Executives Briefing

WASHINGTON Several Bankers on List For LaWare Post at Fed

A number of bankers are being mentioned as possible successors to John LaWare, the retiring Federal Reserve Board governor. Among them: Wachovia Corp.'s John G. Medlin Jr., Keycorp's Victor Riley, Chemical Banking Corp.'s John McGillicuddy, J.P. Morgan's Dennis Weatherstone, and BankAmerica Corp.'s Richard Rosenberg.

Use LaWare's photo

March 28

19181

A coalition of liberal advocacy groups has urged President Clinton to dump bank lawyer John D. Hawke as a candidate for under secretary of the Treasury. Although he has not been nominated, Mr. Hawke, a partner at Arnold & Porter, is known to be the administration's choice for the Treasury Department's top domestic post.

March 28

19096

The Office of the Comptroller of the Currency said institutions may permanently lose the right to branch into other jurisdictions if their home state "opts out" of the nation's interstate branching law. In its first assessment of whether a state's decision to opt out of branching would be reversible, the OCC said that the law is unclear.

March 30

19218

The House Banking Committee's second-ranking Democrat, Rep. John J. LaFalce of New York, said the Bank Insurance Fund should be required to hold an extra 25 cents for each $100 of insured deposits - a step that would delay the premium rate reduction. Though Rep. LaFalce is in the minority party, his suggestion could increase pressure on the banking industry to contribute to the Savings Association Insurance Fund.

Photo on page 2 of Ed Yingling, at the ABA

March 27

18897

Private and public enterprises seeking to raise capital would benefit from the removal of the walls separating commercial from investment banking, the House Banking Committee was told. "The vast majority of commercial enterprises have never dealt with an investment bank," said House Banking Committee Chairman Jim Leach, who has sponsored Glass- Steagall repeal legislation. "For a smaller enterprise that wants to grow, its only alternative is ... a lending approach."

See Leach photo page 3

March 30

19200 REGIONAL BANKING Slump in Sales May Spell Trouble for Auto Lenders

Bank auto lenders, who spent a good part of 1994 worrying about pricing pressures and thin margins, face a host of other concerns this year: growing competition, technological change, legal and regulatory problems, and a potential sales slump. Weak auto sales in February raise the possibility that this year may disappoint after the blistering pace set last year.

March 27

18864

Strategic alliances between banks are terrific in theory, but they can be terribly hard to implement. However, an alliance struck between First Interstate Bancorp and Standard Chartered PLC has found a happy medium. Can the photo on page 6 be resized, with Alliance stats?

March 29

19134

CoreStates Financial Corp. announced a long-awaited restructuring, saying it will slash 2,800 jobs, or 19% of its work force. The planned cuts, far more extensive than analysts had expected, place the Philadelphia-based company at the forefront of an industrywide drive to reduce costs.

There are no graphs, but there are stats on page 1 and 5

March 30

19216

The planned merger of Bank of Tokyo with Mitsubishi Bank is likely to create the biggest foreign-owned bank in the United States, with $90 billion of assets and powerful presences in California retail banking and wholesale banking nationwide. The unit would be slightly larger than the eighth-ranking U.S. bank, Banc One Corp., Columbus, Ohio, which has $89 billion of assets.

March 30

52241

Lackluster revenue growth at banks undergoing major cost cutting initiatives has prompted a Morgan Stanley analyst to wonder if huge restructurings hurt revenue more than they help. While the results of these initiatives still are unclear, Dennis Shea says there is virtually no evidence to support bank management claims that revenue gains stem directly from expense reductions.

March 29

19136

Two more major Northeast banks have begun intense reviews of their cost structures, which will possibly mean layoffs. Meridian Bancorp has begun an intense cost-cutting analysis that involves every employee in the Reading, Pa.-based bank, said Ezekiel "Zeke" Ketchum, president and chief operating officer. Republic New York Corp. confirmed it has hired Tandon Capital Associates Inc., a Manhattan-based consulting firm known for trimming fat at banks.

