AMERICAN BANKER - Find and Nurture Your Biggest Fans

Customer satisfaction is a valuable measure for any business, yet it is also a rather blunt yardstick. That's because "satisfaction" is a broad term that can include someone virtually indifferent to the bank but not motivated to leave, to someone very happy who wouldn't consider switching. Banks are keying into the distinctions within satisfaction, and are focusing their attention on the so-called "advocates" among their clientele; these customers not only buy more products and services and do so more often than other customers, but they also recommend the institution to friends and family.

There's value in keeping these customers advocating, and identifying the triggers that move other customers into the advocates category. According to J.D. Power and Associates, for every one million customers a bank has, a five percent increase in the number of customers shifting from "modestly committed" to "highly committed" can lead to an additional $1 billion in deposits. These "free sales-agents" can also be a counterweight against churn, which is between 10 and 12 percent at most banks.

To understand these advocates and what makes them tick, some banks are turning to enterprise feedback management (EFM), a technology that started as a way to rationalize the often hundreds of surveys a bank puts out every year. But today leading EFM providers are perfecting more sophisticated "customer listening" that can grab and analyze unsolicited chatter about a bank from social networking sites, blogs and other Internet venues. "Knowing what the customer behavior actually is is much more telling than just asking them," says Ron Shevlin, a senior analyst at Aite Group.

Surveys are still important, says Ed Thompson, a vp at Gartner, but that's just a component of today's EFM. Tapping multichannel feedback is one of the two underlying trends driving EFM today. The other is banks' desire for real-time, or near real-time, customer feedback, he says. In the past, the process of gathering, analyzing and pushing customer feedback to front-line employees could take months, which meant that problems identified by the source data were probably too far gone to remedy.

The MSR Group, a provider of customer experience monitoring systems that uses telephone, Web or interactive voice response, contacts customers within 24 to 48 hours of their bank interaction and delivers feedback to the bank's front line via performance monitors within 72 hours. MSR, which counts Compass BBVA, Bank of the West, and Huntington Bancshares among its customers, recently began offering an enhanced performance monitoring tool that includes audio of the customer. Listening to a customer "is much different than reading the verbatim. You can hear the sincerity and intonation," says CEO Richard Worick. "It also helps the bank employee prepare before the call, to know if this is an enormously upset customer. It arms them with intelligence to do a better job with problem resolution."

MSR provides Advocacy charting, Net Advocacy Rating, and Problem Resolution Tracking and Audit System. MSR also provides Key Driver Analysis, which analyzes data most critical to increasing advocacy scores down to the individual branch levels. This is critical, says Worick, since what turns ordinary customers into advocates is not uniform across the nation. In the East, speed at the teller line is paramount, while knowing the customer name is less important (and in some East Coast cities treated with suspicion). In the Midwest, meanwhile, speed is less a concern than knowing the customer's name.

There are several hundred vendors in the EFM space, says Gartner's Thompson, but one with a sizable presence in the banking industry is Allegiance, which helps financial institutions continually collect, manage and analyze their customer, member and employee feedback, as well as measure, manage and grow loyalty and engagement. "A lot of EFM vendors only do surveys, but we have the ability to scoop in unsolicited feedback - all the rest of that chatter whether it be compliments or complaints," says Chris Cottle, vp of corporate marketing.

Melissa Wagner, market research manager at Texans Credit Union, says Allegiance provides insight into employee attitudes and a new appreciation for how those attitudes shape customer interactions and thus customer loyalty and advocacy. "There's a spillover effect. When the employees feel better about their jobs, the overall engagement with customers increases," she says.

But perhaps most helpful is seeing what problems to focus on first. "You can't approach all your flaws at once, or you'll only create more flaws," she says. Allegiance "points us in the right direction - that solving this problem will have the most impact and so this is where you should focus and have the biggest impact on the bottom line."

AMERICAN BANKER - Former Fed Chief Sees 'Too Big to Fail' Inescapable

WASHINGTON -- Alan Greenspan spent years denying "too big to fail" even existed and yet on Wednesday the former Federal Reserve Board chairman argued there is no escaping it.

Not even a constitutional amendment would prevent the government from finding a way to save the largest financial firms, he said.

Exhibit A is Fannie Mae and Freddie Mac, which during his years at the central bank Greenspan argued could fail. But Wall Street believed otherwise and gave the government-sponsored enterprises cheap funding until ultimately the government stepped in to bail out the companies last September.

"Our government has lost credibility on this issue," Greenspan said in a speech to the American Enterprise Institute. "I don't think you can pass legislation today that would say the government cannot bail out financial institutions because the market would say, 'We didn't believe you previously, so why should we believe you today?' "

Greenspan's comments came the same day that his successor, Ben Bernanke, spent the morning on Capitol Hill noting glimmers of hope that the financial crisis might be easing and investor confidence returning to the banking sector.

As Bernanke and other policymakers work to prevent a recurrence of the financial crisis, Greenspan said many of their efforts could be for naught. He labeled "too big to fail" as a problem, in effect, with no acceptable solution.

"All efforts, of which I am aware, at addressing TBTF have drawbacks," he said.

Still, he described a few tactics that could blunt the impact of this reality.

"At a minimum, we will be forced to offset the TBTF borrowing cost advantage by imposing a comparable cost -- such as increased capital requirements of a sufficient magnitude to offset the implicit government-created guarantee, a tricky calculation at best."

An alternative, he argued, would be to rewind several decades and require nonbanking business to be conducted only by partnerships.

"As partnerships, investment banks were an exceedingly cautious bunch," he said. "It is inconceivable that, as partnerships, investment banks would have taken the enormous risks that turned out so badly this decade."

But such a structure still leaves something to be desired in a system where investment and commercial banking are intertwined.

"One problem with turning back the clock in this way is that commercial banks, for good reason, are currently authorized to engage in investment banking," he said.

"It is possible that financial nonbanks organized as partnerships might simply convert to bank charters so they could more safely (for them) take on risk."

Greenspan said he was "puzzled" that more banks have not been formed during the financial crisis.

"With interest rate spreads so wide, a new bank without a legacy of toxic assets could be quite profitable," he said.

In an appearance that lasted nearly an hour, Greenspan's main point was that expectations of a systemic risk regulator should be realistic.

Pointing to weaknesses in the United Kingdom's Financial Services Authority, the Basel Committee on Banking Supervision and the regulatory structure in this country, he said no supervisory framework can predict the next financial crisis.

"Such evidence of failure is common to every financial crisis and points up to the broader problem that forecasting the onset of financial crisis, except by chance, has always proved to be beyond our reach," he said.

AMERICAN BANKER - Green Dot Fee Plan Could Signal Prepaid Evolution

DALLAS -- Green Dot Corp., one of the oldest and biggest players in the prepaid card market, is about to change its fee structure drastically, and by doing so, it could accelerate the maturation of the young prepaid industry.

The overhaul, following Wal-Mart Stores Inc.'s price cuts four months ago, will give Green Dot cardholders an incentive to reload and reuse their cards after the initial amount has been spent.

In August, Green Dot will reduce its up-front fees for all consumers, and it will start waiving its monthly maintenance fees for consumers who use their cards regularly, executives said Tuesday.

"One of the problems with a lot of the prepaid products out there is that it rewards your worst customers," said Steve Streit, Green Dot's founder and chief executive. "If you buy a card and use it once and throw it away, you never pay any monthly fee. If you buy the card, really like it and really use it and keep it for a year and a half, the way a lot of our customers do, you're paying a lot of money just to make sure that it works."

Like an airline's frequent flier program, Green Dot's new pricing structure will reward repeated use, Streit said. "If you're a regular user of the card, the miles rack up. We really want this to be a product that they use over and over, and fees never become a material consideration of whether they use it or not."

He spoke to American Banker during the fourth annual Underbanked Financial Services Forum. (The conference was presented by the Center for Financial Services Innovation, a nonprofit arm of Chicago's ShoreBank Corp, and SourceMedia Inc., the parent company of American Banker.)

Green Dot, which markets its own cards and provides reloading and support services for Wal-Mart's MoneyCards, may not have the retailer's name recognition. But Streit said his Monrovia, Calif., company has sold more than 10 million of its cards, which are sold mostly in grocery stores and other retailers, since 2001 and has "several million" active accounts.

When Wal-Mart reduced its up-front, reloading and monthly maintenance fees to $3 each in February, it said it was on the way to having 2 million customers. Kathy Barney, the president of H&R Block Inc.'s bank, said in an interview Tuesday that it issued about 2.7 million of its prepaid Emerald cards this past tax season.

Mark Troughton, Green Dot's president of cards and network, said its up-front fee will be "significantly lower than it is today." In addition, "if you're a regular user, it will be completely free from ATMs to back-end fees," including monthly fees. However, all users will still have to pay the up-front free, as well as reloading fees if they reload their cards through channels other than direct deposit. "That's not really a card fee. That's a retailer fee."

Green Dot would not say how much its reduced up-front fee will be or how the company will determine whether a cardholder is a regular user, beyond "a couple of tests," as Troughton put it. "It's really easy. … You don't have to have lots of money. If you make this card your primary vehicle, that's the mind-set with which we approached the pricing model. For us, it's about building a portfolio of long-term customers."

On July 1, nFinanSe Inc. will cut the up-front price of its reloadable prepaid card by $2.95, to $3, the Tampa company said Wednesday. The other fees -- a $2.95 monthly maintenance fee and $2.95 reload fee -- will not change. Direct deposit and customer service will remain free, nFinanSe said. (Some prepaid providers charge consumers to call a customer service center.)

"When Wal-Mart went to $3, we had thought all along that we would be reducing our price," Jerry R. Welch, nFinanSe's chairman and CEO, said in an interview Wednesday. "We had to get the cards priced down to a level where you can really get attention in the marketplace."

The lower prices "will really stimulate impulse buying of prepaid cards," he said. "Those higher prices" for the cards "really don't encourage trial and usage."

Russell Simmons, the music industry mogul whose Rush Communications Inc. offers the prepaid RushCard, acknowledged Wal-Mart's influence in April as he discussed plans to introduce lower-priced versions of his cards. (None have yet appeared.)

Green Dot dismissed the suggestion that it was reacting to Wal-Mart's repricing. "I don't think so," Troughton said. "It's pro-consumer. It's alignment" with consumer needs.

But observers quickly noted a "Wal-Mart effect" on the prepaid industry.

"Given that Wal-Mart has lowered its fees, we're seeing downward pressure on fees generally," said Rachel Schneider, the innovation director for the Center for Financial Services Innovation. "And it may not be purely a Wal-Mart phenomenon. It may be that there's increased competition in the marketplace and generally growing prospects for prepaid cards, and the industry may be at an inflection point where consumers are starting to evaluate different card offerings versus each other in a way they hadn't in the past."

