CAST Management Consultants, Inc.

CASTing an Eye on Banking - July 19

1: CAST SERVICE HIGHLIGHT

Non-Earning Asset Reduction
A proven approach to quickly grow the revenues associated with Non-Earning Assets (NEA) on either an enterprise-wide or line of business basis

Over the last 15 years, CAST has observed extensive mergers and acquisitions within the banking industry, frequently resulting in underperforming and largely untapped revenue potential from overlooked assets. For banks that have not carefully addressed this potential or have unsuccessfully attempted to increase NEA revenues in the past, CAST has developed a focused and highly proven technique for realizing improvements in the order of 5 to 10 basis points on total assets.

Factors Contributing to Under-Performing Assets

Incomplete understanding of customer behavior related to various types of fees
Misaligned product structures and incentives
Insufficient tools for measuring and monitoring performance
Limited understanding of competitive practices
Inappropriate product structures and features
Lack of product alignment across organizational silos
Failure to actively manage the timing of fund inflows and outflows
Ineffective procedures and policies

Why CAST for Non-Earning Asset Improvement

Extensive experience in Cash Management, Operations, Finance
15 year successful track record in non-earning asset optimization
Proven tools for monitoring and measuring performance
Database of non-earning asset best practices
Knowledge of the inter-relationships of various insurance and financial service products
Proven, fact-based approach to analysis and implementation
Cross industry experience in non-earning asset improvement

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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2: AMERICAN BANKER - As Investors Grow Restive, Advisers See Opportunity…

… to Peddle Calm

American Banker Wednesday, July 14, 2010

By Howard Stock

Affluent investors ended the first half of the year on a sour note, their confidence slipping seven points in June, to minus-12 on Spectrem Group's Affluent Investor Confidence Index, but advisers say that falling confidence presents an opportunity rather than an obstacle.

The last time affluent investors' confidence fell so far so fast was in June 2009, when the Spectrem index dropped by eight points. This June's decline means affluent investors, those with $500,000 to $1 million to invest, are feeling bearish.

Millionaires, too, lack confidence in the investment climate; their index fell six points, to minus-7. Though all wealthy investors were worried about their accounts, richer clients were less worried.

At 26% (29% for millionaires), the political climate is what most worries wealthy investors, particularly the uncertainty about future tax hikes and the potential impact of the nation's bloated deficit, said George Walper, the president of the Spectrem Group in Chicago. Other prominent concerns were the economy (24%), market conditions (10%), unemployment (5%), inflation (4%) and health-related issues (3%).

All this worry is a clear sign to advisers to expect gloomy clients, but Walper said the news is not all bad.

"This is an opportunity," he said. "Make sure you understand your clients' psychological feeling about the market and Washington; listen to that, and build solutions for them," be they additional financial planning or simply portfolio tweaking.

"People are shifting toward far more conservative investment strategies," Walper said. "The definition of that is in the eyes of clients, which is why it's so important to really know your clients well."

Barry Jones of Axa Advisors in Davison, Mich., said he agrees that what appears like a negative is actually a positive for advisers.

"Market gyration is a great reason to sit down with clients to articulate what's going on," he said. "A lot of people are keeping their money on the sidelines."

The goal is to get them to move that money into a relatively safe investment strategy that will reward the client far more than the certificates of deposit and money market funds many have chosen.

For the past eight months, Jones said, he has been talking to clients about Curian's dynamic risk account, a seesaw consisting of one- to three-year Treasuries on one side and a basket of global equities, commodities and emerging-market-debt exchange-traded funds, among other things.

When the portfolio falls any more than 1.2%, Jones said, assets are shifted to Treasuries. If it gains by 1.4%, assets are shifted from Treasuries to growth investments. Almost 10% of Jones' $60 million book is now with Curian, which he combines with annuities for guaranteed income and pools of "sometime" money in long-term growth strategies.

Maris Ogg, the president of Tower Bridge Advisors in West Conshohocken, Pa., also seesaws between market exposure and safety, depending on how the market is acting.

Most of her firm's clients fall between 60:40 and 40:60 ratios of stocks to bonds, she said. The firm uses a proprietary but "simple" market indicator based on factors such as bond and earnings yields and risk premiums to figure out whether the market is overpriced or underpriced relative to the past 25 years.

Right now, she said, the market is more undervalued 25% of the time, making it a buyer's market.

Typically, she said, "we'll pull back when stocks go up," that is, sell them and move the money to cash until a suitable bargain emerges or into hedges against sudden slumps with puts and covered calls.

Market volatility is making both advisers and clients skittish, so they are holding back until prices stabilize.

"With volatility so high, all you can do is offer sympathy and keep people calm," Ogg said.

However, she noted that it is sometimes an adviser's job to counter excessive client negativity. The market will become more stable in November when "there will be more of a balance in Congress, and a stop to the anti-business agenda. The underlying economic numbers are clearly moving in the right direction," she said.

In short, just because investors are scared does not mean they will stay on the sidelines if an adviser can offer a viable alternative for getting a return. What seems to work is active management that minimizes downside risk.

"This strategy works tremendously well in a sideways market," Jones said. "I think we'll be stuck in it for a long time, so it's very attractive to clients right now."

3: AMERICAN BANKER - B of A Merrill Retirement Services Buildup Showing Results

American Banker Tuesday, July 13, 2010

By Matt Ackermann

Bank of America Merrill Lynch's expansion of its retirement services business is picking up momentum.

Enlarging the operation has been a key initiative for the Charlotte company for the past year, and its "recommitment" to the business is really beginning to see results "in terms of sales traction in the marketplace," Andy Sieg, head of B of A Merrill Lynch retirement and philanthropic services, said in an interview last week.

In the first six month of this year, the unit generated more than $13 billion in new retirement business, which is more than it accumulated for all of 2009. At March 31, the unit was responsible for about $500 billion in client assets.

"The pace of sales is running well ahead of our forecast and objectives," Sieg said. "The momentum is strong and these additions will redouble momentum."

B of A Merrill Lynch said in an internal memo Thursday that it hired two veterans from Fidelity Investments, Rich Linton as head of business retirement solutions, and Steve Ulian as head of institutional retirement and benefits solutions.

Linton, 42, will be responsible for managing B of A Merrill Lynch's small-business retirement solutions including its Advisor Alliance platform, which was formerly MLConnect, and the SEP/Simple offering, which is an individual retirement account offering for small businesses.

He was an executive vice president of the adviser retirement group at Fidelity, where he held a variety of senior executive positions since he started at the Boston company in 1990.

Ulian, 46, will run B of A Merrill Lynch's proprietary 401(k) platform, defined benefit plan administration, requests for proposals, pricing and underwriting as well as equity plan services.

