the height of our financial crisis -- so we can recover every dime of taxpayer money," Obama said in his weekly radio and Internet address.

Obama, who is in Canada to attend gatherings with leaders of the world's biggest economies, also used the address to welcome a deal by congressional negotiators on a historic rewriting of U.S. financial regulations.

Obama hopes to tout the changes as a model for other countries at the Group of 20 summit on Saturday and Sunday.

"I hope we can build on the progress we made at last year's G20 summits by coordinating our global financial reform efforts to make sure a crisis like the one from which we are still recovering never happens again," he said.

The financial regulation package would set up a new financial consumer watchdog, create a protocol for dismantling troubled financial firms and mandate higher bank capital standards, with the aim of avoiding a repeat of the 2007-2009 financial meltdown.

The bill, marking the biggest changes to the financial regulatory structure since the 1930s, still needs final approval from both chambers of Congress.

Obama, who hopes to sign the legislation by July 4, urged Congress to push the bill "over the finish line."

With congressional elections looming in November, Obama hopes the financial reform and the bank tax idea will resonate with U.S. voters furious over Wall Street risk-taking that led to the financial meltdown and the worst recession in decades.

Some lawmakers have indicated they are receptive to the bank tax proposal but others have questioned whether it is fair to impose the tax on banks that have already repaid money from the Troubled Asset Relief Fund to make up for losses by American International Group Inc and General Motors.

Financial companies with more than $50 billion in assets and hedge funds with more than $10 billion in assets will be hit with the new levy upon enactment and lasting until 2020.

Observations:

1. Many banks (and most of the large ones - eg Wells Fargo) have already paid back the TARP funds with interest
   
2. Some banks - Wells Fargo being one - resisted taking TARP funds in the first place but had them forced on them for the good of the economy
   
3. All business taxes ultimately are born by the populace.
   
4. What about GM ... (Government Motors)? They were on the receiving end of TARP and have not paid it back and probably never will! Speaking of GM ... my little retired mother lost all of her investment in GM. Talk about taking it from the little old lady!
   
5. And what exactly wasteful way will Obama spend this increase in revenue?
   
6. End in 2020? Like the telephone tax it will live on
   
   
   

Tax the big banks?

On Hill, Geithner Makes Case for a Bank Tax

Excerpt:

Timothy F. Geithner, the Treasury secretary, urged Congress on Tuesday to impose a 10-year, $90 billion tax on the largest financial institutions to recoup the costs of the 2008 bailouts. But he faced skeptical questions from lawmakers on the design and purpose of the fee.

The administration proposed the tax, which it calls the Financial Crisis Responsibility Fee, in January, amid public anger over the bank bailouts. The tax is not part of the overhaul of financial regulations being debated by the Senate.

At a Senate Finance Committee hearing on Tuesday, officials from the American Bankers Association and the Financial Services Roundtable sharply criticized the proposal. While lawmakers did not reject the idea outright, some questioned its impact on consumers and small businesses, as well as the timing.

“This is a simple and fair principle: banks, not the taxpayer, should pay for bank failures,” Mr. Geithner said. “And this is a principle with ample historical precedent.”

...

Even so, the math of the new tax proposal is complicated. Banks have largely repaid their share of the bailouts, known as the Troubled Asset Relief Program, and taxpayers are expected to actually make a profit from the federal rescue. In contrast, other recipients of aid from the program — notably General Motors, Chrysler, Fannie Mae and Freddie Mac — might never be able to repay and would not be affected by the fee.

“It’s no surprise that bank institutions are not enthusiastic about the proposal,” said Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee.

“We need to understand the best way to design the tax so that it’s fair and achieves its purpose,” Mr. Baucus said. “We need to understand who should pay the tax, and we need to understand the impact the tax would have on small businesses and the economy.”

Senator Charles E. Grassley of Iowa, the top Republican on the committee, called the fee an excise tax, as he did in a previous hearing, and urged that the proceeds from a tax be used to reduce the deficit, suggesting that he was open to the notion.

