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Citigroup Inc. to Acquire Banking Operations of Wachovia

Posted by Wendell Brock on Mon, Sep 29, 2008

FDIC, Federal Reserve and Treasury Agree to Provide Open Bank Assistance to Protect Depositors

Citigroup Inc. will acquire the banking operations of Wachovia Corporation; Charlotte, North Carolina, in a transaction facilitated by the Federal Deposit Insurance Corporation and concurred with by the Board of Governors of the Federal Reserve and the Secretary of the Treasury in consultation with the President. All depositors are fully protected and there is expected to be no cost to the Deposit Insurance Fund. Wachovia did not fail; rather, it is to be acquired by Citigroup Inc. on an open bank basis with assistance from the FDIC.

"For Wachovia customers, today's action will ensure seamless continuity of service from their bank and full protection for all of their deposits." said FDIC Chairman Sheila C. Bair. "There will be no interruption in services and bank customers should expect business as usual."

Citigroup Inc. will acquire the bulk of Wachovia's assets and liabilities, including five depository institutions and assume senior and subordinated debt of Wachovia Corp. Wachovia Corporation will continue to own AG Edwards and Evergreen. The FDIC has entered into a loss sharing arrangement on a pre-identified pool of loans. Under the agreement, Citigroup Inc. will absorb up to $42 billion of losses on a $312 billion pool of loans. The FDIC will absorb losses beyond that. Citigroup has granted the FDIC $12 billion in preferred stock and warrants to compensate the FDIC for bearing this risk.

In consultation with the President, the Secretary of the Treasury on the recommendation of the Federal Reserve and FDIC determined that open bank assistance was necessary to avoid serious adverse effects on economic conditions and financial stability.

"On the whole, the commercial banking system in the United States remains well capitalized. This morning's decision was made under extraordinary circumstances with significant consultation among the regulators and Treasury," Bair said. "This action was necessary to maintain confidence in the banking industry given current financial market conditions."

Wachovia customers with questions should call their normal banking representative, service center, 1-800-922-4684 or visit http://www.wachovia.com/. The FDIC's consumer hotline is 1-877-ASK-FDIC (1-877-275-3342) or visit http://www.fdic.gov/.

Topics: FDIC, Bank Regulators, Commercial Banks, Bank Mergers

Ameribank, Inc., Northfork, West Virginia Closed By OTS

Posted by Wendell Brock on Fri, Sep 19, 2008

All Insured and Uninsured Deposits Transferred to Acquiring Banks

Ameribank, Inc., was closed today by the Office of the Thrift Supervision and the Federal Deposit Insurance Corporation (FDIC) was named receiver. The FDIC entered into purchase and assumption agreements with Pioneer Community Bank, Inc., Iaeger, West Virginia, and The Citizens Savings Bank, Martins Ferry, Ohio to take over all of the deposits and certain assets of Ameribank, Inc., Northfork, West Virginia.

Ameribank has five branches located in West Virginia and three branches located in Ohio. Pioneer Community Bank, Inc., Iaeger, West Virginia will assume all deposits for the five branches located in West Virginia. The Citizens Savings Bank, Martins Ferry, Ohio will assume all deposits for the three branches located in Ohio.

All depositors, including those with deposits in excess of the FDIC's insurance limits, will automatically become depositors of the assuming institution where the customer opened the account for the full amount of their deposits. All deposits will continue to be insured with the new institutions. Therefore, there is no need for customers to change their banking relationship to retain deposit insurance. Brokered deposits are included in this transaction.

Branches in West Virginia will reopen on Monday. Ohio branches will reopen on Saturday. Over the weekend, customers of the banks can access their money by writing checks or using ATM or debit cards. Checks drawn on the banks will be processed normally. Loan customers should continue to make loan payments as usual.

Pioneer Community Bank, Inc., and The Citizen's Saving Banks' acquisition of all deposits was the "least costly" resolution for the Deposit Insurance Fund compared to all alternatives because the expected losses to uninsured depositors were fully covered by the premium paid for the banks' franchises.

As of June 30, 2008, Ameribank, Inc. had total assets of $115 million and total deposits of $102 million.

Customers who would like more information on today's transactions should visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/ameribank.html. They may also call the FDIC toll-free about both institutions at 1-877-894-4710 until 9:00 p.m., this evening; Saturday and Sunday from 8:00 a.m. to 5:00 p.m.; and thereafter from 8:00 a.m. to 6:00 p.m. All time are Eastern Standard Time.

In addition to assuming all of the deposits of Ameribank, Inc., the acquiring institutions will purchase approximately $23 million in assets from the receivership. The FDIC will retain the remaining assets for later disposition. Pioneer Community Bank, Inc. will pay a premium of 2 percent for all deposits of the West Virginia branches. The Citizens Savings Bank will pay a premium of 1.14 percent for all deposits of the Ohio branches.