He was an executive vice president in sales and relationship management for Fidelity's workplace investing group. He has worked at Fidelity since 2005. Before that, he was a national sales manager and an operations team leader at Deutsche Bank/Scudder Investments, where he led its retirement services business.

Both Linton and Ulian will take on responsibilities that were handled by John Furlong, who left in January to pursue other opportunities. They will report to Sieg, who said the pair will help B of A Merrill Lynch penetrate both ends of the retirement market.

He said Ulian will focus on delivering integrated benefits solutions to mid- and large-market companies and Linton will focus on smaller businesses.

Sieg said Linton will work with executives throughout the parent bank to cross-sell retirement solutions to its 4 million small-business customers.

In June, B of A Merrill Lynch relaunched Advisor Alliance, a retirement services platform for companies with fewer than 100 employees, to attract more business from small businesses. The platform allows Merrill Lynch advisers to sell record keeping and retirement plan administration services to small-business owners.

Sieg said he thinks there are opportunities to work more closely with small-business owners. Bank of America Global Commercial Bank has relationships with one out of every three midsize businesses nationally. This year the company's global commercial bank had referred more than 2,100 clients to the B of A Merrill Lynch institutional retirement business, as of June 30.

Sieg said B of A has "only scratched the surface of the referral opportunities that exist between these two businesses."

Adding retirement assets has been a major initiative at B of A since it hired Sallie Krawcheck in August as the $2.39 trillion-asset company's head of wealth management and brokerage operations. In October, B of A rolled out My Retirement Income, a group of products that let customers nearing or in retirement automatically transfer funds from a Merrill Lynch cash management account into a B of A deposit account monthly or quarterly.

Sieg said his unit will continue to look to hire to support its growth.

4: AMERICAN BANKER - Back from The Brink

US Banker July 2010

By John Engen

Talking with Stephen Steinour can feel oddly refreshing, much like stepping into a time machine and going back five years or so to a simpler, happier time. The chairman and chief executive of Huntington Bancshares spends a lot of time discussing branding, product development, cross-selling and--gasp!--loosening underwriting standards, all with an eye toward stealing business from rivals, building wallet share and growing revenue.

If you didn't know better, you might think that the country was no longer in the midst of a devastating banking crisis, or that the $52 billion-asset Huntington hadn't recently survived its own near-death experience. The Columbus, Ohio, company lost $3.1 billion in 2009, buried under a mountain of toxic subprime housing, construction and commercial real estate loans, and its survival was in doubt.

But it is poised for a strong recovery now, asserts Steinour, 51. As proof, he offers up Huntington's surprising first-quarter profit of $39.7 million. Nonperforming assets, chargeoffs and loan-loss provisions all declined. Like others, the company has taken to publishing "pre-tax, pre-provision" income numbers to demonstrate its operating health, and again the news looks good: $252 million in the first quarter, up 12 percent from a year earlier.

Huntington might not be out of the woods yet, but it appears to be a couple of paces farther down the path than most rivals. That, Steinour explains, provides a powerful advantage as banks everywhere ponder how to position themselves for the post-crisis world. "There's a moment here to invest in growth, and we intend to seize it," he says.

Under Steinour, a former CEO and president of Citizens Financial Group in Providence, Huntington has won kudos for attacking its credit woes aggressively. Since he took the helm in January 2009, the company has set aside $3 billion in loan-loss provisions, cut expenses and done deep-dive reviews of the subprime mortgage, commercial real estate and construction loan portfolios that have given it so much trouble. It also has raised $1.8 billion in new capital.

Such moves have revived Huntington's vital signs. In the first quarter, the company's Tier 1 capital ratio was 11.94 percent, while its tangible common equity ratio was 5.96 percent.

Nonperforming assets were still elevated at $1.92 billion, or about 5.2 percent of loans, but the figure was smaller than the quarter before. Net chargeoffs were $238.5 million, or 2.58 percent of total loans on an annualized basis--a 46 percent drop from the previous quarter's levels.

"A year ago, there were some legitimate questions about whether Huntington would still be around," says Scott Siefers, an analyst with Sandler O'Neill & Partners. Today, "survivability is no longer a concern."

Huntington isn't alone in having successfully tackled its credit woes. What's really turning heads is the assertiveness with which Steinour is positioning his company for the future.

"From the day Steve arrived, the message has been to get ahead of the credit and capital problems ... and not wait for those problems to go away before we started investing" in growth, says Daniel Benhase, a senior executive vice president in charge of private banking. "The pace of play and sense of urgency in the company are much higher today than they ever were before."

That high-energy, pedal-to-the-metal approach appeals at a time when external pressures--still-hefty credit problems, Washington's crackdown on fees, higher regulatory expenses and meek loan demand--are placing added pressure on industry earnings.

"The real issue for all banks going forward is, how will they grow coming out of this cycle?" says Fred Cummings, a longtime Huntington follower as an analyst and now president of Elizabeth Park Capital Management, a $30 million fund based in Cleveland that invests in banks. The short answer, at least in the Midwest, is to steal business from competitors.

"What's going to differentiate one bank from another in the next couple years will be how much momentum they have in their core businesses," adds Cummings, whose fund owns Huntington shares. "When you look at Huntington, they've been dealing with their credit problems. But they've also plotted a strategy for revenue growth."

None of this is a surprise to the people who know Steinour well. Larry Fish, Citizens' former CEO and chairman, says his protégé has trained his whole career to be a bank CEO.

"It was always his ambition--almost a destiny--and he was ready for it," Fish says.

During his 28 years at Citizens, Steinour became a "complete banker," Fish says. "He's one of those executives who can tell you how checks are processed, how credit is underwritten, how deposits are priced, how M&A contracts are completed. He knows every facet of the business."

When Steinour took the helm, "a lot of Citizens' executive team bought Huntington stock," Fish adds. "We know what he's capable of."

Ask colleagues to describe Steinour, and the words "intense," "tireless" and "workaholic" come up. With his family still in Philadelphia, he's pretty much all business, all the time--a demanding boss who puts in 15-hour days, expects his charges to know their numbers, and isn't much for idle chitchat or joke-telling. Benhase calls the measurement, tracking and level of dialogue under the new boss "the most intense I've seen in my career." When meeting with Steinour, he adds, "you'd better know your numbers. He expects high things from you."

That Huntington, a perennial also-ran in a recession-battered region with a reputation for sluggish growth and too many banks, is winning accolades as an industry model might be a shocker.