“I completely agree that taxpayers should be paid back every penny of TARP losses,” Mr. Grassley said, while adding that the bailout legislation called for calculating those losses in 2013, not now.

Mr. Grassley added: “If a TARP tax is imposed and the money is simply spent, that doesn’t repay taxpayers one cent for TARP losses. It’s just more tax-and-spend big government, while taxpayers foot the bill for Washington’s out-of-control spending.”

As proposed, the fee would apply to financial institutions with more than $50 billion in assets and that were eligible for an array of emerging assistance programs, including the TARP and lending programs set up by the F.D.I.C. and the Federal Reserve. American subsidiaries of foreign-owned banks would also be covered.

Comment: Let's take a bank like Wells Fargo. It did not want to take the TARP money but did at the government's insistence. Then paid it back with no loss to the government. And it should pay a tax for this? See my earlier post Misperceptions on Wells Fargo and the TARP

Strong banks .... weak banks

Banks at risk of going bust tops 700

Excerpt:

More than 700 banks, or nearly one out of every 11, are at risk of going under, according to a government report published Tuesday.

The Federal Deposit Insurance Corp. said that the number of banks on its so-called "problem list" climbed to 702, its highest level since June 1993.

The number of banks under scrutiny by regulators has moved steadily higher since the recession began. Just 76 financial institutions were on the list in the fourth quarter of 2007.

Banks that end up on the problem list are considered the most likely to fail because of difficulties with their finances, operations or management.

Still, few of the lenders that are on the list actually reach the point of failure. In fact, just 13% of banks on the list have been seized and shuttered by regulators.

The names of the banks on the list are never made available to the general public by regulators out of fear that depositors at those institutions may prompt a so-called "run on the bank."

Comment: Interesting graphic from the WSJ: Tracking Bank Failures. This morning at breakfast I was reading yesterday's WSJ (paper edition). An article stated that Wells Fargo and JP Morgan Chase are very strong banks. Can't find the link but found the article of interest.

John Stumpf: no more acquistions for now

Big 3 won’t buy failed banks

Excerpt:

In an interview with Atlanta Business Chronicle, John Stumpf, president and CEO of Wells Fargo, said the San Francisco-based financial services conglomerate would likely not be an acquirer in a regulator-assisted deal in Georgia or anywhere else.


“To the extent we participate in the consolidation of [the banking industry], our No. 1 job, No. 2 job and No. 3 job is getting Wells Fargo and Wachovia merged and do it exceedingly well,” Stumpf said Nov. 19 following meetings in Atlanta with top clients and regional management. (See Stumpf interview, Page 4A.)

Wells Fargo (NYSE: WFC) acquired Wachovia in October 2008 and is grappling with the Charlotte, N.C.-based bank’s challenged loan portfolio. Industry watchers said the $1.3 trillion-in-assets mega-bank has its hands full, integrating Wachovia’s 3,300 branches, extensive business lines and dealing with legacy Wachovia’s rocky loan portfolio.

“We’re not going to play in the consolidation of the market unless it is very late in [traditional] merger activity, or if we are invited in some way [by regulators],” Stumpf said. “Otherwise, we’re saying grace over all the things we can say grace over right now.”

Wells Fargo/Wachovia is the second-largest bank in metro Atlanta.

Comment: Several more years before Wachovia completely merged!

Fiserv: "a faster, easier, more convenient way to send mone"

Money Transfers Between People Could Get Easier Soon

Excerpt:

The financial services technology provider Fiserv announced this week that it was starting a money transfer service for banks and credit unions that already use its online bill pay system. It said it expected the customers would be able to use the new service as early as the first half of next year. The announcement comes as PayPal is also seeking new ways to use its system.

Here’s how Fiserv’s service is expected to work: Customers of participating banks will be able to make next-day transfers of funds to the accounts of anyone who has enrolled in the service at his or her own bank or at the service’s public Web site, which doesn’t exist yet. To make the transfer, customers would just need the e-mail address or mobile phone number that the recipient used to sign up for the service and the transfers could be made online or by cellphone.