Similarly, John Grund, a partner at First Annapolis Consulting Inc., said he would view Green Dot's decision "in the context of Wal-Mart's repricing," but he also said the plan is "just a natural stage of evolution" in the industry.

"We'll see the pack start to separate," Grund said. "It wouldn't be unusual to see some of the big guys go for some more intense competition to further complete the land grab in the prepaid space."

Fees at H&R Block, which already waives most up-front and monthly fees for active cardholders, are unlikely to change soon.

"Every year we re-evaluate them," said Amy Roberts, the Kansas City, Mo., tax preparation company's director of product development for card programs. "Going into next year … we actually just did our analysis, did a comparison against what we consider our key competitors in the space, and we think we're in a great competitive position with our fee structure, and it still remains a great value."

(According to its Web site, after three months of inactivity, H&R Block charges a $2.50 monthly maintenance fee.)

Roberts would not say how many cardholders reload and reuse their Emerald cards. However, "the population that is" doing so "is reloading $4 million per day," she said. "And every year we see it increase. This past tax season we saw a 20% increase in the reload rate. People who reload it are extremely loyal. We haven't seen them go anywhere."

Schneider said that if Green Dot or another large player were to waive reloading fees, it would have a bigger effect on the industry.

Still, "retention is one of the major challenges to prepaid companies," and Green Dot's plan "strikes me as an innovative way to increase retention, because it's directly focused on their existing customer base and I see how that would potentially drive longevity," she said. "They're trying to lower fees selectively for the customers they want to keep. So that may be a good strategy in terms of segmenting the market and offering the right pricing structure for different kinds of usage."

AMERICAN BANKER - In Cash Management Equation for Wells Fargo, 2 + 2 = 5

Wells Fargo & Co. has provided a detailed look at its plan to integrate its cash management operations with those of the former Wachovia Corp., a process that will eventually combine two units with little overlap into a single business with a coast-to-coast presence.

Wells Fargo is strong in the West; Wachovia was focused on the East Coast. The San Francisco banking company's products are known for their features, and the Charlotte banking company it acquired last year has a good reputation for service.

The combination, according to Danny Peltz, a Wells Fargo executive vice president and the head of its treasury management group, has few redundant parts and plenty of room to expand.

"I'm looking at this as a growth opportunity, not a cost-cutting exercise," Peltz said in an interview. "We're very thoughtful and deliberate about making changes. This is about using a scalpel, not an axe."

The goals, he said, are to use Wells Fargo's existing cash management portal, Commercial Electronic Office, to deliver a unified product line to customers and to minimize any potential disruption to clients during the transition. Wells said it expects to shift all of Wachovia's automated clearing house volume to a payment-processing joint venture currently in development with Bank of America Corp. Check-image archiving, however, which is viewed as noncore, is likely to be outsourced. And given the scope of the effort, Peltz said the integration project will likely require "several years."

Analysts said that the two operations are complementary.

"They're nearly mirror images of each other on the two coasts," said Chris McDonnell, a vice president at Greenwich Associates, a financial services market research firm that focuses on cash management issues.

Both companies offer a full range of cash management products and services, but they have little duplication in their territories or customer sets.

David Fox, a managing director at Greenwich Associates, said that such a pairing is unusual. Most acquisitions bring together businesses with some redundancies, in terms of customer base, product line or both. "Wells Fargo probably had more features around many of their products, and Wachovia had more servicing elements around their products," he said. "This really is a case where two and two add up to four and could approach five."

Though the deal creates a national-scale cash management player, Fox said Wells still lacks the international reach of its largest competitors. For large corporate clients, with international cash management needs, "the Citi and the Chase and the Bank of America will continue to have some advantages that even economies of scale won't overcome."

Peltz said Wells plans to expand its international presence by fortifying its correspondent relationships. "We will be expanding our organization virtually through a network of partnerships around the world," he said.

David C. Robertson, a partner at the consulting firm Treasury Strategies Inc., said that the new Wells would be a stronger competitor to JPMorgan Chase & Co. and Bank of America in domestic cash management. "You're going to have three deep-pocket competitors aggressively investing not only in their existing businesses but also investing in the new Web businesses of the future."

Wells expects the integration project to move slowly, Peltz said, "to minimize disruptions to" cash management clients' daily workflows, though he would not specify a timeline.

It made the first appointments for the new organization in January, he said, keeping most of the Wachovia management team.

Though Wachovia corporate clients ultimately will move over to Wells Fargo's core processing system, Peltz said, "no customer account numbers are going to have to change as a result of the merger." Wells also has decided to make no change in lockbox clients' post office box addresses, he said.

Wells plans to use its Commercial Electronic Office as the cash management portal for the combined organization, though "some of the products and services will be from the old Wachovia and some will be from the old Wells," Peltz said.

The portal uses service-oriented architecture to provide a framework that will let Wells combine the 550 individual cash management products and services from the two companies, all connected with a common look and feel, said Peltz, who formerly was executive vice president of Wells' wholesale Internet and treasury solutions unit.

Greenwich Associates' McDonnell said Wells is wise to take its time. "This warrants several years because of the magnitude of the integration that has to take place," he said, noting that the Wells-Wachovia combination is one of the biggest deals ever in U.S. wholesale banking, ahead of JPMorgan Chase's acquisition of Bank One Corp. in 2004 and possibly matching, in inflation-adjusted terms, the Bank of America-NationsBank deal in the 1990s.

McDonnell said that prudence is also required because of the speed at which the deal came together. The marriage was part of a wave of megamergers prompted by failures or near-failures last fall at the top end of the banking industry.

To be sure, several of these deals have led to protracted planning projects. Another example is National City Bank and PNC Bank, which plan to operate as separate businesses at least through the end of 2009, their executives have said, though the two banks are now each beneath the umbrella of PNC Financial Services Group Inc.

Where changes are necessary, Wells has established "communications SLAs," Peltz said, borrowing a tech term for service level agreements that describe the company's efforts to give customers advance notice of changes in its processes or products.

For instance, if Wells Fargo decides it must change the file fields in the reports it provides to corporate treasurers, the banking company will give six months' advance notice of the specifications, he said, "more than adequate time to test between the bank and the customer."

For a product or workflow change, Wells promises to give clients two to four months notice, he said. And it will hold "Webinars" on the changes and offer online tutorials.

In the longer term, Wells expects to consolidate some back-office treasury operations, Peltz said.

For instance, he said, Wells plans to bring Wachovia's ACH processing onto the combined platform to be run by Pariter Solutions LLC, a joint venture that Wells formed in May 2008 with Bank of America. "Wells Fargo is going to be one organization," he said. "We will be operating on one ACH platform."

The original goal was for Wells and B of A to move to the shared platform by the end of 2010. Though Peltz would not commit himself to a target for moving the Wachovia volume, "obviously, the sooner the better," he said.

Likewise, Wachovia's in-house check image archive is likely to be transferred to the shared repository operated by Viewpointe LLC, which is used by Wells, 10 other large banking companies, the vendor Fiserv Inc. and soon the Federal Reserve banks. Though no final decision has been made, "I don't see us being an image archive," Peltz said.

Tech operations consolidations often bring the opportunity to cut staff, but Peltz would not discuss the outlook for treasury management jobs.

AMERICAN BANKER - Innovation's Mantra: Back to the Future

Now that exotic products are out of fashion, the next wave of banking innovation may well come from bread-and-butter staples.

Bankers hoping to distinguish themselves from their competitors will not find much of a market for the quirky but ultimately troubled offerings of the past few years. The pressure to be creative will still be there -- manifested through twists on traditional products.

"Right now the banking industry is very focused on the fundamentals: risk control, trying to make sure customer service is good," said Charles Wendel, the president of Financial Institutions Consulting inc. in New York. "But as banks become more confident, they will refocus on innovation, and it'll really come from what the customer wants, more than anything else."

Experts say that banking companies will look to develop reward programs to draw in deposits, and that links between deposits and other products will likely be enhanced. Bankers will also become more inventive about how and where to build branches, and features will be added to automated teller machines to attract the unbanked. Expect wealth management products to be linked more to insurance offerings to offer customers more guaranteed income streams.

And now that Congress has limited credit card companies' ability to raise rates on balances, issuers may develop "value-added" products providing additional benefits to the consumer and higher fees and revenue for issuers, said Frank Barkocy, director of research at Mendon Capital Advisors Corp.

Loan portfolios may be in for a revamp, too. But instead of new kinds of loans, bankers may try offering a wider variety of traditional lending products. James Bradshaw, an analyst at Bridge City Capital LLC in Portland, Ore., said companies burned by residential construction lending would find this particularly attractive.

Already, institutions like the $66 billion-asset Bank of the West in San Francisco are tweaking reward models to entice depositors.

Last month the BNP Paribas SA unit launched its Community Jumpstart Campaign, in which customers get $100 -- and encouragement to spend it locally -- provided they open a checking account and deposit at least $250 a month using direct deposit. "We didn't want to just give away money, so this lets our customers know how important our local communities are, and it encourages our customers to spend in their communities," said Andy Harmening, Bank of the West senior executive vice president.

He wouldn't say how many new accounts stem from the campaign, except to say the amount was "twice as many as usual."

Aaron Fine, a partner in the retail and business banking practice at Oliver Wyman Group, a New York management consulting unit of Marsh & McLennan Cos., said bankers will further link checking accounts, savings accounts and other products.

One such product is Virtual Wallet, an online account from PNC Financial Service Group Inc. "I think linkages across product types will become stronger, and banks will develop products that focus on helping customers better organize their payments and manage their money," Fine said.

Bankers may build on the capabilities of vendors like Mint Software Inc. that analyze customers' monthly bills and other expenditures to find ways to cut back spending and pay off debt faster, among other suggestions, he said.

But bankers will also likely develop offerings that link deposits to products such as mortgages, to offset monthly payments, Fine said. Such products are popular in England and Australia, but only a few U.S. firms offer them.

The $896 million-asset First PacTrust Bancorp Inc. in Chula Vista, Calif., offers a product that combines a mortgage, a home equity line of credit and checking and savings accounts. The more money the customer puts into the checking account, the larger the reduction in the loan's principal balance and the subsequent monthly finance charge.

"The main advantage to the customer is that it provides flexibility that no other mortgage product does," said Hans Ganz, First PacTrust's chief executive. "It benefits us in that we have a loan product that isn't just a commodity -- it's a relationship builder."

First PacTrust began offering the Green Account in 2005. As of March 31, it had $231.5 million of such loans on its books, or about 27% of its total loan portfolio.