The Midwest has 22 percent of the nation's population, but 44 percent of its banks, says Tony Davis, an analyst with Stifel Nicolaus & Co. In Ohio, home to nearly two-thirds of Huntington's deposits and a 10.9 percent unemployment rate, the list of competitors includes Pittsburgh's PNC Financial Services, Cincinnati's Fifth Third Bancorp and Cleveland's KeyCorp. JPMorgan Chase & Co. and U.S. Bancorp also boast strong Ohio roots.

Long rumored as a takeover target, the 144-year-old Huntington has floated for decades in the murky middle of banks--considered too big to offer the same level of service as a community bank, too small to provide the products and reach of the big guys. It has stubbornly defied the cynics, performing just well enough to retain its independence, but never truly distinguishing itself.

Huntington's recent history has included the botched integration of its First Michigan Bank acquisition in 1997, an ill-fated foray into Florida (though it did exit the state before real estate prices imploded), and accounting troubles in the early 2000s that sparked regulatory investigations and financial penalties.

Former CEO Thomas Hoaglin, an old Bank One hand who took the reins in 2001, mimicked his former employer by introducing a decentralized culture that promoted local decision-making. The plan worked, to a certain extent, with respectable, but not knock-your-socks-off, returns, but also created vulnerabilities.

In 2007, Huntington completed a $2.7 billion acquisition of the Bowling Green, Ohio-based Sky Financial Group, itself a serial acquirer. Buying the $17 billion-asset Sky and its 330 branches boosted its size and promised some big cost savings from branch consolidations. But the deal also included a $1.7 billion-in-loans partnership with subprime mortgage originator Franklin Credit Management Corp.--and the timing couldn't have been worse.

Within months, the Franklin portfolio began to sour badly. In December 2007, just five months after the deal closed, Huntington announced a $300 million charge related to its recently acquired loans. Sky's former CEO--and Hoaglin's heir apparent--Marty Adams abruptly resigned as president.

Hoaglin had publicly stated his intention to step down by 2011; with Adams gone, most analysts assumed he'd stay. Instead, in late summer of 2008 he quietly prodded the board to begin searching for his replacement. The board hired headhunter Spencer Stuart to conduct a national search, and four months later Steinour, who was managing partner for Cross Harbor Capital Partners, a Boston private-equity shop, emerged at the top of the list.

Steinour says the company's troubles were "part of the allure" of the job. Huntington hadn't been aggressive enough on its credit issues, he says, and also had an opportunity to grow. As a former competitor, "I knew that, historically, it's always been very difficult to pry a customer away from Huntington."

On the flip side, Huntington's board was impressed with Steinour's background, including a stint early in his career with the Federal Deposit Insurance Corp. and his connections with the investor community. "Steve was the complete package," says David Porteous, the company's lead director and head of the search committee that landed Steinour. "When we overlaid his experience with our needs, it was very evident he was the right person."

The initial going was rough. The week Steinour's hiring was announced, Huntington's share price plunged by nearly a third, to near $4. Within two months, it bottomed out at about $1. This was early in 2009, and the entire industry was in turmoil over the economy, government stress tests and the like. Even so, "seeing a new CEO really spooked a lot of investors," Siefers says.

Almost immediately, Steinour went to work, biting the bullet on loan-loss provisions, overhauling Huntington's relationship with Franklin and cleaning up the balance sheet. In his first six months, he laid off more than 500 employees in a cost-cutting move, slashed the quarterly dividend to a penny and raised about $1.8 billion in badly needed capital.

Steinour also installed two new board members, both with banking experience, and hired a number of key managers--including those in credit, strategy and development and commercial real estate. Others were let go. "We had some individuals who let the company down in our risk area," he says. "They're not with the company any longer."

The entire organization was restructured to foster better controls and accountability. Commercial real estate, which previously had been part of commercial banking, became an operating unit of its own. In the retail-banking group, the number of district managers dropped from 51 to 32.

Post-crisis, risk-management has been a high priority. One of Steinour's first hires was Kevin Blakely, former president of the Risk Management Association, as chief risk officer. Business units have been imbedded with their own risk-management officers.

Those teams pull together audits and exam data, but also spend time "process-mapping everything ... so that everyone understands what moderate-risk and low-risk mean," says Mary Navarro, senior executive vice president for retail and business banking.

Big-picture risk-management goals were set, such as reducing the loan-to-deposit ratio (it has dropped from 108 percent a year ago, to 92 percent today), backed by changes to incentive plans. "We used to be a loan machine," Navarro says. Last year, the incentives on selling checking accounts were doubled, while lending targets were tamped down.

Individual units have goals of their own. The CRE team, for instance, has broken down present-day problems in its $7.5 billion portfolio into "core" and "noncore" segments.

The approximately 60 percent of the book considered core--or worth keeping--is treated with kid gloves; noncore loans, including those outside of Huntington's geography or risk tolerance, are handled more aggressively.

Business line heads are held accountable for their troops' results, but they also have help in the form of greater centralization. It's now part of the process for higher-level executives to sit around the table and critique how one manager's initiatives might impact the greater whole.

"Before, we had each group making its own decision," Navarro explains. "By the time you rolled it all up, the overall company might have had a higher risk profile than we wanted."

Halfway through 2009, even as the company was still working through its credit problems, Steinour put senior management to work on a three-year strategic plan, with an eye to capitalizing on the disruptions in the marketplace and growing revenues. While somewhat counterintuitive in the midst of a crisis, "being able to say, 'We're going to set some growth goals and invest in the business,' had an energizing effect on employees," Benhase says.

Huntington had strengths to build on, including a highly rated online banking platform and strong customer-service rankings. Some product lines were targeted for enhancement. One example: foreign exchange, where officials saw an opportunity to build on relationships with middle-market clients.

Another is small-business lending, where Steinour has committed to relaxing Huntington's underwriting standards, with an eye to doubling originations by 2012, to about $1.5 billion.

Steinour offers as an example an otherwise solid small business that lost money in 2009, due to the economic conditions, but now is turning a small profit. "Historically, that's not a loan a lot of banks would make. But it's a smart, prudent business decision to find those [clients], make sure you understand the circumstances, and then get behind them and make some loans," he adds. "We need to restart the economic engines."

In a part of the country saturated by banks, getting more business from existing customers has emerged as a top priority. "Cross-sell is the mission of the company at this point," Benhase says, noting that incentive plans and measurement all have been reworked to emphasize working together to get more business from individual clients.

"You can't opt-out," he says. "There's an insistence and accountability about working together."

Those initiatives have been backed with technical support and spending. A new customer relationship management system, for instance, is being installed to replace five different systems presently in place around the company.

In recent months, Huntington has hired about 500 people--roughly the amount it cut early last year. It also has renewed the lease on its headquarters office, ahead of schedule, opened six new wealth management offices and boosted its spending on corporate marketing by 36 percent in the first quarter versus a year earlier.