“The industry right now is ripe for this kind of service,” said Erich Litch, general manager of customer services at Fiserv. “We are seeing a demand by consumers for a faster, easier, more convenient way to send money.”

Comment: INGDirect has money transfer to accounts outside of their bank. I typically use Paypal or write an Electric Orange check. All very convenient.

Banking: Common sense fee adjustments

Chase and Bank of America Revise Fee Policies

Excerpt:

Bank of America said it would allow current customers to turn off the ability to spend when their account hits zero, starting Oct. 19. Next June, the bank plans to limit the number of times each year that current customers can overdraw their accounts when using a debit card at a store. It will let new customers choose whether they want overdraft protection when they are opening their account.

Chase plans to eliminate by the first quarter of next year a common industry practice that enraged many consumers. Instead of lumping a day’s worth of debit card and A.T.M. transactions together and then processing the highest amounts first — a practice that has caused large numbers of consumers to overdraw more quickly and pay more fees — it will credit the transactions chronologically. Chase also plans to allow customers to opt out of overdraft coverage.

Comment: Commendable moves

Updated - Wells Fargo also makes changes (source)

Wells Fargo today announced changes to its overdraft practices for Wells Fargo and Wachovia customers. Wells Fargo will eliminate overdraft fees for customers when they overdraw their accounts by $5 or less and will charge no more than four overdraft fees per day. In addition, Wells Fargo and Wachovia customers will be able to opt out of overdraft coverage, meaning customers can specify that they don’t want their transactions authorized into overdraft if funds aren’t available to cover the transaction.

Baking, banking and two big lies

Baking, banking and two big lies


Comment: No excerpts but worthwhile read.

The First National Bank of Orwell

Vermont Bank Thrives While Others Cut Back

Excerpts:

While many of the nation’s large and midsize banks are staggering under the weight of bad mortgages piled up during the housing boom, the First National Bank of Orwell, Vermont’s smallest bank, founded in 1832, is having its best year in recent memory. Loans are up 22.6 percent from a year ago, and deposits are up 7 percent in the same period, Mr. Young said. The bank has $36.5 million in assets.

“If the banks maintained the lending standards that they had established in the past, and had not and did not buy a lot of securities from Fannie Mae and Freddie Mac, they’ve got no problems and they’re sound,” said James F. Gatti, a finance professor at the University of Vermont.

“There is a value to sticking to your knitting, if you will,” Mr. Gatti added. “And I think banks that did will prosper, and prosper nicely, in the next few years.”

...

First National, whose main branch is next to a village store where local residents sit on the porch, drink coffee and chew the fat, has stayed successful because its employees know the area and their customers.

“Having the borrower sit in front of us is very meaningful,” Mr. Young said. “We’re not massive brokers, trying to underwrite a loan from the 55th floor of an office somewhere. There’s serious value in looking someone in the eye and understanding what their drive is, where they’re coming from and how serious they are about the project.”

The employees at the branches here and in neighboring Shoreham also know where a building project is and what it looks like.

“We benefit from knowing what house they’re talking about, what shape it’s in and what neighborhood,” Mr. Young said. “We benefit from a very detailed knowledge of our community, its people and its geography.”

Many times, the project is on one of the dairy farms that dot the verdant, rolling hills here. Or a couple are asking for a mortgage to buy their first home. No matter who the prospective borrower is, the bank requires a 20 percent down payment for every loan, Mr. Young said.

Comment: It's that face to face, know the customer, know the community that I like about the First National Bank Of Orwell. Apparently they do not have a website!

Banking oligopoly

Just 3 ‘superbanks’ now dominate industry

Excerpt:

Several of the nation's biggest banks have failed or been absorbed by healthier institutions, leaving three giant "superbanks" with an unprecedented concentration of market power: Bank of America, JPMorgan Chase and Wells Fargo.

Comment: My own bank strategy: Have a primary bank and an Internet bank. A good Internet bank is IngDirect. I love the work "oligopoly", by the way! Just say it aloud about 5 times ... a fun word to say!