On the wealth management side, Sean Cunniff, a research director in brokerage and wealth management services at TowerGroup Inc., an independent research firm owned by MasterCard Inc., said bankers might develop hybrid managed accounts that have an insurance component, so that at least a portion of the customer's monthly income is guaranteed.

"Banks are realizing that people want a guaranteed stream in income, and they're trying to figure out the best way to offer that," Cunniff said.

Tom Brogan, a research director at TowerGroup, said revamps are also likely for branch networks as deposit competition intensifies.

Bankers might put branches in strip malls, grocery stores or Wal-Mart locations, he said. "Right now those are the most likely places for in-store branches, but there's a possibility you'll see them in other big box retailers -- it wouldn't surprise me if we see some in Home Depot or a Lowe's."

Branch interiors may change, though don't expect an explosion of cafe models like those used by Umpqua Holdings Corp. or Washington Mutual Inc., Brogan said. (JPMorgan Chase & Co., which bought Wamu's banking operation, is retrofitting or closing the Occasio cafe-style sites.)

Instead, bankers are more likely to add features such as digital signs and videos, including those for use in three-way conversations between a customer, a branch employee and an off-site expert such as a loan officer, he said.

Nicole Sturgill, also a research director at TowerGroup, said banking firms will also add features to ATMs, such as the ability to accept prepaid cards from customers who do not have a checking account, so they can send money to others.

AMERICAN BANKER - More or Less: Branches' Role After the Meltdown

The future-of-branching debate -- "brick-and-mortar is dead!" "no, expansion is near!" -- is back on, but the two sides have more in common than they might think.

In one corner are the industry experts who forecast a post-meltdown reduction in the number of branches, saying executives have to close branches to raise billions of dollars in capital and return to profitability.

In the other corner are those who argue that if the near future will bring an emphasis on bread-and-butter banking, bankers will have to add branches to whip up deposits.

The predictions vary widely -- from roughly 10,000 closings to more than 1,000 additions over the next five years -- but everyone agrees on one thing: no matter what happens, the size, nature and location of the branches will change greatly.

"If there is one thing we have learned from this whole crisis, it's the importance of traditional banking, and nothing is more traditional than access to cheap core deposits," said Ken Thomas, the president of Branchlocation.com in Miami.

The two sides are surprisingly united on how to get those deposits.

Though stand-alone branches on street corners might still be superior in high-traffic locations, cost-conscious banks will increasingly shift to smaller branches in strip malls and in grocery and retail stores. Technology upgrades, such as automatic cash vaults and videoconferencing phones, will also reshape the landscape.

As of June 30 there were just over 99,000 U.S. bank and thrift branches, according to the Federal Deposit Insurance Corp.

Thomas said the number of branches in the country could top 100,000 in the next five years. Underperforming branches will be weeded out, Thomas said, but total numbers will increase to attract more deposits, particularly in high-growth markets fed by immigration, such as Southern California, Arizona and Florida.

Tom Brogan, a research director at TowerGroup Inc., an independent research firm owned by MasterCard Inc., is projecting a net gain of about 1,200 branches in the U.S. by 2013.

Banks will likely keep building smaller branches to save costs, Brogan said. A typical branch is currently about 3,500 square feet, and he expects that average to shrink to about 3,000 square feet. Strip mall branches and in-store branches typically cost $700,000 to $1 million to build, and stand-alone branches about $2.7 million each, he said.

"The main driver of branch usage is still convenience, so if I can spend the same amount of money on six or seven smaller locations as I do five, I can provide better, more convenient service to my customer base," Brogan said.

Fewer tellers will work at these sites, and banks will likely use more technology such as video phones to arrange conversations between customers and experts in mortgage lending or wealth management, Brogan said.

In interviews, a handful of bank officials backed up some of these arguments.

Richard Hartnack, the head of consumer banking at U.S. Bancorp, said the Minneapolis company will likely have a larger branch network in five years.

"We don't have branches in all the places we need to best serve our clients," Hartnack said, particularly on the western end of its territory.

Currently U.S. Bank has 2,867 branches, but Hartnack would not estimate how many it would have in 2014, because acquisitions would factor into that projection.

JPMorgan Chase & Co. will also have a net gain by then, said spokesman Tom Kelly.

Though it has closed 300 overlapping branches in New York, Chicago and Texas since buying the banking operation of Washington Mutual Inc. in September, and it expects to close 100 more by yearend, it plans to open 100 to 150 branches a year indefinitely.

It has roughly 5,200 branches now.

"The branch is the single most important place for people to open accounts," Kelly said.

TD Bank, the U.S. unit of Toronto-Dominion Bank, plans a net gain of about 30 branches for the next two years and then at least 50 each year after that, said Fred Graziano, executive vice president of retail banking.

That strategy can help the bank meet its goal of being ranked one of the top three in branch count and deposit share in each of its markets.

Not everyone believes branch networks will continue to expand. Dave Kaytes, a managing director in the New York consulting firm Novantas LLC, said there could be as many as 10,000 fewer branches in the country in the next five years as the industry makes slashing costs its top priority.

Kaytes estimated that the industry needs about $800 billion to $900 billion in additional capital over the next several years to repay funds from the Troubled Asset Relief Program and to placate regulators. However, banks as a group will likely make about $100 billion to $150 billion in net income a year, so the industry will have to find more ways to lower expenses.

"Banks have done a very good job of squeezing costs out of their headquarters -- outsourcing operations, consolidating back offices, cutting various lines of business, reducing purchasing costs," Kaytes said. "The only place left is reducing the very-high-cost branch network," which typically amounts to 60% of a bank's expenses.

Though smaller branches can cost less to build and maintain, Kaytes contends that there are considerable fixed costs at every branch and that a greater number of smaller branches will not necessarily cost less than a network of fewer, but larger, branches.

Bob Hedges, managing partner at Mercatus LLC, a Boston consulting firm, agreed with Kaytes that there could easily be 10% fewer branches in five years. Consolidation within the industry will play a large part, as acquirers close overlapping branches and smaller banks go under.

But Richard A. Soukup, a partner with the Chicago office of the consulting firm Plante & Moran PLLC, said he expects branches to maintain their customer service lead in the foreseeable future. He conceded there could be a net reduction in branches in the near term in markets like Chicago as a result of consolidation. And there may come a time that alternative channels will gain in prominence as younger generations mature -- but that will not happen soon, he said.

"For years, everybody's been predicting the death of brick-and-mortar, but it just hasn't happened," Soukup said.

AMERICAN BANKER - Overdraft Anxiety

Overdraft fees not only generate significant noninterest income for banks, they help subsidize other services, such as free checking and online bill payment.

But if the Federal Reserve follows through on proposed amendments to Regulation E, otherwise known as the Electronic Fund Transfer (EFT) Act, that fee income could dry up, leaving many banks with the stark choice of raising fees or eliminating services.

"When the government interferes in the market mechanism, there are unintended consequences," says James Holly, founding president and chief executive of Bank of the Sierra in Porterville, Calif.

The Fed proposed in December changes to Reg E that would provide consumers the choice to either opt in or alternately opt out of their institution's overdraft program for automated teller machine withdrawals and one-time debit card transactions. In addition, it would prohibit an overdraft fee due for a hold placed on the account for a future transaction.

Opting in would mean that the bank would be prohibited from allowing a transaction that would cause an overdraft fee, unless the consumer consented to the service. Opting out would require the financial institution to notify the customer of the program, and give time to accept or deny the service. Those who decline overdraft services run the risk of having checks bounce or being stranded without cash.

The Fed received roughly 4,700 comment letters on its proposal. The majority of consumers said that they were upset with the "outrageously high" fees connected with overdraft and that they wanted the chance to opt in to overdraft services. "This is the only way that I will truly feel protected," was a phrase used in many consumer letters.

Bankers, though, by and large, oppose the idea of consumer consent. "An opt-in requirement would impose additional administrative burdens and high costs to our bank without any offsetting consumer benefit," wrote Doris Lambert, vice president and chief financial officer at Farmers Citizens Bank in Bucyrus, Ohio.

"Requiring our bank to offer and track either opt-in or opt-out notices would only add to our cost of operations and eventually raise fees for all customers, not just those who may (or may not) benefit from this change," wrote Al Vermeer, president and chief operating officer at Peoples Bank in Rock Valley, Iowa, in his comment letter.

Fees, particularly from overdraft, help to pay for services that often are free to customers, such as use of ATMs and call centers, bill payment and mobile banking. Overdraft fees from electronic transactions generate between $7 billion and $10 billion a year for the industry, and if customers choose en masse to opt out of overdraft programs, then banks will likely respond by ceasing to offer free services, says Tony Hayes, partner at international consulting firm Oliver Wyman.

"It would be very hard to maintain the status quo without $7 billion of supporting revenue; so we could see a move away from free checking," Hayes says.

Jennifer Tescher, director of the Center for Financial Services Innovation, a nonprofit affiliate of ShoreBank Corp., says changes in overdraft could have a similar impact on deposit account fees as new credit card regulations-which limit interest-rate hikes, ban double cycle billing, and restrict charging late fees-could have on card fees. The new card rules-issued by the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration in December-take effect in July of next year.

With the changes in credit cards, "you hear credit card issuers saying that we'll see the return of the annual fee," Tescher says. "I would say that it's exactly the same situation in retail banking. With the curtailment of overdraft, we'll see the return of the monthly fee on checking accounts."

Hayes says that he expects that the Fed will make a decision on the overdraft proposals by July. If they are approved, he says the rules are also likely to take effect in July 2010.

It's not just the Fed proposing new overdraft rules. Some in Congress say that the Fed's proposed changes do not go far enough to protect consumers and have proposed legislation of their own. Among the provisions is a bill sponsored by Rep. Carolyn Mahoney (D-N.Y.), which would require retrofitting point-of-sale terminals so that they can notify customers when they are about to overdraw their accounts.

Elizabeth Eurgubian, regulatory counsel at the Independent Community Bankers of America, says that banks would likely shoulder the cost of retrofitting the terminals, and, if that's the case, "then you are going to see a lot of community banks in particular consider not even offering overdraft protection because it's too costly. And that affects consumers because it's a good service for consumers."

Consumer groups disagree, and have been pressuring policymakers for years to take action against banks' overdraft programs. But Bank of the Sierra's Holly, whose bank has a non-notice overdraft program, says the onus of accountholder responsibility can't be overlooked.

"If people are not wanting to pay overdraft fees the answer is very simple: They exercise individual responsibility, they balance their account and they monitor either their debit card use or their check writing in a way that they're not overdrawn," he says.

AMERICAN BANKER - Protectionism Is not Self-Defense

Former President George W. Bush increased 300 tariffs in the final days of his administration; Congress successfully inserted "buy-America" provisions into the American Recovery and Reinvestment Act; French President Nicolas Sarkozy threatened to repatriate auto manufacturing from Eastern Europe; and UK Prime Minister Gordon Brown promised "British jobs for British workers." Desperate times often bring damaging measures. But protectionist acts will only further stifle world trade, thus lengthening and deepening the recession.