"I've been asked many, many times to grow retail 15 percent year over year, while also cutting expenses," Navarro says. "This is different. We're getting support to achieve our goals."

To promote his agenda, Steinour has become cheerleader-in-chief, making near-quarterly bus journeys around Huntington's six-state franchise to transmit his energy and answer questions in town hall-style forums.

All of these are first steps, and it's frankly too early to say for sure if they will produce lasting change. But it seems clear that Huntington will emerge from the financial crisis better off, its independence more assured than it was before. For the third quarter, Steinour is openly targeting pre-tax, pre-provision earnings of $275 million, which would mark a nearly 10 percent increase from first-quarter levels.

Some analysts predict it won't be long before Huntington heads out on the acquisition trail. "The beneficiaries coming out of this cycle will be the banks that are positioned to be consolidators. Huntington is a candidate to be one of them," Stifel's Davis says.

Steinour "has set some aggressive objectives and been relentless in achieving them," Davis says. "In the process, he's turning Huntington into the best bank it's been in several decades."

5: AMERICAN BANKER - Core Matters

US Banker July 2010

By Glen Fest

Banco Bilbao Vizcaya Argentaria SA unveiled in May a new customer-centric banking model called Plan Uno, which is intended to remove the walls between service delivery channels at the $662 billion-asset company. Within three years, BBVA plans to fully merge all customer channels to one service platform, meaning there will be no more business-line distinctions between in-person branch or electronic banking. Banking, investment or insurance products will be tailored for the individual, each constructed from the information in a single consumer profile that lies in the hub of BBVA's core operations.

What makes this ambitious plan possible is a modern core processing system, featuring relational database capabilities plus integrated products that interact fluidly and in real-time with the core. BBVA stands in contrast to most institutions running their operations on dated mainframes that offer less flexibility to add new services and products without substantial information technology work.

Despite the limitations of legacy core systems, U.S. bankers have largely preferred to get by rather than pony up for the substantial expense of an overhaul (which can eat up 50 percent of an institution's annual IT budget). Why? Bankers have generally felt no pressure to upgrade when profits were abundant and lacked the means to do so when earnings evaporated. Banks "seem to get stuck in the spot of, 'how do we justify the massive expense when we're not dealing with the pain?'" says Jim Washburn, head of the banking consulting group for Capgemini Financial Services.

But now, as banks confront the necessity of becoming more efficient, more will be forced to replace and update core systems.

According to an Aite Group survey of bank and credit union executives, 20 percent admit they have reached a critical stage in the need to replace their core systems, at the risk of losing business to spry competitors.

Despite the high upfront costs, Aite found that 56 percent of banks in need of a core upgrade could justify the expense because of new opportunities in revenue, cost cuts and compliance improvement.

Analysts say there are several drivers behind this new sense of urgency.

Competitors Are Plugging In

BBVA's Plan Uno is about improving customer profitability and loyalty. The company, which already has an enviable efficiency ratio in the low 40s, aims to capture all aspects of a consumer's economic life to boost cross-selling and shave expenses--a longtime goal of many in the financial services industry.

As it phases in Plano Uno over three years, BBVA expects its services, which include a Web page that users can customize for their own personal financial management, to attract an additional 500,000 customers. The company plans on eventually bringing unified platforms to all its global subsidiaries, which includes BBVA Compass in the U.S.

That should make banks here nervous. BBVA and fellow Spanish institution Banco Santander--another with U.S. expansion on its mind--have each done "fantastic jobs" at improving efficiencies in their global networks, says Robert Hunt, a core banking analyst for the research firm TowerGroup. When Santander acquired U.K.-based Abbey National Bank in 2004, a conversion to Santander's real-time processing system introduced a regimen of expense reduction that shaved Abbey's 70 percent efficiency ratio to 45 percent.

Besides the Spanish duo, many high-profile North American banks have started the process of modernizing their cores. Union Bank in San Francisco is working on one of the most ambitious core projects in memory, replacing all its disparate systems for checking, loan, consumer and commercial operations into a single real-time processing environment on Indian vendor Infosys' Finacle system. Citigroup is being watched closely to see how well it migrates its North American banking operations to a Fidelity National Information Services platform. Royal Bank of Canada is also said to be moving to a new core, according to the research firm Celent.

Hunt thinks that core-replacement announcements last year at three "super-community" banks--American Savings Bank in Hawaii, Community Bank Systems in DeWitt, N.Y., and Whitney National Bank in New Orleans--might be a prelude to an upgrade cycle for midsize institutions in the $5 billion to $20 billion-asset range. Over the last two years, only 3 percent of core replacements in the U.S. involved midsize or larger banks.

Aite research estimates the market for core replacements is starting to heat up--growing from 391 replacements in 2009 to a projected 575 by 2012.

Doing More with Data

Richard Kick of First National Bank of Long Island jokes that he could "keep two employees busy full time" just handling the data requests submitted to the data warehouse program built into its two-year-old core platform system from Fiserv. Marketing demographics and relationship profitability measures are among the regular data points the bank tracks. "You just get that insatiable appetite for more information," says Kick, an executive vice president.

The $1.6 billion-asset bank had sought to do such benchmarking years earlier, but balked at paying the steep fee for a less robust data-mining product for its old core system. Banks running on legacy mainframe systems often have to pay princely sums for custom applications or program interfaces to dig out numbers from these systems that weren't built to handle complex strategies such as relationship-based pricing, says Hunt.

Newer core systems are much more capable. "We're taking transaction data, frequency of deposits, amount of deposit, debit transactions, and bill pay transactions," says Steve Tait, president of Fiserv's depository institutions group. Banks can use these figures to predict customer attrition, derive optimum customer cross-sales models, and even predict loan defaults, he says. Kick says First National plans to add customer account profitability measures, not only for service means but to break down the performance of its account managers. "We want to take it a step further now."

Getting Beyond Batch

More than 50 percent of large U.S. institutions still operate in a batch memo-post processing environment, according to Aite Group. That creates added functional weakness in the event of a system crash, since the batch process depends on the six-to-eight-hour grind of manual exceptions handling. A batch-based system that goes down might require days of catch-up work, says TowerGroup's Hunt. Another shortcoming is bank batch systems cannot always update a memo-post file in time for the next day's business opening--meaning customers might be denied access to funds they deposited or could withdraw excess funds if a previous debit remains unposted.

Banks would like to automate issues like exceptions and funds availability. The best route would be through a connection from the account to the point of presentment, and "that requires re-engineering the bank and requires replacing the core systems," says Hunt. Real-time processing systems can trigger alerts on errors (such as a double-processed transaction) and have online reporting capabilities that would keep personnel alerted to exceptions throughout the day and could reveal a substantial software or hardware failure that needs addressing.