The cost of the transactions to the Deposit Insurance Fund is estimated to be $42 million. The failed bank had assets of $112.62 million, .033 percent of the $13.4 trillion in assets held by the 8,451 institutions insured by the FDIC. Ameribank, Inc. is the first bank to be closed in West Virginia since First National Bank of Keystone, Keystone, on September 1, 1999. This year, a total of twelve FDIC-insured banks have been closed.

Topics: FDIC, failed banks, Bank Regulators, Commercial Banks

Regions Bank Acquires All the Deposits of Integrity Bank, Alpharetta, Georgia

Posted by Wendell Brock on Fri, Aug 29, 2008

Integrity Bank, Alpharetta, Georgia, with $1.1 billion in total assets and $974.0 million in total deposits as of June 30, 2008, was closed today by the Georgia Department of Banking and Finance, and the Federal Deposit Insurance Corporation was named receiver.

The FDIC Board of Directors today approved the assumption of all the deposits of Integrity Bank by Regions Bank, Birmingham, Alabama. All depositors of Integrity Bank, including those with deposits in excess of the FDIC's insurance limits, will automatically become depositors of Regions Bank for the full amount of their deposits, and they will continue to have uninterrupted access to their deposits. Depositors will continue to be insured with Regions Bank so there is no need for customers to change their banking relationship to retain their deposit insurance.

The failed bank's five offices will reopen Tuesday, September 2nd, as branches of Regions Bank. However, for the time being, customers of both banks should use their existing branches until Regions Bank can fully integrate the deposit records of Integrity Bank.

Regions Bank has agreed to pay a total premium of 1.012 percent for the failed bank's deposits. In addition, Regions Bank will purchase approximately $34.4 million of Integrity Bank's assets, consisting of cash and cash equivalents. The FDIC will retain the remaining assets for later disposition.

Customers with questions about today's transaction or who would like more information about the failure of Integrity Bank can visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/integrity.html, or call the FDIC toll-free at 1-800-523-0640, today from 5 p.m. until 9 p.m., Eastern Time, on Saturday from 9 a.m. to 6 p.m., on Sunday from 11 a.m. to 5 p.m., and thereafter from 8 a.m. to 8 p.m.

The FDIC estimates that the cost to its Deposit Insurance Fund will be between $250 million and $350 million. Regions Bank's acquisition of all deposits was the "least costly" resolution for the FDIC's Deposit Insurance Fund compared to all alternatives because the expected losses to uninsured depositors were fully covered by the premium paid for the failed bank's franchise.

Integrity Bank is the tenth FDIC-insured bank to fail this year, and the first in Georgia since NetBank in Alpharetta on September 28, 2007.

Topics: FDIC, failed banks, Bank Regulators, Commercial Banks

Federal Reserve Announces Launch of National Minority-Owned Bank Program

Posted by Wendell Brock on Thu, Aug 07, 2008

The Federal Reserve System today announced the nationwide launch of Partnership for Progress, an innovative outreach and technical assistance program for minority-owned and de novo institutions.  The program seeks to help these institutions confront their unique challenges, cultivate safe and sound practices, and compete more effectively in today's marketplace through a combination of one-on-one guidance, workshops, and an extensive interactive web-based resource and information center (http://www.fedpartnership.gov/).

"The program's overarching mission is to preserve and promote minority-owned institutions and to enhance their vital role in providing access to credit and financial services in communities that have been historically underserved," said Federal Reserve Board Chairman Ben S. Bernanke. "The Federal Reserve is committed to helping minority-owned and de novo banks achieve long-term success."

Partnership for Progress provides insight on key issues in three distinct stages of a bank's life cycle: "Start a Bank," "Manage Transition," and "Grow Shareholder Value." Topics covered include credit and interest rate risk, capital and liquidity, and banking regulations. To ensure broad access to the program, all aspects of the training will be available through workshops, online courses, and the program's interactive website.

"This cutting-edge program, which draws on insights from economics, accounting, finance, and regulatory compliance, will become a valuable resource for institutions at different stages of their development," said Federal Reserve Board Governor Randall S. Kroszner.

In developing the program, Federal Reserve officials met with minority-owned and de novo banks across the country as well as trade groups, bank consultants, and state and federal banking agencies to better understand the challenges these institutions face in raising capital, growing their institutions, and attracting talent. This process provided valuable insight and contributed significantly to the design of the program, which was spearheaded by the Federal Reserve Bank of Philadelphia. Key concepts from the program will be incorporated into the Federal Reserve System's examiner training to provide a deeper understanding of the issues unique to minority-owned institutions.

The nationwide launch of Partnership for Progress follows a successful pilot for the program that began last fall. Questions and comments regarding the program should be directed to Marilyn Wimp at the Federal Reserve Bank of Philadelphia, 215-574-4197.

