WASHINGTON Banks Due a Refund For Late Premium Cut
The government is expected to owe the banking industry nearly $2 billion by the time the Federal Deposit Insurance Corp. finally cuts its rates in September. Banks will be charged the current, high premiums through Sept. 30, though the FDIC estimates that the Bank Insurance Fund hit its required reserve level in April - about three months earlier than expected.
In a stinging rebuke to the management of the Student Loan Marketing Association, shareholders elected at least six of eight insurgent board candidates led by former executive Albert Lord.
In a surprising display of harmony, House Banking Committee Chairman Jim Leach, R-Iowa, and House Commerce Committee Chairman Thomas J. Bliley, R- Va., pledged to cooperate in passing Glass-Steagall legislation on the House floor by June 30. "We are committed to working together to resolve the insurance questions surrounding Glass-Steagall reform," they said in a written statement.
Rep. Bill McCollum, a rising star in the new Republican Congress, is trying to broker a compromise to cure the ailing thrift industry fund. The Florida Republican's deal would force banks to pay part of the rescue tab. But in return, any surplus cash in the Bank Insurance Fund would be returned to the industry in the form of rebates.
19132 REGIONAL BANKING Meridian Makes Deal For United Counties
Meridian Bancorp said that it had agreed to acquire Cranford, N.J.-based United Counties Bancorp. for $360 million in stock. The transaction allows Reading, Pa.-based Meridian to expand its New Jersey franchise into the central part of the state, where it already has about $600 million of assets.
Profitability declined at most of the 10 biggest U.S. banks in the first quarter, and large second-tier regional banks posted mixed results, according to an American Banker survey.
Bank of New York Co. said that it has agreed to acquire J.P. Morgan & Co.'s $800 billion-asset global custody business for an undisclosed sum. Analysts estimated the deal could be worth as much as $400 million. The transaction covers Morgan's securities lending and custody business in the United States and the United Kingdom.
First Interstate Bank of California became the last of the state's three biggest banks to start storing canceled checks rather than mailing them back to retail customers in monthly statements. Recently, the bank made check safekeeping available on a voluntary basis for no additional fee but without the incentives that some banks offer.
In what some analysts are terming another coup for former Society Corp. executives, Keycorp named Henry Meyer 3d chief operating officer - effective June 1 - giving him a title that now belongs to president Robert Gillespie. Mr. Gillespie has been designated to succeed chairman Victor Riley as chief executive on Sept. 1.
18989 COMMUNITY BANKING Small-Bank Problem: Too Much Capital
Community banks are beginning to cope, often creatively, with a problem that until recent years most banks would have craved: too much capital. The banks are buying back stock, using reverse stock splits, and acquiring banks and branches.
The Maryland Bankers Association and its longtime legislative rival, the Maryland League of Financial Institutions, are planning to merge. As financial services industries shrink, trade groups, especially those representing thrifts, are finding it difficult to justify a separate existence.
Valley National Bancorp, Wayne, N.J., has applied for Federal Reserve Board permission to establish a consumer finance company in the Toronto area. The $3.9 billion-asset corporation is also awaiting approval from the Canadian Minister of Finance. Federal Reserve approval is expected within a couple of weeks.
The California Independent Bankers has launched a drive to scuttle state legislation sponsored by the California Bankers Association that would opt in early to the branching provisions of the Riegle-Neal Interstate Banking and Branching Act.
19109 SMALL BUSINESS Canadian Imperial Sees Many Automation Gains
When Canadian Imperial Bank of Commerce decided to automate its loan decisions - criticized by small businesses as cumbersome and capricious - the bank couldn't just plug into a ready file of information. Though consumer data are widely used, Canadian credit bureaus have no information on the nation's estimated 1.2 million small companies.
The Money Store Investment Corp. announced it was centralizing its Small Business Administration loan underwriting and document preparation operations in one facility in Sacramento, Calif. American Banker recently interviewed Larry Wodarski, president of the company's SBA division, about the reasons for this change in strategy and how he expects the company will benefit.