In Book IV, Chapter 2 of "The Wealth of Nations", Adam Smith makes clear his distaste for what the modern world calls protectionism: "To give the monopoly of the home-market to the produce of domestic industry...must, in almost all cases, be either a useless or a hurtful regulation." While G-20 nations and most other free-trading countries strive to meet the letter of international trade law, some appear to be skirting its spirit.

Indeed, the World Trade Organization regularly tracks "trade and trade-related measures," country by country. Its latest survey covered the September 2008 to March 2009 period, and pointed to more than 200 measures, often with multiple effects. Some of the actions are no doubt acceptable under WTO rules -- and the organization says its listing "implies no judgment by the WTO Secretariat on whether or not such measure, or its intent, is protectionist in nature." But it is clear that, in many cases, the measures could limit imports.

Argentina, for example, introduced reference prices for "around 1,000 imported products considered sensitive," the WTO report states. State-sponsored reference pricing allows domestic companies to sell their goods at just below market prices, and is considered one of the basic non-tariff trade barriers.

The allure of protectionism is growing, the WTO says. "At the start of this year, most WTO members appeared to have successfully kept these pressures under control," according to most recent report from the director-general to the organization's Trade Policy Review Body. Now the barricades are going up, with higher tariffs, other restrictions, and anti-dumping actions on the rise. Although most stimulus bills "clearly favor the restoration of trade growth globally," several include trade-limiting government aid and subsidies, and various buying and hiring restrictions.

And as anti-trade measures pile up, "this will worsen the contraction of world trade and undermine confidence in an early and sustained recovery in global economic activity," the WTO says.

The world has experienced the misfortune of protectionism before. High tariffs didn't create the Great Depression, but they made it greater, making the downward spiral uncontrollable and unstoppable. Smoot-Hawley was a craven concession to the perceived public will, a pure play for votes. The law passed despite the failure of the Fordney-McCumber Tariff, enacted in 1922 to protect the American farmer. Fordney-McCumber greatly limited European agricultural imports. But overproduction eroded prices, and American farmers continued to suffer. So newly elected President Herbert Hoover raised tariffs even more. In no time other industries sought and were granted similar "protection," which was solidified by Smoot-Hawley in 1930.

An escalating imposition of retaliatory measures ensued amid already weakened economies, a self-destructive virus that strangled trade and was only wiped out by a world war.

"Clearly there's enough understanding that extreme trade wars can be destructive, and that's better than starting without that underlying belief," says David Levy, chairman and director of the Levy Forecasting Center. But the public grows impatient as the pain of recession intensifies. "It's difficult for politicians who want to stay in office -- or alive, depending on their situation -- too ignore the temptation," Levy observes. The G-20's defense of free trade is laudable. But when survival of key domestic industries is in doubt "it's natural to say we can't have all those cars coming into the U.S. The nature of the debate changes."

Levy calls the U.S. the "800-pound gorilla because the importer has more clout in this situation." Protectionism could "push a particular player to default," leading to a panicked, downward spiral. The global economy is in a delicate state: "Rattle it and it can break," he warns.

The 300 tariff hikes signed by President Bush complied with WTO rules, and the "buy-America" provisions in the stimulus bill were altered to the same effect. But Brown still stands behind his "British jobs for British workers" cry, and Sarkozy has not withdrawn his repatriation remarks. This protectionist stance may win them votes, but it will harm their economies.

AMERICAN BANKER - Seeking to Solve a 401(k) Riddle

SunTrust Banks Inc.'s launch in April of a retirement plan platform for small employers seems like a no-brainer. According to ING Direct, just 20 percent of U.S. businesses with fewer than 25 employees have retirement plans, and the rest of the market is not much further ahead. What's more, SunTrust's own survey indicates small businesses overwhelmingly want to offer 401(k)s and similar plans to their employees.

"We were encouraged by the fact that 85 percent of them said -- even during this period of turmoil -- that having a retirement plan is really important," said Brenda Seliga, head of employee benefit solutions at SunTrust. Yet if SunTrust's small-plan retirement business succeeds, it will be a noteworthy achievement. Most banks have taken a pass on the business, and many of those that have tested it have floundered. The problem, they've found, is that sales to small employers generate little profit. "The economics of the market make it a difficult one to service," says Rick Meigs, president of 401khelpcenter.com LLC.

Still, interest in serving this market is picking up, in part because the market for large plans has matured, says Meigs. Indeed, he says plan providers have become increasingly interested in firms with as few as one employee.

SunTrust, which already offers plans to larger employers through its brokerage channel, hopes to succeed in the under-100-employee sphere by using online automation and selling retirement plans in tandem with other small-business products, says Seliga. It will collect fees as the plans are set up, and it stands to earn investment management revenue as well because its RidgeWorth Capital Management Inc. unit will be among the advisers available to participants.

The bank's plans center around a Web-based tool provided through ePlan Services Inc., in Denver. The SunTrust Online 401(k) allows companies with 100 or fewer employees to quickly establish plans online and choose from more than 200 investments. The quick setup and simple maintenance cater to small businesses that traditionally balk at a perceived complex, paper-heavy undertaking. Its features run the gamut from online account access for employers and employees to annual compliance testing and a retirement planning education portal for participants.

SunTrust and ePlan provide retirement specialists to assist small businesses over the phone with setting up and running the plans. The question is whether the Web-and phone-rep combination will provide enough human touch to satisfy a cross-section of small businesses, says Andrew McIlhenny, an executive vice president with Firstrust Financial Resources, in Philadelphia. Starting 10 years ago, Firstrust, a unit of Firstrust Bank, has used its advisers' relationships with small business clients to build a profitable 401(k) line consisting of 100 plans. While the more tech-savvy entrepreneurs are good candidates for a Web-based approach, says McIlhenny, there is a sizable chunk of business owners for whom personal advice is indispensable.

Such an approach explains why insurers, with their armies of reps, have established a larger presence in the small-business retirement plan market, says Meigs.

Firstrust offers its 401(k)s as a complement to products such as insurance and investment planning, and SunTrust's effort is grounded in the same approach. Its Online 401(k) is built to work with its online payroll and cash management products. Those products, along with other small business services, are marketed together.

One bank making headway in the small-plan market is ING Direct. Since 2005, it has installed 2,000 plans through its Web-based Sharebuilder 401(k) product. Sharebuilder, which offers inexpensive exchange-traded fund shares as investments rather than the typical mutual fund shares, increased its plan total by 34 percent last year, says Stuart Robertson, general manager of ING's ShareBuilder Advisors LLC.

Even in a down market, business owners recognize the importance of 401(k) plans for employees, and they value their tax benefits, he says. ING Direct's approach is unapologetically low-touch. "Our strategy is that we have no feet on the street," Robertson says. "We're all about how you keep the costs out and make it intuitive and easy."

Robertson says that Sharebuilder 401(k) is meeting its growth goals, but declined to say whether the business is profitable. But there is no shortage of opportunities in the small-plan market, he says. "You're finally seeing providers asking how they can serve this market," he says. "I still think we're on the cusp of it."

AMERICAN BANKER - Taking a New Swipe at Debit Incentives

Busey Bank of Champaign, Ill., has given out debit rewards since 2005 to increase incremental revenue from cardholders through interchange, and add-on services, like bill-pay.

The program generates about $62 in annual revenue per account, but Busey officials believe the bank can do better by strengthening its relationships with area merchants. So the $4 billion-asset Busey is reaching out to local gas stations, bookstores and coffee shops to participate in new rewards offers that will be based on a consumer's debit-card spending habits. The transaction information marketed to retailers help construct promotions and offers to customers most likely to shop with them. Busey -- through debit rewards program vendor MyRewards -- will earn added fees from merchants as cardholders redeem the offers.

"In addition to going to merchants and saying 'we can carefully target customers for you,' it builds in a return for the bank that is significantly more than interchange," says Bob Giltner, a consulting partner for Wilmington, N.C.-based MyRewards. "The [numbers] the bank has on purchases are the keys to the kingdom...nobody else has that data."

The new program at Busey is similar to other data-driven rewards programs getting underway. An Atlanta-based startup, Cardlytics, is planning pilot programs with three banks that will have targeted merchant offers sent to customers through online banking sessions. Cardlytics CEO Scott Grimes would not name the banks, but his firm is gaining attention because Grimes and president Lynn Laube are each former Capital One executives who were instrumental in the 2007 rollout of the issuer's industry-rattling decoupled debit product.

"Banks...don't have a lot of interchange to go and reward consumers," says Grimes. "We've brought in a new source of economics for the loyalty relationship, and that's merchants who value reaching customers through the banking portal."

A second-quarter 2009 rollout was planned by Jack Henry & Associates and partner Saylent Technologies for a "Big Rewards" program that Jack Henry clients can use to micro-target pockets of customers with incentives based on their transaction history - for both external rewards offerings or for internal incentives to promote bank products or services.

By being able to mine debit transactions, merchants have the market opportunities to "dice and sort" bank customer data in important new ways - especially through competitive research, says Elizabeth Rowe, a principal analyst with Mercator Advisory Group. For example, Burger King could build a database of McDonald's patrons through the transactions compiled by the bank and poach them with a special offer."

In a pilot program last year, Busey and convenience-store chain Super Pantry offered a $10 gift-card incentive to about 6,000 cardholders who frequented other stores to come swipe $100 in Super Pantry purchases.

Grimes says Cardlytics' system will be able to offer up to $200 a year in account rewards value to customers, versus the average debit-card program return of $15 to $30 a year. Data-driven rewards can serve as more than a new profit center. Institutions have struggled with improving lagging consumer interest in debit rewards programs. Only 27 percent of debit cardholders in a First Data survey in December participated in rewards programs, and large percentage -- up to 40 percent -- have grown unhappy with offers that lack quality, variety or usefulness.

While consumers aren't clamoring for debit rewards, more banks are moving toward offering them. The 2008 Pulse Network Debit issuer survey found 51 percent of banks had a debit rewards program, up from 37 percent two years earlier. Another 23 percent were considering adding the programs.

Getting more debit-card use out of customers is becoming a crucial link to performance as lending opportunities -- and that includes credit card lending -- shrink. "It's probably the last refuge for any kind of potential growth opportunity at the moment," says Aite Group analyst Ron Shevlin.

At Busey Bank, chief retail officer Susan Abbott says the bank's goal is for merchant component to eventually provide about half the total income generated by its debit rewards programs.

BANKINSURANCE.COM - 45.0% Drop in Contingent Income Hurts Overall Insurance...