Buying Power

Banks looking at renewing or replacing their core system relationships have a new strategy in place: Let's make a deal. Almost any solution from vendors like Fiserv, FIS and Jack Henry & Associates today will include add-on modules or standard third-party interfaces for services like online banking or customer relationship management. This allows banks to get more services from fewer vendors, increasing the competition among providers. Banks are "looking at the contracts they have and renegotiating as a way to add features and reduce costs," says John Buhrmaster, president of the 1st National Bank of Scotia in New York.

For banks that want to maintain their previous IT investments, most vendors now offer easy plug-n-play interoperability of third-party systems. Jack Malinowski, chief technology officer of branch automation firm Benchmark Technology Group, says his firm has programming interfaces to add teller capture or voice over Internet protocol to most major systems. Although core providers would like to nudge him aside, they have to acquiesce to bankers' demands. "We don't consider the core systems are competitors to us at all," says Malinowski.

Gary Tice, chairman and CEO of the startup First National Bank of the Gulf Coast in Naples, Fla., says he chose to deploy Jack Henry's SilverLake core platform last year in part because it worked with external products he wanted, such as a Harland Financial Solutions' credit-scoring product.

Five or 10 years ago, banks had to get approval from the core processor to support such a product, says Tice. "That's not the case today."

6: AMERICAN BANKER - In a State of Deterioration

US Banker July 2010

By Robert Wilmers

There is no getting around the fact that we live in a time of unusual crises, from wars in Afghanistan and Iraq to unemployment and underemployment reaching 17 percent to upheaval on Wall Street. But what about the future of our communities, which are being crippled by shrinking tax bases and runaway government spending?

We all know the sorry state of the federal government--the deficit now stands at $1.4 trillion, or three times what it was just five years ago--yet there is virtually no national dialogue about the dismal financial condition of state and local government.

Total state government debt at the end of 2008 amounted to $416.8 billion, not including the $1 trillion in unfunded liabilities of state employee pension, benefit and health care plans. Since 1998, state budgets have grown by 7.6 percent annually or at more than three times the rate of inflation.

State debt in Maryland has increased 8.3 percent annually since 2002. In the past two years, New York State debt has increased 7.4 percent per year, on average. New York is facing a hole of $12 billion this fiscal year and it has been projected that all states combined are facing a budget shortfall of between $180 billion and $350 billion in 2011.

Local governments are no better off. The controller of Harrisburg, Pa., is looking to file for bankruptcy, while the mayor of Los Angeles wants to close city departments two days a week in order to save money. In the meantime, libraries, schools and museums are closing and university systems are being crippled by layoffs. Our bridges and roads sometimes look like they were imported from a third-world country.

In Buffalo, where my company has its headquarters, population has declined for 18 years in a row, and more than 30 percent of the population is living in poverty.

Schools are the best hope to help the disadvantaged and to lay the groundwork for economic renewal, but ours are failing far too many of their students. In Buffalo and Baltimore, fewer than 63 percent of those who enter the ninth grade graduate from high school.

Meanwhile, government keeps growing. Since January 2000, average public-sector employment in the United States has grown by 10.5 percent, while the private-sector job total has decreased by 1 percent. The share of U.S. personal income derived from public employment, social benefits and pensions was 29.4 percent in 2009, compared to 19 percent in 1962. Looked at another way, the number of people depending on government grew by two-and-a-half times the rate of increase of the total U.S. population over this period. The government wants the private sector to create jobs even as it competes with it for talent.

Upstate New York faces an especially toxic combination: high taxes and inefficient public services. Property taxes per capita are among the highest in the nation. As young people continue to leave for lower-cost, higher-growth regions, they leave behind a smaller and smaller private workforce to pay the cost of a bloated, burdensome public sector and the pensions of its retirees. Consider the fact that in Upstate New York, since January 2000, average public employment increased 50,000 or 8.3 percent, while private employment decreased 82,800 or 3.3 percent. In 2009, annual public sector wages in Upstate New York were 14 percent higher than private sector wages. As a result, New York local government, outside New York City, has seen its debt level grow at almost three times the rate of inflation.

I said some years ago that Upstate New York was in danger of becoming more and more like the moribund old Socialist economies of Eastern Europe. In that time since, those countries have found the entrepreneurial spirit, while America is looking increasingly arteriosclerotic.

We simply cannot sustain an increasingly expensive government with a smaller and smaller private economy. We already spend at too high a level with too little to show for it; we have already incurred huge amounts of debt, constraining our capacity to undertake new initiatives. This combination of excessive debt and ongoing high spending robs us of the resources needed to provide the infrastructure of economic growth, including well-supported colleges and universities, as well as the roads, rails and bridges that pave the way for commerce. Simply put, there's no money left for the things we need most to build long-term prosperity for our communities.

Wilmers is chairman and CEO of M&T Bank in Buffalo. This column was excerpted from his annual speech to shareholders.

7: AMERICAN BANKER - Key Aims to Be an Acquirer, Not a Takeover Target

American Banker Wednesday, July 7, 2010

By Matt Monks

KeyCorp's chairman and chief executive, Henry Meyer, said the Cleveland lender -- having just hired a high-profile strategic planner -- has the strength to be a buyer of other banks as the recession eases, not a takeover target like some market watchers have speculated.

"I see the opposite," Meyer said in an interview last week. "I think Key is very well positioned to be an acquirer. We have got as broad a footprint as any bank in the country."

With more than 1,000 branches in 14 states, he said the $95 billion-asset company has the reach to do deals from "Maine to Alaska" as the banking industry consolidates in the next few years.

Keefe Bruyette & Woods Inc. analysts said in a report last week that Key was among several regional banks that could be taken over in the next 18 months as stiff financial and regulatory headwinds crimp banks' ability to improve profits. But Meyer said he is upbeat about Key's prospects as a stand-alone player given its scale and progress in "digging out of a crisis."

After two years of losses on bad construction and commercial loans, Key's net loss narrowed sharply last quarter on falling problem loans and expenses. Meyer said Key has lots of capital; with an unusually far-reaching branch network, it is in a lot of markets where it can build density by buying other banks. It also has ample opportunity for boosting market share organically, something it has been focusing on by overhauling and opening new branches in 2009 and 2010.

"Going on the offense is the way I have been talking to our employees," Meyer said. "We are looking at the future, and we want to be strategically prepared to do better in this new environment."

To that end, Meyer hired a veteran commercial banker with a background in consulting and aerospace engineering to oversee strategic planning.