18979 COMPLIANCE Vista Offers Software For New CRA Rules
Newly formed Vista Information Solutions Inc. is based on the philosophy that knowledge is power. Through its merger with DataMap, Vista doubled the power it offers bankers. Its combination with DataMap diversifies Vista's product line to include sophisticated mapping software products that ease compliance with community reinvestment and fair lending laws.
In addition to answering individual bankers' complaints, the Comptroller of the Currency's ombudsman has been changing the agency's regulatory policy. Samuel P. Golden says he has converted some solutions to bankers' regulatory problems into broad improvements at the agency.
One small national bank that has tested a new compliance exam praised it as simpler and faster. National Bank of Blacksburg, Va., was one of 17 chosen for a pilot test of streamlined compliance exams from the Office of the Comptroller of the Currency. Come October, all national banks with less than $250 million of assets will undergo the new exams.
19104 CREDIT UNIONS Insurance Fund Sets $85M-Plus Rebate
The country's 12,000 federally insured credit unions will be receiving a rebate from the National Credit Union Share Insurance Fund this year. The refund should run between $85 million and $100 million, according to the National Credit Union Administration. This month, the equity level of the $3.4 billion insurance fund hit 1.3% and is expected to end the year at 1.33%. The agency is required to return money to credit unions once the ratio breaks 1.3%.
Bank regulators in Washington State are preparing to clamp down on its 77 privately insured credit unions. Starting as early as August, the state banking agency plans to hold credit unions to higher capital and liquidity standards. The regulator also plans to tighten accounting standards.
A proposal to allow incentive pay for loan officers is separating the industry's traditionalists from its more competitive-minded Young Turks. Opponents of the National Credit Union Administration plan argue that the incentives could tempt officials to make poor loans.
18701 CREDIT/DEBIT/ATMs Scant Growth Seen In Portfolio Sales
Few big card portfolio deals have come down the pike this year like Mellon Bank Corp.'s $230 million acquisition of 480,000 accounts from U.S. Bancorp in March. In fact, investment banker Robert K. Hammer expects only 20 portfolio sales of Visa and MasterCard accounts this year - two more than in 1994.
The corporate card market has vast untapped opportunities and lower losses than the highly competitive and mature consumer card business, a researcher from Payment System Inc. said. Research director Warren Emerson said many companies are not aware of the availability of commercial card services.
Brittain Associates Inc. concluded that American Express' Optima True Grace card has garnered 1.1 million customers since its September 1994 launching, more than the 500,000 to one million accounts the card giant had expected.
Nigel W. Morris and Richard D. Fairbank, the brain trust of Signet spinoff Capital One Financial Corp. seem confident of winning new credit card customers. But the pair, who made their mark with low-rate balance transfers, say reckless imitators are flooding the market.
19103 INVESTMENT PRODUCTS ITT Pushes Annuities To Chinese, Hispanics
ITT Hartford Life Insurance Cos. is making available brochures for its best-selling fixed annuity both in Spanish and in two Chinese dialects. Officials at the company said the move was only the first in an effort to make its retirement programs more accessible to these groups.
Bankers who turned out for the Investment Company Institute's annual conference were critical of some of the steps their institutions have taken to enter the $2.3 trillion fund business. Some even predicted that a shakeout in the fund industry in coming years would see many banks give up managing mutual funds.
While many U.S. banks focus on building a domestic presence in mutual funds, Citicorp is homing in on opportunities overseas. Citicorp, which manages only $3.9 billion of U.S. mutual funds, has boosted its global fund assets to $30 billion, up 50% in the past 30 months, said David Cariseo, managing director of Citibank Global Funds.
Banc One Corp., Columbus, Ohio, has hired four executives and charged them with strengthening the company's effort to market custody and corporate trust services, as well as with boosting outside sales of its proprietary mutual funds. Some bankers and experts say the hirings are a signal that a year-long reorganization may finally be taking root at the $90 billion-asset company.