…Results at First Defiance

BANKINSURANCE.COM – News In Brief – June 1 7, 2009-06-19

Defiance, OH-based, $2 billion-asset First Defiance Financial Corp reported insurance brokerage fee income in the first quarter suffered from a 45.0% drop in contingent income to $431,000, down from $784,000 in first quarter 2008, impacting total insurance brokerage earnings, which fell 21.1% to $1.5 million, down from $1.9 million a year ago.  Insurance revenue comprised 6.3% of noninterest income, which rose 13.0% to $6.8 million, up from $6.02 million, helped by a $1.6 million jump in mortgage banking income.  Net interest income on a 3.71% net interest margin grew 6.4% to $13.3 million, up from $12.5 million, despite a $1.74 million increase in loan loss provisions to $2.75 million, and net income remained basically stable at $3.41 million, compared to $3.42 million in first quarter 2008.  First Defiance Financial Chairman, President and CEO William Small said, "The economic challenges of the country and our market continue to be reflected in our quarterly results."

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com .

BANKINSURANCE.COM - 79% Hike in Noninterest Income Thrills First Mariner Bancorp

BANKINSURANCE.COM – News In Brief – June 8 14, 2009-06-19

Baltimore, MD-based, $1.38 billion-asset First Mariner Bancorp reported first quarter insurance brokerage fee income grew 18% to $734,000, up from $620,000 in first quarter 2008, and comprised 8.9% of noninterest earnings.  Noninterest income, propelled by a 453% spike in gains on sales of mortgage loans to $3.6 million and 33% climb in other mortgage banking revenue, jumped 79% to $8.27 million, up from $4.63 million.  Net interest income on a 3.70% net interest margin fell 18% to $6.68 million, down from $8.15 million, as loan loss provisions grew 15% to $4.4 million.  Credit-related losses tied to residential real estate, including $2.1 million to maintain foreclosed property impacted performance, and First Mariner reported a first quarter net loss of $3.1 million compared to a $3.78 million net loss a year ago.

In 2008, First Mariner Bancorp reported $3.24 million in insurance brokerage income, which comprised 15.8% of its noninterest income and 4.9% of its net operating revenue.  The company ranked 103rd in insurance brokerage earnings among all U.S. bank holding companies (BHCs), according to the Michael White-Prudential Bank Insurance Fee Income Report. 

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com .

BANKINSURANCE.COM - Ameriana Bancorp to Acquire Chapin-Hayworth Insurance Agency

BANKINSURANCE.COM – News In Brief – June 8 14, 2009-06-19

New Castle, IN-based, $496 million-asset Ameriana Bancorp, through Ameriana Insurance Agency, has agreed to acquire New Castle, IN-based Chapin-Hayworth Insurance Agency.  The multi-line property-casualty agency's management and staff will continue to operate from their current location but will become an Ameriana Insurance Agency unit when the deal closes in July, pending regulatory approval.  The agreement comes on the heels of Ameriana's sale of its 16.67% interest in Family Financial Holdings, the $645,000 proceeds of which, Ameriana said, would be "redeployed in pursuit of more attractive opportunities."

Ameriana Bancorp has also received approval from the Indiana Department of Financial Institutions to convert its charter from an Indiana savings bank to an Indiana commercial bank.  Ameriana Bancorp President and CEO Jerome Gassen said, "With an increased emphasis on commercial banking over the past several years, a commercial bank charter represents a more logical fit for our current operations."

In 2008, Ameriana Bank reported $842,000 in insurance brokerage income, which comprised 22.2% of its noninterest income and 5.2% of its net operating revenue.  The company ranked 203rd in insurance brokerage earnings among all U.S. banks, according to the Michael White-Prudential Bank Insurance Fee Income Report. 

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com .

BANKINSURANCE.COM - Arrow Financial's Insurance Brokerage Fee Income Slips 3.6%

BANKINSURANCE.COM – News In Brief – June 1 7, 2009-06-19

Glens Falls, NY-based, $1.7 billion-asset Arrow Financial Corp. reported first quarter insurance brokerage fee income generated by Capital Financial Group, which specializes in the sale and servicing of group health plans, slipped 3.6% to $528,000, down from $548,000 in first quarter 2008, and comprised 7.6% of noninterest income, which jumped 43.7% to $6.97 million, up from $4.85 million, reflecting a $2.7 million gain on the transfer of merchant bank card processing.  Net interest income on a 3.9% net interest margin grew 13.6% to $14.2 million, up from $12.5 million, as loan loss provisions increased by $208,000 to $502,000, and net income climbed 34.0% to $6.7 million, up from $5 million in first quarter 2008.  Arrow Financial Chairman, President and CEO Thomas Hoy said, "This performance was driven by an increase in the average level of earning assets and a widening of the net interest margin."

In 2008, Arrow Financial Corp. reported $2.07 million in insurance brokerage income, which comprised 12.3% of its noninterest income and 2.8% of its net operating revenue.  The company ranked 127th in insurance brokerage earnings among all U.S. bank holding companies (BHCs), according to the Michael White-Prudential Bank Insurance Fee Income Report.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com .

BANKINSURANCE.COM - BOLI Income is a Boon to Alliance Financial

BANKINSURANCE.COM – News In Brief – June 8 14, 2009-06-19

Syracuse, NY-based, $1.4 billion-asset Alliance Financial Corporation reported income from bank-owned life insurance (BOLI) in the first quarter jumped over 55% to $247,000, while insurance brokerage fee income slid 6.8% to $315,000, down from $338,000 in first quarter 2008.  Investment management income dropped 23.1% to $1.76 million, down from $2.29 million, but remained the largest contributor to noninterest income, comprising 32.8% of that revenue which rose 3.3% to $5.36 million, up from $5.19 million, helped by a $1.02 million gain on the sale of securities.  Insurance brokerage and BOLI comprised, respectively, 5.9% and 4.6% of noninterest income.  Net interest income on a 3.42% net interest margin grew 12.2% to $8.3 million, up from $7.4 million, as provisions for loan losses increased by less than $400,000 to $1.75 million, and net income jumped 25.2% to $2.6 million, up from $2.1 million a year ago, as mortgage originations increased by 48% and the company recorded the over $1 million pre-tax gain in the sale of securities. 

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com .

BANKINSURANCE.COM - Cadence Financial Reports 72% Decline In Trust Income…

…Insurance Brokerage Fee Income Down 5.1%

BANKINSURANCE.COM – News In Brief – June 1 7, 2009-06-19

Starkville, MS-based, $2.1 billion-asset Cadence Financial Corp. reported first quarter insurance brokerage fee income slipped 5.1% to $1.31 million, down from $1.38 million in first quarter 2008, while trust income fell 72.3% to $466,000, down from $1.38 million.  Insurance earnings and trust income comprised, respectively, 22.5% and 8.0% of noninterest income, which slid 3.2% to $5.81 million, down from $6 million.  An almost $30 million increase in loan loss provisions to $32.76 million, up from $3 million, caused a net interest loss of $20.4 million, down from net interest income of $11.5 million and, with a $66.8 million goodwill write down, contributed to a first quarter net loss of $84.5 million, compared to net income of $2.8 million in first quarter 2008.  Cadence Financial Chairman and CEO Lewis Mallory said, the loss "reflects the impact of the economy on real estate-based loans and the value of goodwill associated with previous acquisitions."  Cadence sold $44 million in senior preferred shares to the U.S. Treasury in January under the Troubled Asset Relief Program (TARP).

In 2008, Cadence Financial Corp. reported $5.03 million in insurance brokerage income, which comprised 26.2% of its noninterest income and 6.7% of its net operating revenue.  The company ranked 77th in insurance brokerage earnings among all U.S. bank holding companies (BHCs), according to the Michael White-Prudential Bank Insurance Fee Income Report.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com .

BANKINSURANCE.COM - Despite Dip, Insurance Brokerage Still Dominates…

…Noninterest Income at Shore Bancshares

BANKINSURANCE.COM – News In Brief – June 8 14, 2009-06-19

Easton, MD-based, $1.07 billion-asset Shore Bancshares, Inc. reported insurance brokerage fee income generated by The Avon-Dixon Agency, Elliott Wilson Insurance and Jack Martin & Associates slid 5.6% in the first quarter to $3.34 million, down from $3.53 million in first quarter 2008, but dominated noninterest income, comprising 62.4% of that revenue, which slipped 2.8% to $5.35 million, down from $5.5 million.  Net interest income on a 4.09% net interest margin slid 4.4% to $9.15 million, down from $9.57 million, as loan loss provisions almost doubled to $912,000, up from $462,000, but net income rose 8.7% to $2.5 million, up from $2.3 million a year ago.  In January, Shore sold $25 million in preferred shares to the U.S. Treasury under TARP and in April repurchased the shares for $25 million plus $208,333.33 in accrued dividends.

In 2008, Shore Bancshares reported $12.1 million in insurance brokerage income, which comprised 58.3% of its noninterest income and 19.9% of its net operating revenue.  The company ranked 39th in insurance brokerage earnings among all U.S. bank holding companies (BHCs), according to the Michael White-Prudential Bank Insurance Fee Income Report.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com .

BANKINSURANCE.COM - Despite Downturn, Insurance Brokerage Fee Income Remains

…Largest Contributor To Noninterest Income At Peoples Bancorp

BANKINSURANCE.COM – News In Brief – June 1 7, 2009-06-19

Marietta, OH-based, $2.1 billion-asset Peoples Bancorp, Inc. reported first quarter insurance brokerage fee income remained the largest contribution to noninterest income but decreased 7.4% to $2.75 million, down from $2.97 million in first quarter 2008, impacted by the effects of the contracting economy on commercial insurance needs.  Trust and investment income declined 15.2% to $1.06 million, down from $1.25 million, and comprised 12.9% of noninterest income, while insurance comprised 33.4% of those earnings, which rose 0.1% to $8.24 million, up from $8.23 million, bolstered by an almost $400,000 increase in mortgage banking income.  Net interest income on a 3.52% net interest margin fell 10.8% to $11.46 million, down from $12.85 million, as loan loss provisions jumped by $2.63 million to $4.06 million, and net income dropped 25.0% to $4.2 million, down from $5.6 million.  Peoples Bancorp President and CEO Mark Bradley said, "We are pleased with first quarter results considering the extremely challenging market conditions and economic uncertainty."  Peoples sold $39 million in preferred shares to the U.S. Treasury under the TARP in January.

In 2008, Peoples Bancorp reported $9.9 million in insurance brokerage income, which comprised 30.1% of its noninterest income and 10.8% of its net operating revenue.  The company ranked 49th in insurance brokerage earnings among all U.S. bank holding companies (BHCs), according to the Michael White-Prudential Bank Insurance Fee Income Report.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

BANKINSURANCE.COM - Despite Economy, Bank Holding Companies Bring In Third ...