Mark Williams, who starts this week in the newly created position of director of strategy, comes to Key from rival PNC Financial Services Group Inc., where he had worked since 2005 and oversaw various corporate banking units. He worked as a McKinsey & Co. consultant and engineer in General Electric Co.'s aircraft division earlier in his career.

Williams sits on Key's management team and answers directly to Meyer, whereas prior strategic planners worked under the chief financial officer. Meyer said Williams is a "strategic thinker" with a "tremendous resume." He "will help us prioritize where we will focus spending our money," Meyer said.

Scott Siefers, an analyst with Sandler O'Neill & Partners LP, said that Williams "brings plenty of experience to the table." He said the hire shows how Key is looking beyond fixing its problems to increasing profits, a transition it began last year.

If loan losses keep falling like they did last quarter, that would enable it to start releasing reserves, freeing up capital to do deals in places like the Northwestern and Northeastern U.S., Siefers said. Acquisitions are among the most efficient ways to grow profits, he said.

"They'll definitely survive. They have plenty of capital and plenty of reserves," Siefers said. "It is certainly possible they could be a consolidator a little later on."

The big worry market watchers have about Key involves the strength of its core earnings, he said, because its profits excluding taxes and loan provisions have lagged behind its competitors.

For his part, Meyer declined to discuss Key's profit outlook. But he said Key has a competitive edge on a number of fronts. It is ahead of other midsize banks in technology, he said, having developed a process that reduces the need for paper checks. Though it is among the 20 largest banks in the country, it has maintained a local touch, with the majority of lending decisions made at the local level.

Meyer said reform may also work to Key's favor in some ways because the new regulations may be most painful for large and small banks. Lawmakers have stigmatized large banks for being large, he said, while small banks have fewer resources to cover compliance costs. The "negatives in this regulatory reform bill are going to fall very heavily on community banks. … A company like Key at roughly $100 billion [of assets] is very well positioned," he said.

"We're medium, and we've got a lot of room to continue to grow both our size and our profitability at a time when the small banks are going to be having trouble."

8: AMERICAN BANKER - Overdraft Outlier

US Banker July 2010

By Marissa Fajt

For years overdraft fees helped fuel Woodforest Financial Group Inc.'s fat returns and fast growth.

Even through the financial crisis, when most banks lost money, the $3.3 billion-asset Woodforest consistently posted a stunning return on equity in the 30 percent range and continued adding scores of branches every year.

But regulatory changes could undermine its strategy. As the industry contends with new rules that bar banks from covering overdrafts on debit cards without customers' permission, Woodforest offers an extreme example of the potential impact. Last year more than half of its revenue--interest and noninterest income combined at its bank and thrift units--came from fees on transaction accounts, according to data from Foresight Analytics. The average was 5.9 percent for all holding companies with assets of $1 billion to $5 billion.

Robert E. Marling Jr., Woodforest's chairman and chief executive, says his company intends to slow its growth as it assesses the shifting regulatory landscape. He expects its net income will shrink by up to 15 percent once the overdraft changes take effect this summer."I think most banks are expecting a decline in the revenue," Marling says. "It is just a fact of life that revenue is going to be diminished and companies are going to have to be creative."

But unlike most banks, Woodforest is so dependent on fees that it has attracted regulatory scrutiny lately. An April consent order fined its thrift unit $400,000 for unfair and deceptive practices, forced it to repay $12 million of overdraft fees to customers, and demanded it devise a new business model that relies less on fees.

Marling says the company expects regulators to sign off any day now on a plan that calls for the thrift to start originating mortgages. He could not say whether the bank unit also faces regulatory action.

The accusation of unfair and deceptive practices arose from its "Absolutely Free Checking," which charged overdraft fees. The account has since been renamed.

"Obviously misleading any customer is damaging to a franchise," Marling says. "It is extremely important that the industry be clear and as transparent as possible."

Woodforest, which is based in The Woodlands, Tex., operates more than 660 branches in 17 states, predominately inside Wal-Mart stores. Its returns have long outpaced industry averages and have risen even more significantly since 2005, when it began opening the Wal-Mart branches outside of Texas at a rapid clip.

Though the in-store locations have low deposit balances, do not make loans and, in some cases, stay open around the clock, the expansion proved lucrative, partly because of the account fees Woodforest collected. Overall Woodforest's branches average only $4.3 million of deposits, even counting its 40 traditional ones in Texas.

Industry observers say in-store branches are cheaper to build and operate than a traditional branch, which might need to amass $25 million to $30 million in deposits to break even. A typical in-store branch has less than $10 million in deposits. Still, they agree that it'll be a struggle for Woodforest to maintain its outsized returns, at least in the near term.

"This is clearly a fee-based model," says Ken Thomas, a bank consultant and economist in Miami. "It's a model built on a large number of low-deposit branches charging deposit fees repeatedly to the same customers."

Often in-store branches attract customers who, being inexperienced with banking, incur more fees. So these branches are "particularly vulnerable to fee erosion" with the new overdraft rules, says Steven Reider, the president of Bancography, a bank consulting firm in Birmingham, Ala.

But Reider doesn't believe the industry will see fee income drop by 50 percent at in-store branches, as some predict. "I certainly think it has some diminishment of the attractiveness of the in-store proposition. But I don't see this change being as acute as others do."

Consultants and bankers say that many customers are opting in for overdraft protection and that more are likely to do so once their debit cards get declined because of insufficient funds. In Woodforest's case, 85 percent of new customers since April have signed up for the service, Marling says.

The privately held Woodforest also has changes afoot to cut expenses and generate additional revenue, but Marling would not give specifics. "We are adjusting like most institutions, looking at our staffing models and in some cases our hours of operation," he says. Already the company--which sometimes added as many as 150 branches a year--is slowing the pace of its expansion as a result of the weak economy and uncertainty over what the government's massive regulatory overhaul will bring. It opened 100 branches last year and expects to open about 50 this year.

Marling says the company, which charges $34 for each overdraft incident, offers financial education programs to help its customers. It also removes the first fee that customers incur for insufficient funds if they take an online financial literacy course.

Dave Martin, an executive vice president at the consulting firm NCBS, says Woodforest's customers are more likely than most to opt in for overdraft protection, though they might wait until after their debit cards get declined. "There is a tendency to say this bank makes a ton of money on fees, but at the end of the day the product they are providing is what customers want."

9: AMERICAN BANKER - Tap, Pay and Go

US Banker July 2010

It's likely most people in Stoneham, Mass., never heard of Bling Nation before this summer.

But Rule Loving is confident they'll take to the mobile payment service Bling created.

"There's no reason not to do it," says Loving, an assistant vice president at the $420 million-asset StonehamBank, which tested the service with its employees before starting to roll it out to customers in June.