J. Edward Diamond, president of Dime Securities, didn't waste any time upon learning in January that its parent company had merged with Anchor Bancorp. The conclusion reached after days of detective work: Both sales forces warranted beefing up, and selling strategies required revisions.
19014 MORTGAGES FHA, VA Mortgages Lost Market Share
A TRW Redi Property Data survey said the volume of Federal Housing Administration and Veterans Administration loans declined 70% during the first three months of 1995, while originations of all loans declined only 51%. The survey looked at loans originated in major metropolitan areas in Virginia, New Jersey, Texas, Nevada, Arizona, and Colorado, and all loans in Florida and California.
Lenders are doing all they can to get borrowers to draw on their home equity lines of credit now that the costs to find new customers are going up and competition among lenders is intensifying. The portion of lines of credit in use has dropped steadily since 1991, according to the Federal Deposit Insurance Corp.
Low down payment mortgages financed by Fannie Mae and Freddie Mac in lower-income urban areas are likely to default more frequently than similar loans made in other areas, according to a preliminary study by government regulators.
In the early 1990s, the availability of home loans to minorities got the attention of regulators. Now regulators have turned to the way home loans are priced. And they are particularly concerned at above-normal fees and interest rates charged to minority borrowers. These charges are known as overages.
With demand for home loans projected to decline this year, lenders are searching for untapped markets. At the national real estate lending conference of America's Community Bankers, several speakers focused on how to lend to minorities and people with lower incomes.
19098 TECHNOLOGY Citi Ends Most Fees On Electronic Services
Making a bold play for customers in the hotly contested remote banking field, Citibank has eliminated fees on the majority of its electronic banking services. Beginning in June, Citibank customers will no longer pay monthly or transaction-based fees for banking through automated teller machines, personal computers, or screen phones.
With the proposed merger of Microsoft Corp. and Intuit Inc. dashed against the rocks of antitrust scrutiny, many bankers are relieved. Microsoft's bid to acquire Intuit - the maker of the very popular personal finance software package, Quicken - had been seen by many as the most dangerous of a number of nonbank threats to banking's control of its customers.
Stepping up competition in the crowded market for check processing systems, Banctec Inc. has moved to acquire a smaller supplier, Recognition International Inc. The deal, worth more than $180 million, is expected to help Dallas-based Banctec compete for business from the shrinking number of check processors.
CFI ProServices Inc. and the Bisys Group Inc. have signed an interface and marketing agreement that will let them benefit from each other's market positions, products, and expertise. Under the deal, CFI and Bisys will develop interfaces between Bisys host computers and CFI's Laser Pro loan closing software and Deposit Pro operations software.
19121 FINANCE Chase Hires Experts In Takeover Defense
Chase Manhattan Corp. has assembled Skadden, Arps, Slate, Meagher & Flom and Sullivan & Cromwell, two of the top firms serving the banking industry, to defend against hostile takeover bids or a proxy fight, sources said. Chase also has retained investment banks Goldman, Sachs & Co. and James D. Wolfensohn Inc.. But banking experts agree that takeover considerations are a high priority for Chase.
Spreads on bank bonds have widened by 5 to 10 basis points in the past two weeks, prompting debate about whether the spate of new bank issuance of the past two months has run its course.
Short interest in banking stocks traded on the New York and American stock exchanges rose by 7.1% in the month ended May 15, to more than 156 million shares. The rising short interest reflects hedging strategies of investors as well as bets that the stocks will decline in value after a recent rally.
Money-center bank stocks took flight last Tuesday as the Federal Reserve Board's Open Market Committee met without acting on interest rates. Chemical Banking Corp. rose $1.375, to $47; BankAmerica Corp., $1.25, to $51.75; Bankers Trust New York Corp., $2.25, to $60.875; and Bank of New York Co., $2, to $39.25.