… Highest Insurance Brokerage Fee Income Ever

BANKINSURANCE.COM – News In Brief – June 8 14, 2009-06-19

U.S. bank holding companies (BHCs) generated $11.8 billion in insurance brokerage fee income in 2008, their third highest performance ever, down 3.6% from the record $12.26 billion set in 2007 and off 2.7% from $12.13 billion earned in 2006, according to the Michael White-Prudential Bank Insurance Fee Income Report.  In contrast, banks and savings institutions reported noninterest income fell 11.0% to $207.5 billion, down from $233.1 billion, and net income dropped 89.8% to $10.2 billion, down from $100.0 billion in 2007, according to the Federal Deposit Insurance Corporation (FDIC).

Bank holding companies with $1 billion to $10 billion in assets enjoyed 8.4% growth in insurance brokerage fee income to $586.1 million, up from $540.4 million in 2007, led by Eastern Bank Corporation (MA), Old National Bancorp (IN), Trustmark Corp. (MS), and Johnson Financial Group (WI).  BHCs with over $10 billion in assets, however, saw their insurance brokerage fee income slide 4.2% to $11.07 billion, down from $11.56 billion, impacted by a 40.1% drop in Citigroup's insurance brokerage earnings to $1.21 billion, a 32% drop in HSBC North America Holdings' earnings to $115.7 million and a 50.7% drop in JPMorgan Chase & Co.'s insurance brokerage income to $68 million, the Michael White-Prudential Bank Insurance Fee Income Report shows.

Still, Citigroup remained an industry leader in insurance brokerage income, ranking second behind San Francisco-based, $1.31 trillion-asset Wells Fargo & Co. ($1.595 billion) and ahead of North Carolina-based, $152 billion-asset BB&T Corp. ($847.3 million), Charlotte, NC-based, $1.8 trillion-asset Bank of America Corp. ($432.2 million), and Chicago-based, $434 billion-asset HSBC North American Holdings ($115.7 million), which ranked third, fourth, and fifth, respectively.

Commenting on BHC insurance brokerage earnings in 2008, Michael White said, "Since MWA began conducting this report in 2001, this is the first year we've seen a decline in total BHC insurance brokerage income."  Prudential Individual Life Insurance Senior Vice President Joah Cleveland focused on growing BHC life insurance earnings and said, "Our own experience suggests that insurers and banks are developing stronger marketing relationships and finding new ways to offer consumers simplicity and convenience when it comes to purchasing a basic, protection-oriented life insurance policy."  She added, "A combination of high quality service, improvements to the application process and the use of technology support a positive outlook for growth in sales of life insurance through financial institutions."

To learn more about the Michael White-Prudential Bank Insurance Fee Income Report, click here.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

BANKINSURANCE.COM - Far Eastern International Bank to Acquire AIG Credit Card Co

BANKINSURANCE.COM – News In Brief – June 1 7, 2009-06-19

Taipei, Taiwan-based Far Eastern International Bank, a subsidiary of Taipei-based Far Eastern Group, has agreed to acquire Taipei-based AIG Credit Card Co. from American International Group (AIG).  The NT 2.3 billion ($70.7 million) to NT 3 billion ($92.2 million) deal is expected to be completed by the end of the year, pending regulatory approval.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

BANKINSURANCE.COM - First M & F Corp. Reports 2.9% Dip…

…in Insurance Brokerage Fee Income

BANKINSURANCE.COM – News In Brief – June 1 7, 2009-06-19

Kosciusko, MS-based, $1.64 billion-asset First M & F Corp. reported first quarter insurance brokerage fee income slipped 2.9% to $971,000, down from $1 million in first quarter 2008, and fiduciary and brokerage fee income fell 15.9% to $116,000, down from $138,000.  Insurance earnings comprised 18.7% of noninterest income, while fiduciary and brokerage income comprised 2.2% of that revenue, which slid 5.5% to $5.2 million, down from $5.5 million, reflecting declines in all categories, including service charges on deposits.  An over $19 million jump in loan loss provisions to $19.84 million, up from $780,000, produced a net interest loss of $7.996 million compared to net interest income of $12.35 million a year ago, and impacted a net loss of $27.2 million compared to net income of $3.14 million in first quarter 2008, as goodwill sunk to $16.8 million, down from $32.6 million a year ago.  First M & F Chairman, President and CEO Hugh S. Potts said, "Our capital is strong.  Our deposits and depositors remain safe."  He added, "M & F Bank has thrived through a Great Depression, numerous economic recessions, two World Wars and innumerable battles and skirmishes and is still strong and fully engaged in serving our constituencies with integrity and a sense of stewardship."

In 2008, First M & F Corp. reported $4.04 million in insurance brokerage income, which comprised 20.7% of its noninterest income and 5.6% of its net operating revenue.  The company ranked 87th in insurance brokerage earnings among all U.S. bank holding companies (BHCs), according to the Michael White-Prudential Bank Insurance Fee Income Report .

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

BANKINSURANCE.COM - Fixed Annuity Sales Skyrocket 78% Higher

BANKINSURANCE.COM – News In Brief – June 1 7, 2009-06-19

U.S. Fixed annuity sales surged 78% in the first quarter to an estimated $34.9 billion, up from $19.6 billion in first quarter 2008, according to Evanston, IL-based Beacon Research.  The company's Fixed Annuity Premium Study shows that book value annuity sales almost doubled to $19.2 and dominated the market.  Indexed annuities grew 24% to $7.1 billion, market value adjusted annuity sales nearly tripled to $6.5 billion, and immediate fixed annuity sales grew 24% to $2.1 billion.

Banks, savings and loans and captive agents sold primarily book value annuities.  Independent broker-dealers, large/regional broker-dealers and wirehouses sold primarily market value adjusted annuities, while independent producers favored indexed annuities.  MetLife continued to be the largest supplier of fixed annuities with $3.63 billion in sales, followed by New York Life ($3.47 billion), Aviva USA ($2.46 billion), RiverSource Life ($2.13 billion) and AEGON/Transamerica Companies ($2.09 billion).

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

BANKINSURANCE.COM - Former Washington Mutual Branches …

…Get JPMorgan Chase Name and Logo

BANKINSURANCE.COM – News In Brief – June 8 14, 2009-06-19

New York City-based, $2.2 trillion-asset JPMorgan Chase & Co. has rebranded its 187 Washington Mutual branches in Washington State with the Chase bank name and logo.  In addition to investing $56 million to refurbish branches in an environmentally sound manner, Chase has agreed to invest $2.65 million in the state's nonprofit organizations this year.  JPMorgan Chase acquired the branches when it purchased Washington Mutual at the government's urging in September 2008

In 2008, JPMorgan Chase reported $68.0 million in insurance brokerage income, which comprised 0.3% of its noninterest income and 0.1% of its net operating revenue.  The company ranked 10th in insurance brokerage earnings among all U.S. bank holding companies (BHCs), according to the Michael White-Prudential Bank Insurance Fee Income Report.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

BANKINSURANCE.COM - Hartford Chairman And CEO To Retire

BANKINSURANCE.COM – News In Brief – June 8 14, 2009-06-19

The Hartford Financial Services Group Chairman and CEO Ramani Ayer announced he will retire by the end of the year after 12 years as the company's CEO and nearly 36 years with the company.  Ayer said The Hartford will move ahead with its "strong property and casualty and life franchises."  He added, "I have been honored to call The Hartford my home and am proud of the culture of integrity, trust and customer service that is woven into the fabric of this outstanding organization."  The Hartford reported a $2.7 billion loss in 2008, a $1.21 billion loss in first quarter 2009, and recently sold the government preferred stock in return for cash.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

BANKINSURANCE.COM - ING Groep NV Announces Plans To Cut Back Its Operations

BANKINSURANCE.COM – News In Brief – June 8 14, 2009-06-19

Amsterdam-based ING Groep NV plans to sell 10 to 15 of its 70 businesses within five years and exit 10 of the 48 countries in which it currently operates.  Last October ING received a €10 billion ($14.1 billion) capital infusion from the Dutch government and said it plans to raise €6 billion to €8 billion ($8.5 billion to $11.3 billion) through asset sales "as market conditions permit," Reuters reports.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

BANKINSURANCE.COM - Insurance Brokerage Fee Income Up 10.2% at VIST Financial

BANKINSURANCE.COM – News In Brief – June 8 14, 2009-06-19

Wyomissing, PA-based, $1.26 billion-asset VIST Financial Corp. reported increased commissions on group insurance products helped first quarter insurance brokerage fee income grow 10.2% to $2.96 million, up from $2.68 million in first quarter 2008, to comprise 53.6% of noninterest income, which climbed 18.7% to $5.52 million, up from $4.65 million.  Net interest income on a 3.19% net interest margin fell 6.6% to $7.66 million, down from $8.2 million, as loan loss provisions basically doubled to $825,000, and net income rose 3.2% to $1.61 million, up from $1.56 million in first quarter 2008.  VIST Financial President and CEO Robert Davis said, "We continue to be profitable at the corporate and business line levels and will balance current profitability with investments for long term growth."

In 2008, VIST Financial Corp. reported $11.3 million in insurance brokerage income, which comprised 61.4% of its noninterest income and 21.0% of its net operating revenue.  The company ranked 41st in insurance brokerage earnings among all U.S. bank holding companies (BHCs), according to the Michael White-Prudential Bank Insurance Fee Income Report.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

BANKINSURANCE.COM - M&T Completes Acquisition of Provident Bankshares

BANKINSURANCE.COM – News In Brief – June 1 7, 2009-06-19

Buffalo, NY-based, $64.9 billion-asset M&T Bank Corporation has completed its all stock acquisition of Baltimore, MD-based, $6.5 billion-asset Provident Bankshares Corporation.  M&T Bank Mid-Atlantic Division President Woody Collins said, "Our new customers will have access to the largest branch and ATM network in the Baltimore-Washington corridor and to a wider array of products and services."  M&T now operates 800 branches in Deleware, Maryland, New Jersey, New York, Pennsylvania, Virginia, West Virginia and Washington, D.C.

In 2008, M&T Bank Corporation reported $71.2 million in investment program income, which comprised 7.2% of its noninterest income and 2.4% of its net operating revenue.  The company ranked 21st in investment program earnings among all U.S. bank holding companies (BHCs), according to the Michael White-Prudential Bank Insurance Fee Income Report.