Users stick a small plastic tag on their mobile phones, allowing them to simply tap the phone to pay for purchases at participating local businesses.

Bling automatically transfers payment from the customer's bank account to the merchant's. A text message acts as a receipt, providing details of the transaction and the new account balance.

The service costs customers nothing, just as if they had paid with a debit card, Loving says. And the transaction fee that the business pays is about half the amount it would be for a purchase with a card.

So far only about a dozen community banks work with Bling, and analysts are split about its prospects.

"I think Bling is one of the most interesting payment startups out there," says Gwenn Bezard, a research director at Aite Group. With the money saved on fees, businesses often start a rewards program for Bling users, Bezard says. And this gives customers more of an incentive to pay with Bling.

"Building a payment network is a challenging proposition, no doubt about it," he says. "But they don't necessarily need to have a massive national network right away. All they need is scale in a specific community."

Red Gillen, a senior analyst at Celent, is skeptical about whether Bling can take off, though.

The challenge for a company introducing a new payment method is that getting consumers to use it requires signing up merchants to accept it, Gillen says. But getting merchants to try something new requires having enough consumers to make the effort worthwhile.

"They have to address the chicken and the egg," Gillen says. "Right now this model is going to make it very difficult to succeed, picking off one small bank and one small merchant at a time."

Loving is an evangelist. His bank wants to attract more young people as customers, and Loving expects they'll be enthusiastic about the ability to tap and pay with a mobile phone.

"We just rolled out mobile banking a few months ago, and we think Bling is very complementary to that," he says.

StonehamBank aims to have 30 percent of its customers actively using Bling by yearend, and based on early results from other banks, that seems like a realistic goal.

Meyer Malka, Bling's founder and co-chief executive, says the first bank to deploy the service last summer signed up half of its customers within four months. He says debit cards took years to gain a similar level of acceptance.

Customers at the initial bank averaged 11 debit card transactions monthly at the time, and Bling captured a share of that business. Now each Bling user there makes about six purchases monthly using the service.

Loving says businesses need to open an account at the bank to accept Bling payments. So the service is a way for the bank to initiate a relationship with prospects too.

10: AMERICAN BANKER - The Cost of Inaction

US Banker July 2010

By Rob Garver

Bryan Nash was in a meeting when he realized that someone was trying to make a fraudulent purchase with his credit card.

On his cell phone, Nash, the chief information officer at McHenry Savings Bank in Illinois, received a text alert from Bank of America displaying the one-time pass code he would need to log in to his credit card account. Nash wasn't trying to log into his account, but he knew that whoever was didn't have the code, and he returned comfortably to the conversation at hand.

Nash would love to be able to offer the same sort of security to his bank's commercial customers, but like many bankers across the country, he has run into some roadblocks.

Many commercial customers balk at the added inconvenience of using new authentication systems, and many of the vendors that banks rely on to manage their payments systems have not updated their systems to offer state-of-the-art authentication services.

Yet, according to Sandra L. Thomson, director of the Federal Deposit Insurance Corp.'s Division of Supervision and Consumer Protection, banks shouldn't delay introducing additional security into electronic payments.

Speaking at a symposium on commercial payments fraud in May, she noted that electronic bank fraud declined dramatically in 2007, after regulators released guidance mandating stronger customer authentication controls.

But by late 2008, she says, criminals had adapted, and the rate of fraud has been on the rise ever since, with commercial payments as the target of choice."In many of the cases," she says, "the fraudulent transfers were made from business customers whose online business banking credentials had been compromised."

Federal law enforcement officials say that attempts to hack into business bank accounts are a growing threat, with increasingly sophisticated hackers running international efforts to collect customers' log-in credentials.

They sell batches of those credentials in online marketplaces, to other criminals, who have their own networks set up to transfer funds and withdraw cash.

Fraud in commercial accounts is not as much of a financial danger for banks as it is in retail accounts. Unlike an individual, a business is not protected from unauthorized transfers by the Federal Reserve Board's Regulation E. Commercial account holders are generally liable for any transactions authorized through a "commercially reasonable" procedure previously agreed upon by the bank and the customer.

However, the cost of damaged customer relationships andof defending against lawsuits brought by angry accountholders can be every bit as damaging as a financial loss.

The sticking point is that very few cases of electronic payments fraud originate at the bank; most are initiated by someone posing as a customer by using stolen authentication credentials. This leaves banks with a challenge. Though they need to reduce the possibility that one of their customers will be victimized, the largest security threat to business accounts is not under the bank's direct control, but the customer's.

Banks that take steps to address the problem, by supplying consumers with "tokens" that provide one-time access codes or other enhanced security features often face resistance from the very people they are trying to help. Others, dependent on a service bureau or software provider to integrate security measures into their systems, find that they are simply unavailable.

"Banks traditionally have sold convenience, and convenience has been one of the primary attractions of online banking," says Samuel A. Vallandingham, vice president and chief information officer of First State Bank, in Barboursville, W.Va. "Things that impede that convenience are seen as bad."

Vallandingham says that his bank recently revamped its online banking interface for commercial customers to make it more secure and faced strong objections from customers. "Several clients complained that they liked the old system better and that the new one was more cumbersome and difficult to use," he says. "Some threatened to switch banks, if we didn't make changes."

He says many of his customers simply don't see fraud as a threat that justifies the inconvenience of extra security procedures. And according to some researchers, they may be right.

While online fraud is a growing problem, the number of individuals and businesses victimized is relatively small. In a widely-cited study of why online customers tend to ignore much of the security advice they receive, Microsoft researcher Cormac Herley found that, in general, "most security advice simply offers a poor cost-benefit tradeoff to users and is rejected."

Because, in most cases, commercial customers are legally on the hook for payments authorized using an agreed-upon procedure, it would be tempting to leave them to face the losses on their own. But according to Vallandingham, that's not how most banks--particularly community banks--operate.

"Community banks may accept the loss or share the loss rather than sacrifice a customer relationship over one transaction," he says.

Nash of McHenry Savings says that his bank would like to offer commercial customers the same sort of authentication that allowed a simple text message to protect his credit card account from being hacked. But the bank's service bureau has yet to update its systems to support that relatively new technology."We are in the hands of our processor in terms of what we offer our customer," he says. "We want to offer more stringent protections, but we can't."

McHenry currently uses an industry-standard two-factor authentication system, but is very aware of the warnings coming from regulators.

"The Federal Financial Institutions Examination Council guidance says that this is evolving, but some of the processors haven't done anything to evolve," he says."Some processors have made the changes, some are behind the times, and some are not even looking at it."

Vallandingham of First State Bank has similar problems with the vendor supplying his bank's payments processing software.