Note:  While at the Minority Depository Institutions National Conference we received a preview to this program.  This will be a great help to all de novo and emerging banks.  Take a few minutes to view some of the information on the site.

Topics: Community Bank, Bank Regulators, Commercial Banks, De Novo Bank, Bank Capital, Minority Banks

House Passes Regulatory Relief Bill with Bipartisan Support

Posted by Wendell Brock on Fri, Jun 27, 2008

This is important news regarding a new level of opportunity and regulations for all financial instutions, including allowing banks to pay interest on commercial checking accounts.  This will spark a wave of intense comptition for deposits! 

WASHINGTON - The House passed by voice vote a bill (H.R. 6312) combining a substantially revised credit union bill with regulatory relief for banks and savings associations. ABA and the banking industry opposed the original credit union bill -- the Credit Union Regulatory Relief Act, or CURRA -- because it would have allowed any federal credit union to branch into entire cities and counties by claiming they are underserved. The association successfully worked with Financial Services Committee Chairman Barney Frank (D-Mass.) to address its concerns in a meaningful way, and ABA did not oppose the revised credit union provisions when the House considered the legislation.

The revised credit union bill, among other things, would narrow the definition of "underserved area" to census tracts that meet a low-income test; eliminate the grandfathering of cities, counties and other areas currently deemed underserved by the National Credit Union Administration; and require the NCUA to publish annual reports on how the credit unions are meeting the needs of those in the underserved areas they enter. The legislation also would limit the kinds of underserved business loans that can be excluded from the credit unions' business lending cap, and limit credit unions' ability to offer short-term payday loans to nonmembers within a credit union's field of membership.

The final bill includes regulatory relief provisions for banks and savings associations that would provide exceptions to annual privacy notice requirements under the Gramm-Leach-Bliley Act; permission to offer interest on business checking accounts two years after enactment; and increased ability for savings associations to invest in small-business investment companies and make commercial real estate loans, while also removing limits on small-business and auto loans.

Topics: Commercial Banks, Credit Unions, Bank Regulation

Remote Deposit Capture Brings Opportunities and Challenges

Posted by Wendell Brock on Mon, May 19, 2008

While Remote Deposit Capture brings many exciting new opportunities to small community banks, it also brings increased challenges.  Even though there are challenges and operational considerations, we must face the reality that the larger banks are aggressively promoting Remote Deposit (Merchant Capture) and targeting our core deposits.  We must position our banks to meet the challenges.  Face the facts, Remote Deposit Capture is here to stay, and will keep growing. The larger banks are aggressively promoting it, and if we offer Remote Deposit, the regulators will be scrutinizing our operational processes.

If Remote Deposit is implemented properly with the basic infrastructure in place, the bank can increase and sustain its core deposits, effectively compete in the Remote Deposit arena, minimize risk and satisfy regulatory requirements.

 If you are considering Remote Deposit, go through the short term pain and implement a program that will sustain the growth.  You may already be offering Remote Deposit Capture, just re-evaluate the program and be sure the infrastructure postures your bank for success while minimizing risk.

 A Remote Deposit operational infrastructure, which addresses program growth, controls, and regulatory requirements include, but are not limited to:

  • Policies, procedures and controls which integrate documentation and processes from the lending department to deposit operations
  • A monitored and perpetuated selling component which gets the same level of focus that loans in the pipeline receive
  • An aggressive bank-wide training program which includes teaching lenders the importance of Remote Deposit as it relates to enhancing banking relationships, building core deposits and retention of business customers
  • Proper staffing of Cash Management Departments to support the day-to-day functions and servicing of business customers
  • Customer evaluation and underwriting process to minimize risk and potential losses
  • Established daily thresholds monitored by operations
  • Review of your blanket bond insurance coverage to minimize liquidity risk, if the bank sustains a material loss from fraud
  • Fraud related security-exception reports to monitor and minimize risk integrated into the operations department
  • Consideration of "holds" on transmitted funds
  • Annual creditworthiness review and audits of customers
  • Perpetual staff training to focus on Remote Deposit Capture features and opportunities to grow the bank and its core deposits
  • BSA Officer review for changes in patterns and trends to minimize money laundering and illicit activity
  • Required regulatory risk assessments of the Remote Deposit Service Providers and the Remote Deposit product offering which is considered an electronic banking product

We have to think of obtaining and sustaining customers while implementing a basic infrastructure to control risk and address regulatory compliance requirements.

With challenges come opportunities when promoting Remote Deposit. The bank will enjoy core deposit growth, sustain their current customer base, reduce lines at their counters, have a potential new source of fee income, be able to compete in the market and have new opportunities to increase loan volume.

Article Submitted by: Carolyn C. Dowdy, President of Bank Project Solutions

http://www.bankprojectsolutions.com/

T: (770) 653 2389

Topics: Community Bank, Commercial Banks, Bank Regulations, Remote Deposit, Bank Staff Training

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