In 2008, Provident Bankshares reported $2.79 million in investment program income, which comprised 2.6% of its noninterest income and 1.0% of its net operating revenue.  The company ranked 93rd in investment program earnings among all U.S. bank holding companies (BHCs), according to the Michael White-Prudential Bank Insurance Fee Income Report.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

BANKINSURANCE.COM - Many Large Diversified Financial Companies Exiting…

…Indexed Annuity Market

BANKINSURANCE.COM – News In Brief – June 1 7, 2009-06-19

Genworth Financial, Principal Financial Group, Protective Life Corp., AIG Annuity, Oxford Life, Symetra Financial, Woodmen of the World, Farmers New World Life Insurance Company, Standard Life Insurance Company of Indiana (Standard Life), Life Investors Insurance Company of America, Transamerica Occidental and Monumental Life have exited the U.S. indexed annuity market this year, according to Sheryl Moore, president and CEO of AnnuitySpecs.com.  The latter three companies merged into AEGON USA Group, which sold nearly $16.9 million in indexed annuities in 2008.  Standard Life was seized by state regulators after selling $1.1 million in indexed annuities last year, BestWire reports.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

BANKINSURANCE.COM - Morgan Stanley Smith Barney Launches Ops In The Big Apple

BANKINSURANCE.COM – News In Brief – June 8 14, 2009-06-19

Morgan Stanley Smith Barney has launched operations in New York City.  The new firm combines the operations of Morgan Stanley's Global Wealth Management Group with Citigroup's Smith Barney U.S., Smith Barney Australia and Quilter in the United Kingdom.  Citigroup transferred 100% of ownership in those brokerage units in return for a 49% stake in the joint venture and an upfront cash payment of $2.75 billion from Morgan Stanley.  Morgan transferred 100% ownership of its Global Wealth Management business and paid Citigroup in return for a 51% share in the venture and an agreement that it can increase its stake after three years.  Morgan Stanley Smith Barney has 1,000 offices around the world where over 18,500 financial advisors serve 6.8 million households and generate $14 billion in pro forma net revenues, according to the company.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

BANKINSURANCE.COM - New Variable Annuity Sales Fall

BANKINSURANCE.COM – News In Brief – June 1 7, 2009-06-19

New variable annuity sales, including additional premiums to existing contracts (Total Sales), dropped 26.9% in the first quarter to $30.45 billion, down from $41.65 billion in first quarter 2008.  That number minus surrenders, withdrawals, intercompany and intracompany exchanges and benefit payments (Net Sales) fell 29.5% to $5.09 billion, down from $7.22 billion, according to Reston, VA-based NAVA (Association for Insured Retirement Solutions).  Equities comprised 42.1% of total variable annuity assets; fixed accounts comprised 27.6%; while allocation, bond and money market funds comprised 12.9%, 11.9% and 5.5%, respectively.  NAVA President and CEO Cathy Weatherford said, "The data is slightly better than we expected."

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

BANKINSURANCE.COM - Provisions for Loan Losses Pull Banks' 1Q Net Income Down…

Provisions for Loan Losses Pull Banks' 1Q Net Income Down… 60.8%

BANKINSURANCE.COM – News In Brief – June 1 7, 2009-06-19

U.S. commercial banks and savings institutions reported net income in the first quarter tumbled 60.8% to $7.6 billion, down from $19.3 billion in first quarter 2008, hit by higher loan loss provisions, increased goodwill write-downs and reduced income from securitization activities, according to the Federal Deposit Insurance Corporation (FDIC).

Loan loss provisions jumped 63.6% to $60.9 billion, up from $23.7 billion a year ago; goodwill impairments almost tripled to $7.2 billion, up from $2.8 billion, and bad loan charge-offs almost doubled to $37.8 billion, up from $19.6 billion.  Twenty-one FDIC-insured institutions failed, and those on the "Problem List" climbed during the quarter from 252 to 305.  FDIC Chairman Sheila Bair said, "The first quarter results tell us that the banking industry still faces tremendous challenges and that going forward asset quality remains a major concern."  She added, "As I see it, we're now in the cleanup phase for the banking industry.  It will take some more time.  But, in the end, we'll have a stronger banking industry that's better able to meet the demand for credit as the economy recovers."

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

BANKINSURANCE.COM - Prudential Financial Eschews Treasury's Money,…

…Turns To Public Offering To Raise Funds

BANKINSURANCE.COM – News In Brief – June 8 14, 2009-06-19

Newark, NJ-based Prudential Financial, Inc. announced it will not participate in the U.S. Treasury Department's Capital Purchase Program and instead has begun a public offering of $1.25 billion in its common stock.  Prudential said it will use the net proceeds from the offering to add capital to its operations, repay debt and launch strategic initiatives.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

BANKINSURANCE.COM - Sales of Individual Life Insurance Suffers

BANKINSURANCE.COM – News In Brief – June 8 14, 2009-06-19

Premium from individual life insurance sales in the U.S. fell 26% in the first quarter, compared to first quarter 2008, led by a 61% drop in variable life, a 33% tumble in universal life and supported by 5% and 4% slides in whole life and term life, respectively, according to LIMRA's U.S. Individual Life Insurance Sales Report.  Whole life (WL) and term life policies each comprised 28% of annualized premium, a record for term and the highest for WL since 1999, but the number of WL policies sold slid 8% and the numbers of term policies sold slipped 5%.  In contrast, variable universal life sales dropped 51% and variable life sales fell 23%, while universal life sales declined 7% for an overall decline of 8% in the number of life insurance policies sold in the first quarter, the Windsor, CT-based LIMRA report shows.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

BANKINSURANCE.COM - Wells Fargo Acquires Las Vegas-Based Retail Insurance Broker

BANKINSURANCE.COM – News In Brief – June 8 14, 2009-06-19

Chicago-based Wells Fargo Insurance Services, Inc. (WFIS), a unit of San Francisco-based, $1.3 trillion-asset Wells Fargo & Co., has acquired Las Vegas, NV-based Grady & Associates, a retail insurance broker that offers health and benefits insurance to a range of businesses.  WFIS Mountain West Region Director Nick Rossi said the renamed agency will "strengthen and further support Wells Fargo Insurance Services' existing health and benefits insurance professionals."  WFIS Executive Vice President David Wood said the acquisition will "strengthen our growing presence in Nevada."

In 2008, Wells Fargo & Co. reported $1.6 billion in insurance brokerage income, which comprised 9.8% of its noninterest income.  The company ranked first in insurance brokerage earnings among all U.S. bank holding companies (BHCs) engaged in significant banking activities, according to the Michael White-Prudential Bank Insurance Fee Income Report.  (These figures do not include results of Wachovia Corporation, which Wells Fargo bought on December 31, 2008, because neither Wachovia nor Wells Fargo filed income statement figures for Wachovia for year-end 2008.)

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

ANNOUNCEMENTS - The Bank of New York Mellon Marks 225 Years of Innovation…

…Stability and Outstanding Client Service

The Bank of New York Mellon Corporation, the global leader in asset management and securities servicing, will observe its 225th anniversary from June 9-16, 2009, with events that mark the company's history of innovation and stability. One worldwide effort includes hundreds of employee volunteers lending a helping hand to nonprofit organizations through the company's Community Partnership employee volunteering program. In addition, a multimedia package on the company's storied history has been posted on its website (www.bnymellon.com/225years) and company representatives, including an employee with more than 55 years of service to the organization, will ring the closing bell at the New York Stock Exchange on Tuesday, June 16.

"Our company has a remarkable and unique history. As the oldest bank in the United States, ours is a story of innovation and change, and also an example of the power of continuity. Over the course of these 225 years, the people of The Bank of New York Mellon have stayed true to the values that still guide our success today: client focus, trust, teamwork and outperformance," said Robert P. Kelly, chairman and chief executive officer of The Bank of New York Mellon. "It is fitting that during this anniversary year, our company continues to play a critical and stabilizing role in the global economy. We look forward to continuing to support our people, clients and communities for the next 225 years. "

LINK TO ARTICLE: http://bnymellon.mediaroom.com/index.php?s=43&item=754

ANNOUNCEMENTS - The Bank of New York Mellon's Pershing Unit Expands…

…Separately Managed Account Solutions for Independent Registered Investment Advisors and Advisors in Transition

Pershing LLC, a subsidiary of The Bank of New York Mellon Corporation (NYSE: BK), announced today that it has expanded its suite of managed account solutions for independent registered investment advisors (RIAs) and advisors in transition. These new capabilities provide advisors with access to a diverse list of industry-leading money managers and a broad spectrum of managed account tools and services to help them better serve their clients.

Pershing's expanded separately managed account platform provides RIAs and advisors in transition with a broader array of existing money managers to choose from and the flexibility to add new money managers to accommodate their businesses. The enhanced offering also provides advisors in transition with a wide range of solutions that are designed to streamline the administrative aspects of transitioning their existing managed account business to a new organization so they can continue to focus on building and strengthening client relationships. These capabilities include extensive web-based account tracking and maintenance tools, consolidated quarterly and on-demand performance reporting, and fee billing and payment services.

LINK TO ARTICLE: http://news.prnewswire.com/DisplayReleaseContent.aspx?ACCT=104&STORY=/www/story/06-02-2009/0005036532&EDATE=

ANNOUNCEMENTS - U.S. Bank Opens Office in Charlotte for Its National Corporate..

…Banking and High Grade Fixed Income Businesses

U.S. Bank is increasing its presence in the Southeast by establishing a new Charlotte office which will become home to two key businesses, including its national corporate banking group for the Southeast region and its newly established high grade fixed income team. U.S. Bank expects to hire approximately 30 employees to staff this office by the end of 2009.

Dee O'Dell will lead U.S. Bank's Southeast national corporate banking team, focusing on building deeper relationships with large corporate clients that have more than $250 million in sales across a 14-state territory of the Southeast. O'Dell spent 18 years with Wachovia in various roles within its corporate and investment bank, including managing groups in Atlanta and Chicago. For the past seven years he served as a managing director in Wachovia's consumer and retail investment banking division. O'Dell is a graduate of Hampden-Sydney College, has an MBA from the Kenan-Flagler Business School at UNC- Chapel Hill, and is a CFA Charterholder.

LINK TO ARTICLE: http://www.businesswire.com/news/home/20090608006188/en

K@W - Leaving 'Friendprints': How Online Social Networks Are Redefining Privacy…

… and Personal Security

A generation is growing up with social networking web sites such as Facebook and MySpace, casually posting accounts of their lives for their friends -- and the world -- to see. Few of these users realize that the information they post, when combined with new technologies for gathering and compiling data, can create a fingerprint-like pattern of behavior. The information provides opportunities not only for legitimate business purposes, but also for the nefarious aims of identity thieves and other predators, according to faculty at Wharton and elsewhere.

"The way privacy has traditionally been defined is being challenged," according to Wharton legal studies professor Andrea Matwyshyn, who earlier this year organized the Information Security Best Practices Conference at Wharton. Among other topics, the conference addressed security and safety issues raised by the social networks.