March 28

19099 COMMUNITY BANKING N.Y. Bank Sued Over Bid To Buy Chase Branches

Three shareholders of upstate New York's Community Bank System Inc. went a court to prevent the bank's buying 15 branches and $455 million of deposits from Chase Manhattan Corp. The shareholders are alleging in a suit filed last week in state Supreme Court in Albany that the bank is paying far too much - $37.5 million - for the branches, and that if the sale goes through it will drain away capital and reduce book value and earnings. Mug of Belden 1x3 mac

March 31

19252

A growing number of preretirement-age chief executives are finding themselves out of work as merger mania sweeps the industry. This is especially true at community banks, which are disappearing at a rate of eight a week. Some of the ejected executives are starting their own banks; others are going into careers as far afield as plumbing.

Cartoon on front page and photos on page 8

March 28

19122

The megamerger between Fleet Financial Group and Shawmut National Corp. put a two-week stranglehold on Connecticut banking legislation. Angry lawmakers had threatened to derail about a dozen banking bills because the merger as proposed would have resulted in the loss of 1,200 jobs and scores of branch closings. The situation was resolved when Fleet proposed to restore the jobs by moving certain operations back to the state.

See photo page 16

March 30

19204

As plain-vanilla certificates of deposit make a comeback, community banks are trying to give new life to some old selling strategies. Toasters and other premiums are proving popular, while complex products like indexed rates have moved out of the limelight.

March 27

18875

The former president of a Miami bank was sentenced last week to a year in prison for diverting money to a firm that assisted the Contra rebels in Nicaragua during the late 1980s.

March 31

19249 SMALL BUSINESS B of A Gets Big Volume From Quick Processing

Bank of America processes hundreds of small business loan applications daily in its Pasadena, Calif., office. Its secret: "We know how to make a lot of loan decisions very quickly," says Janet Garufis, senior vice president and manager of the center.

March 28

19101

Bank South Corp. plans to test whether alternative delivery is the key to gaining small business market share. While most banks are focused on centralized underwriting to speed loan approvals and lower costs, Bank South officials say these may not be enough to distinguish a mid-size player in an overbanked market.

March 28

19100 COMPLIANCE FDIC Begins Quarterly Debiting for Premiums

On Friday, for the first time, the government collected deposit insurance premiums by quarterly debit. In addition, bankers began reporting more information about their derivatives activities via the quarterly call report. Time table on page 6

March 30

19188

The Financial Crimes Enforcement Network expects to release long-awaited "know your customer" rules next month and plans to finish them by September. Bankers have been waiting nearly a year for the rules, which are supposed to help law enforcement officers combat money laundering.

Photos on page 6 of Pam Johnson and Stan Morris on the

Crimes Enforcement Network

March 30

19186

Bankers blasted the Federal Reserve Board's fifth shot at changing the way annual percentage yields are calculated under Truth-in-Savings. Almost all of the 89 commenters opposed any change in the calculation. They said the proposal is not only mathematically incorrect, but would cost the industry millions of dollars.

March 30

19189

Proactive Inc., a compliance software company in Duluth, Ga., has been acquired by U.S. Banking Alliance Inc., an Atlanta-based financial services company. Proactive's leading product, CompliancePro, helps bankers comply with all federal banking rules.

March 30

19191 CREDIT UNIONS NCUA Board Member Blasts New Ratings It's becoming customary for credit union officials to gripe about their regulator when they gather, but it's still unusual for a regulator to complain about its own agency. That's what Robert Swan, a director of the National Credit Union Administration, did when the Texas Credit League held its annual convention.

March 27

18888

The Credit Union National Association, spurred by the collapse of the Capital Corporate Federal Credit Union, has drafted a plan that would let it monitor how the industry's liquidity centers invest credit unions' money.

March 27

18884

Slapped with a lawsuit, the board of Patelco Credit Union has vowed to allow an internal investigation of alleged management abuses. Directors at Patelco are being sued by members of its supervisory committee who want the courts to ensure an internal probe is completed.