"There are things I have asked my provider for but they are simply not willing to do," he says.

For banks concerned about protecting commercial accounts, there is some hope on the horizon.

The brief decline in online payment fraud in 2007 followed a rewrite of the FFIEC's guidance on user authentication. A further updating of the guidance is underway, and though it is unclear when it will be complete, it is likely to force payment processors to bring their systems up to speed.

But for now, says Vallandingham, the best course is to focus on making sure that both banks and commercial accountholders understand the threat.

"Pointing the finger or looking for legislation is not going to be the answer," he says. "The more education we can provide... the better off we will be."

11: AMERICAN BANKER - Worthwhile Wordplay?

US Banker July 2010

By Howard Stock

Wealth isn't what it used to be.

Though the affluent are bouncing back from the recession, the number of high-net-worth households is still far short of what it was three years ago, and wealth management marketing is starting to change in response.

Consider the semantic shift in U.S. Trust's new advertising campaign, titled "What Is Worth?"By describing its services as "worth management," the unit of Bank of America Corp. hopes to persuade the ultrawealthy that it can add value to their lives beyond just managing money.

This approach reflects a broader adjustment happening across the wealth management sector." Growing wealth isn't something we're talking about today anymore," says Sophie Schmidt, senior wealth management analyst at the Boston consulting firm Aite Group. "A better strategy is to preserve wealth and to get more value from it. The message is that you're more than just a number."

At least one community bank also uses wordplay similar to U.S. Trust's. As part of its "Life in the New Economy" campaign over the past year, First Independent Bank in Vancouver, Wash., ran a wealth management ad with the headline, "Never confuse wealth with worth."

Tammi Olund, senior marketing manager at the $911 million-asset bank, says the intent of the ad is to position First Independent as an adviser. "It's talking about, 'what really is 'value' to you?' It's more than the numbers in your bank account. It's the life you create," she says.

Marketing experts say they have noticed more companies downplaying the "wealth" in wealth management lately, though often in subtle ways. One reason is that more are trying to market those services to a broader audience." Wealth management comes with the baggage that it only caters to extreme wealth, whereas a firm looking to expand its universe of clients needs to offer services beyond those targeting the extremely wealthy," says Robert Passikoff, president of the New York consulting firm Brand Keys. "In this economy, a lot of people aren't sure they have wealth anymore."

Schmidt says the "worth management" concept from U.S. Trust could help distract investors from the catastrophic market drop that made so many wealthy people feel much less so. "Worth management" shifts the emphasis from what the bank can do for a person's money to what the bank can do for the person.

But industry observers disagree over whether this terminology could--or should--become more widespread.

Passikoff says he can envision "worth management" fully replacing "wealth management," just as the word "broker" has largely replaced "adviser."

James Gregory, chief executive of the consulting firm CoreBrand in Stamford, Conn., dislikes the idea, however. "'Worth' has a lot of meanings, so 'worth management' doesn't really make a lot of sense, whereas 'wealth management' is very clear as to what it is," he says.

Kris Gamble, creative director in the marketing departmentat broker-dealer Raymond James in St. Petersburg, Fla., says the industry is starting to question whether the label "wealth management" works. He is unsure how that might play out, though. "Wealth management implies the very rich, and many people don't consider themselves that," Gamble says. "But the challenge of the switch is that you'd need to generate greater awareness of what it is. A small part of my brain connected 'worth management' to recruitment or outplacement services."

Investment Centers of America in Bismarck, N.D., switched to an entirely different label. The broker-dealer, which services banks, renamed its wealth management department the "Financial Solutions Team" last year.

"The problem was, because the department was called 'wealth management,' many advisers weren't using the service for clients they considered under the wealth radar," says Byron Hill, the company's senior vice president of wealth management. His team provides advisers with financial plans for their clients.

Hill says the name change generated positive feedback, though there's been only a slight uptick in business.

The U.S. Trust campaign began in May and runs through December. Jean Fitzgerald, the managing director in charge of U.S. Trust's advertising, says upcoming print ads expand on the "worth" theme, with lines like "What is knowing your best interest is ours as well worth?"

12: ANNOUNCEMENTS - Bank of America Merrill Lynch Announces New Platform…

…to Enhance Delivery of Global Liquidity Product Offering

Centralized Technology Hub Will Provide More Effective Cash Management

Bank of America Merrill Lynch today announced the creation of a strategic platform to enhance the delivery of its global liquidity product offering. The new Global Liquidity Platform is a centralized technology hub that enables the company to provide consistent, seamless and integrated liquidity solutions to clients around the world.

The Global Liquidity Platform encompasses operational, liquidity and product-specific components, or modules, that offer clients robust liquidity concentration products, global account connectivity and enhanced reporting capabilities. BofA Merrill embarked on this multi-million dollar platform last year as part of the bank’s commitment to innovative technology for its treasury management and corporate banking clients.

LINK TO FULL ARTICLE: http://www.businesswire.com/news/home/20100708005068/en/Bank-America-Merrill-Lynch-Announces-Platform-Enhance

13: ANNOUNCEMENTS - President Obama Names BNY Mellon General Counsel Jane Sherburne…

…to Serve on Council of the Administrative Conference of the U.S.

BNY Mellon, the global leader in asset management and securities servicing, today announced that Jane Sherburne, senior executive vice president and general counsel, has been appointed by President Obama to serve on the Council of the Administrative Conference (ACUS) of the United States. Members of the ACUS, a non-partisan public-private partnership designed to make government work better, are individuals from distinguished backgrounds who are devoted to enhancing the efficiency, effectiveness, and transparency of our government.

"I am pleased that these outstanding individuals will lend their talents to ACUS's vital mission of providing nonpartisan, practical assessments and recommendations to improve agency procedures and operations," President Obama said in making the appointments.

LINK TO FULL ARTICLE: http://www.prnewswire.com/news-releases/president-obama-names-bny-mellon-general-counsel-jane-sherburne-to-serve-on-council-of-the-administrative-conference-of-the-us-98142469.html

14: BANKINSURANCE.COM - 2009 Group Life Sales Up, Term and Credit Life Down

NEWS IN BRIEF - JULY 12 - 18, 2010

New group life insurance policies issued in the U.S. in 2009 rose 7.6% over 2008 numbers, countering the downward trend among all other life insurance categories, according to Oldwick, NJ-based A.M. Best. Term life slid 5.9% to $1.3 trillion, down from $1.38 trillion, and credit life dropped 34.5% to $67.4 billion, down from $102.9 billion. New York City-based AIG Life Group was most affected by the decreases, falling from being the number one supplier of ordinary life products to number seven and dropping from first to eighth position in credit life and from first to sixth in term life, A.M. Best found.