LINK TO ARTICLE: http://knowledge.wharton.upenn.edu/article.cfm?articleid=2262

Reproduced with permission from Knowledge@Wharton (http://knowledge.wharton.upenn.edu), the online research and business analysis journal of the Wharton School of the University of Pennsylvania. All materials copyright of the Wharton School of the University of Pennsylvania. http://knowledge.wharton.upenn.edu

K@W - Warning: Big Financial Firms May Be Riskier Than They Appear

Large financial institutions have failed with much higher frequency than is generally perceived, says Andrew Kuritzkes, a partner at Oliver Wyman and head of the management consulting firm's public policy practice in North America. "What is surprising is that we're surprised by how often large banks fail," Kuritzkes says. His research shows the actual failure rate is an order of magnitude higher than the default rates implied by credit ratings. What's more, such failures are unavoidable over the long term, he says. In this interview with Knowledge@Wharton, Kuritzkes suggests new rules of the game that would greatly improve the financial system's ability to absorb the inevitable, if individually unpredictable, shocks of big failures. Kuritzkes was the keynote speaker at the recent 12th annual Financial Risk Roundtable organized by the Wharton Financial Institutions Center and Oliver Wyman Institute.

LINK TO ARTICLE: http://knowledge.wharton.upenn.edu/article.cfm?articleid=2259

Reproduced with permission from Knowledge@Wharton (http://knowledge.wharton.upenn.edu), the online research and business analysis journal of the Wharton School of the University of Pennsylvania. All materials copyright of the Wharton School of the University of Pennsylvania. http://knowledge.wharton.upenn.edu

M&A - Morgan Stanley and Citi Launch Joint Venture to Create New Global Leader…

…in Wealth Management

Morgan Stanley (NYSE: MS) and Citi (NYSE: C) today announced the closing of their Morgan Stanley Smith Barney joint venture, which will create a new global leader in wealth management. Originally targeted for the third quarter of 2009, the closing was achieved ahead of schedule.

As previously announced, Morgan Stanley Smith Barney combines Morgan Stanley's Global Wealth Management Group with Citi's Smith Barney in the U.S., Quilter in the UK, and Smith Barney Australia retail units into a new wealth management firm with over 130 years of experience.

LINK TO ARTICLE: http://www.citigroup.com/citi/press/2009/090601a.htm

MISCELLANEOUS - Finding A Good Financial Advisor: Ask Tough Questions...

…Demand Answers

A new book, Asset Allocation for Dummies®, coauthored by Jerry Miccolis of Brinton Eaton Wealth Advisors, offers detailed advice on what to look for and avoid in a financial advisor.  

Miccolis says to ask any potential advisor these questions:

Have you ever been disciplined for unethical or improper conduct?  Sued by a client? Ask, but don't take the advisor's word for it.  Check the advisor's history for violations or disciplinary actions with state and federal agencies or industry organizations.  Checking is free and usually can be done online.

What are all your sources of income? "You want objective advice, so you need to know if the advisor has any potential conflicts of interest or divided loyalties," Miccolis says.  Understand if the advisor is receiving income only from clients ("fee-only"), or is paid by sales commissions, or both ("fee-based" or "fee-plus-commission").

How easy is it to fire you?  Don't sign any contracts that obligate you to keep an advisor for a set period of time, Miccolis says.

Who will be the custodian of my assets?  Be very wary of an advisor that's its own custodian, a la Bernie Madoff.  Choose one that houses your assets with an established third-party custodian.

What are your qualifications and training?  Only a handful of the more than 100 financial designations mean much, Miccolis says.  Many sound impressive but are meaningless. Top credentials are CPA (particularly CPA/PFS) for income- and estate-tax work, CFP® for financial planning, and CFA® for investments.

What services can you offer me?  Some firms offer limited services; others cover the full gamut of planning, taxes, and investing.  A full-service firm isn't necessarily better than a specialist, as long as the advisor can do what you need.

Will you personally handle my account?  At a large firm, you may first meet a salesperson you'll never see again. Ask to meet with everyone who will be making decisions that affect you.

How did your clients do in the last down market?  "Everyone is a genius in a bull market," Miccolis says.  "You also want your advisor to be able to protect you in down markets."  

Can you describe your investing approach?  Does the firm rely on one or two "stars," or is the approach institutionalized and reliably reproducible over many years?

Are you sensitive to taxes when investing?  Some advisors don't care, but one who takes a holistic approach will help you keep more of what you make.

What do you invest in?  Is it mutual funds, ETFs, individual securities, alternatives, or all of these? You want a firm that offers the most choices and flexibility.

What kinds of reports will I receive, and how often? Make sure you get monthly reports from the custodian, and at least quarterly reports form the advisor, showing portfolio holdings, transactions, tax impact, and performance.

What is your client-to-employee ratio? If close personal attention is what you want, a firm with a ratio of 25-to-1 or less is more likely to satisfy you then one where the ratio is over 100-to-1.

"Don't be embarrassed by the idea of asking so many questions. It's your money," Miccolis says.  The best advisors will welcome these questions because they'll be proud to answer them. www.brintoneaton.com

MISCELLANEOUS - How Photos Can Be Protected From Natural Disasters…

…Advises ScanMyPhotos.com

Expanding on the theme of National Preparedness Month (NPM), ScanMyPhotos.com is not waiting until the annual September event to issue an urgent recommendation encouraging people to take action and prepare for emergencies year-round. NPM is a nationwide effort sponsored by the Department of Homeland Security's Ready Campaign to increase awareness for preparing and to effectively deal with emergencies and natural disasters.

LINK TO ARTICLE: http://www.businesswire.com/news/home/20090610005358/en

MISCELLANEOUS - The Face of Financial Distress –

Millions of Consumers Seek Help from NFCC Member Agencies

As the economy declined, the number of consumers reaching out for financial help from the National Foundation for Credit Counseling (NFCC) increased dramatically.  In 2006, the NFCC Member Agencies assisted 1.48 million people.  Two short years later, that number more than doubled with 3.2 million consumers receiving counseling.

NFCC Member Agencies deliver a variety of services including budget counseling for those not experiencing financial distress, debt counseling for people who are struggling to service their debt obligations, housing counseling from pre-purchase to foreclosure prevention, along with providing the mandated bankruptcy pre-filing counseling and pre-discharge education.

LINK TO ARTICLE: http://www.nfcc.org/NewsRoom/newsreleases/files09/FaceFinancialDistress.pdf

MISCELLANEOUS - TowerGroup Optimistic On Wholesale Banking Sector…

…In Otherwise Ailing Industry

The wholesale banking sector is weathering the storm and providing a major "bright spot" in the banking industry even as consumer banking continues to falter, according to TowerGroup, a leading financial services research and advisory services firm. The economic crisis that has struck the US consumer financial services industry and devastated banking institutions and channels around the world has not had as great an impact on wholesale banking. TowerGroup reports that transaction services businesses of leading global banks averaged 22% annual revenue growth in 2008 and wholesale banking overall revenue growth of 11%. Though growth rates have begun to slow in 2009, these businesses continue to generate a significant portion of the profitability of commercial banks globally.

"Bank executives must determine how to guide their institutions through the deteriorating economic circumstances of this recession while also focusing on how to build their businesses for the new financial landscape that will follow," said Theodore Iacobuzio, Research Executive for Payments and Wholesale Banking, at TowerGroup. "The reliability of the wholesale banking sector provides a critical business engine for stable revenue growth, an engine that will help drive institutions in the post-recessionary era, creating even greater business opportunities in the years to come."

REGULATORY/COMPLIANCE - Predatory Payday Loans: Congressional Briefing…

…New YouTube Video and Website Chronicle Abusive 400% Interest Rates

Religious, civil rights and consumer groups today briefed congressional lawmakers and staff on why all families should be covered by the 36 percent rate cap on consumer loans that already protects military families. Over 70 percent of Americans support a cap of 36 percent or less.

"The issue of payday loans is an economic justice issue, and it is a moral issue," said Bishop Minerva Carcaño of the Desert Southwest Annual Conference of the United Methodist Church in Arizona. Arizona and Ohio voters last fall sent a strong message to the payday industry when they used the ballot box to boot abusive payday lending practices from their states.

LINK TO ARTICLE: http://news.prnewswire.com/ViewContent.aspx?ACCT=109&STORY=/www/story/06-04-2009/0005038659&EDATE=

RESEARCH - Belt Tightening Behaviors Continue to Rise, First Command Reports

The ranks of Americans who contend they have permanently reduced spending is continuing to rise, pointing toward a more frugal consumer environment after the recession is over.

The May survey of the First Command Financial Behaviors Index reveals that 20 percent of Americans say they have cut back for good on spending, up six points from 14 percent in February.

LINK TO ARTICLE: http://www.businesswire.com/news/home/20090610005661/en

RESEARCH - New Research from The Hartford Finds Americans are Worried…

…About Losing Ground on Retirement Savings

Financially battered by a recessionary economy and painfully aware of the nation's rising unemployment rate, one in two Americans polled in a recent survey by The Hartford Financial Services Group, Inc. (NYSE: HIG) say they are concerned about losing ground in their efforts to save for retirement.

The survey, conducted earlier this spring, found that 56 percent of respondents worry they will be unable to maintain their current level of contributions to their employer's 401(k) or other defined contribution retirement plan.  A total of 34 percent were "extremely" or "very" worried about sliding back on how much they save.

LINK TO ARTICLE: http://www.businesswire.com/news/home/20090615005729/en

RESEARCH - New Study Finds Nearly Half of U.S. Companies with Severance Policies

…Have Separate Plans for CEOs

While many U.S. companies are striving to adapt a uniform approach to severance plans, 51 percent of companies with severance policies still have a separate plan for the top executive, according to a study released this week by WorldatWork and Innovative Compensation and Benefits Concepts LLC (ICBC), an HR consulting firm.

LINK TO ARTICLE: http://www.businesswire.com/news/home/20090602006091/en

Workforce Management & Staff Modeling

• Inefficiencies from merging disparate operations, technologies and staffing practices
• Limited understanding of the implications of newly installed technologies
• Inefficiencies resulting from arbitrary, across the board staff reductions
• Inadequate performance metrics
• Lack of tools for objectively monitoring and managing productivity
• Perception that managing staff levels and productivity is an occasional, emergency activity

• 18 years experience reengineering operational areas in banking, insurance and capital markets
• Proven approach to developing work force management standards and performance metrics
• Comprehensive staffing models
• Demonstrated expertise in organizational design
• Established implementation tools and techniques
• Proven tools for monitoring and measuring benefit
  

If you would like additional information, please contact Tom Vleisides at (213) 614-8066 ext. 244 or email tvleisides@castconsultants.com.

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