March 27

18860 CREDIT/DEBIT/ATMs Dean Witter Adds Bork To Team for Visa Suit

Dean Witter, Discover & Co. added Robert H. Bork to its legal team for a suit against Visa U.S.A. The company also has solicited support from a number of federal agencies. Meanwhile, Dean Witter gained an unlikely ally in American Express Co., and is seeking to overturn a September 1994 decision in the U.S. Court of Appeals for the 10th Circuit that barred the company from joining Visa and issuing that brand of cards. Since December, Mr. Bork, the former Supreme Court nominee, has been representing Dean Witter as it seeks a writ of certiorari, which would allow it to make its ultimate appeal before the Supreme Court.

March 27

18878

Mellon Bank Corp. and U.S. Bancorp signed an agreement to jointly offer an array of financial services to American Automobile Association members. As part of the deal, a subsidiary of Mellon Bank will acquire U.S. Bancorp's AAA credit card portfolio of 480,000 accounts representing $230 million in receivables.

March 31

19255

Citicorp, which has been aggressive in marketing credit cards with photos, is forming a partnership with Kodak to explore technology that will enable credit card issuers to digitally record a picture of the cardholder on the card's magnetic stripe.

March 31

19251

PNC Bank Corp. said it will place automated teller machines in 424 Wawa Food Markets, becoming the fifth-largest deployer of the machines at locations other than banks. By yearend, the bank expects to have 600 machines in branches and 900 off-premises.

Photo of A. William Schenck 3d on page 13

March 30

19205

Visa seems to have gained the upper hand, with its "relationship card" strategy, in the seesaw battle with MasterCard for leadership in smart card technology. The association has advanced what had been a mostly technical discussion - including plans by three member banks to issue chip cards - to the level of market activity.

XYZ Bank Card picture on page 12, with Carl and Scott's

photos

March 28

19117 INVESTMENT PRODUCTS IRA Marketing Cut Back At Banks as Sales Slump

Tax season is normally the busiest time of the year for opening individual retirement accounts. But at some banks, the story is shaping up quite differently this year, as consumer demands for IRAs is flagging and promotions are scaled back. Experts say that IRA reform being considering in Congress is making some people wait to see what happens before putting more money into the accounts.

March 27

18876

Mutual funds are coming off one of their toughest years in recent memory, but it would have been hard to tell from the turnout at one of the industry's premier gatherings. Some 1,460 mutual fund executives, lawyers, and accountants convened in California for the annual mutual fund and investment management conference sponsored by the Federal Bar Association and Commerce Clearing House Inc.

March 28

19114

Hawaii's largest banking company, Bancorp Hawaii, is embarking on a major push to get more of its revenue from private banking and personal trust services. Through an international expansion and a reorganization, the company aims to double over five years the portion of revenue it gets from these services. Photo of Laskey on page 12

March 29

19167

Bankers know they need to do a better job of coordinating the private banking, trust, and investment management services they sell to the wealthy. The idea has been repeated so many times, it's a cliche in the banking industry. But while the vision has been discussed for years, experts say banks are still having a difficult time fulfilling it.

Mug of Wilma Smelcer

March 30

19198

Bankers Trust Co., Firstier Bank, and Bank of America last year ran the best-performing funds, according to a researcher's ranking of institutional portfolios. The rankings, compiled by TIS/Cadence, Rockville, Md., rated the performance of commingled trust funds, which pool money from pension and other employee benefit plans.

March 31

19266 MORTGAGES Mortgage Market Shows Signs of Upturn at Last

The home mortgage market, severely depressed for more than a year, is showing fresh signs of life, with a nearly 30% increase in home mortgage applications, according to the Mortgage Bankers Association of America. Market experts say loan demand is picking up due to a drop in interest rates and the arrival of spring, which is traditionally the peak season for homebuying.

Check out the Home Mortgage Applications graph on the

front page, and an even better line graph on page 14

March 28

19118

Adjustable-rate mortgages, which gained market share steadily for more than a year, have finally begun to flag. In February, adjustables accounted for 53% of the market, down sharply from a peak of 59% registered in January, according to the Federal Housing Finance Board. Stress line graphs on page 1 and 8

March 30

19212

Home-equity lenders are reporting rapid growth, and they expect it to continue for the long haul, according to several executives interviewed at the National Mortgage Association conference. "We wouldn't be enjoying the interest and attention if business wasn't good," said C. Stuart LaDow, a consultant and longtime player in the home-equity industry.

March 29

19168

Two pools of home equity loans, worth about $2.2 billion, are on the block, industry observers say. The buyer for at least part of ITT Consumer Financial Corp.'s $1.2 billion of home equity loans is believed to be Transamerica's Financial Services Co., according to industry executives.

March 27

18881

Lenders feared a new accounting rule for measuring declines in the value of mortgage servicing rights would be onerous. Now they've decided they can live with it.

March 31

19248 TECHNOLOGY Big Getting Bigger as Small Are Squeezed Out Prominent money-center and superregional banks are increasingly using their size and scale advantages to build market share at the expense of smaller institutions unable to make the necessary system commitments or beat efficient competitors' prices. The result, which was evident in American Banker's annual surveys of ACH activity, is the emergence of an elite 20 to 25 institutions that are making it more difficult for midsize banks to compete for ACH business.

Charts and Graphs on pages 22 and 23

See the National Growth Trends in the ACH Network graph

on the bottom of 22...or the front page

March 27

18871

Sun Microsystems Computer Co. and Broadway & Seymour Inc. have combined their wares to form what they say will be part of the next wave in retail bank automation. The companies said the resulting products will offer customer information capabilities for services in all retail banking areas.

March 28

19120

Robert Randolph, a former federal gumshoe, no longer pursues Arab terrorists or interstate theft rings. But, as manager of investigative services for BankAmerica Corp.'s Southwest region, he still fingerprints people. Under the guidance of the 50-year-old executive, the bank has created a program requiring a "print signature" from any noncustomer cashing a check against a Bank of America account.

See photo on page 14

March 31

19260

The New York Clearing House Association has developed PC-based software designed to make it easier for small and medium-size banks to embrace electronic data interchange. The new software, unveiled last week at the annual National Automated Clearing House Association conference, will enable smaller financial institutions to affordably handle the remittance data that involved in corporate-to-corporate electronic payments.

March 31

19259 FINANCE Worries Grow Over Banks' Credit Easing

Anxieties about bank credit quality are continuing to surface among bankers and analysts. Citing "genuine concern over the direction of credit standards," Robert Morris Associates, the national association of bank loan and credit officers, issued an advisory it termed a "wake-up call." Credit concerns also prompted frequent questions and discussion during the 25th annual symposium of the Bank and Financial Analysts Association in New York.

See back page (28) for photo of Martin Strischek, president of

Robert Morris Associates.

March 27

18893

The imposition of federal levies on Fannie Mae and Freddie Mac is again being presented as a deficit-reduction option. But credit and equity analysts say investors shouldn't lose sleep over the issue.

Look at line graph on last page (24)

March 29

19176

A dispute that could affect the sharing of credit information among banks will be aired in court, after a recent ruling that allowed Citicorp to proceed with a $243 million lawsuit against Bankers Trust New York Corp. Citicorp blames its own losses on information on a borrower provided by Bankers Trust.

March 28

19126

Demonstrating a business-as-usual approach amid the turmoil in its trading business, Bankers Trust, has issued a $150 million note of seven- year noncallable notes. The money-center bank's new notes were priced cheaply for an A-rated bank at 99.789, to yield 8.165% - 112.5 basis points over seven-year Treasuries. The notes were issued March 24 and investors grabbed them by the end of the day on March 27.

March 29

19178

The merger between Bank of Tokyo and Mitsubishi Bank is expected to create a strong player in the international loan syndication market. The combined banks could command a 3% share; the leader is Chemical Banking Corp. at 7%. See chart on page 20

March 30

19209

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