Bank of Scotland could be forced to sell Citizens

The Royal Bank of Scotland, which nearly collapsed during last year’s financial panic, is trying to avoid a possible sale of U.S. banking arm Citizens Financial Group, according to Reuters news service.

http://bit.ly/2BIay1

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Bank Failure Friday

crazynutjob:

It looks like 4 banks were added to the FDIC Failed Bank List today:

1. Metro Pacific Bank, Irvine, CA - Total deposits of $73 million and an estimated cost to the FDIC fund of $29 million.

2. Horizon Bank, Pine City, MN - Total deposits of $69.4 million and an estimated cost to the FDIC fund of $33.5 million. However, the acquiring institution, Stearns Bank, entered into a loss sharing agreement with the FDIC on $65.1 million of Horizon’s assets. There’s a little less certainty on this loss estimate.

3. Neighborhood Community Bank, Newnan, GA - Total deposits of $191.3 million and an estimated cost to the FDIC fund of $66.7 million. Another loss share agreement on $178.5 million of Neighborhood Community Bank’s assets.

4. Community Bank of West Georgia, Villa Rica, GA - Total deposits of $182.5 million and an estimated cost to the FDIC fund of $85 million. The bank was shut down, and there are an estimated $1.1 million in deposits that exceeded the insurance limits. For the rest, the checks are in the mail (well, soon).

That makes 44 failures this year. Georgia is at 9 and California is at 5 with this week’s additions. We’re trying to catch up, Georgia, but you’re pulling ahead. For now. Remember, a Santa Barbara bank has had to suspend the dividend payments on their TARP money. We’re just warming up.

Bank Failure Friday

crazynutjob:

It has turned out to be a Friday true to form, and three banks have been added to the FDIC Failed Bank List:

1. First National Bank of Anthony, Anthony, KS — Total deposits of $142.5 million and an estimated hit to the FDIC fund of $32.2 million.

2. Cooperative Bank, Wilmington, NC — Total deposits of approximately $774 million and an estimated cost to the Deposit Insurance Fund of $217 million.

3. Southern Community Bank Fayetteville, GA — Total deposits of approximately $307 million and an estimated cost to the FDIC fund of $114 million.

All three banks had deposits acquired by other banks (this is the happiest option for depositors). Looks like a hat trick tonight.

Carlyle, TPG Said to Weigh Buying First Republic Bank

June 16 (Bloomberg) — Carlyle Group, Blackstone Group LP and TPG are leading a group of bidders in talks to buy Bank of America Corp.’s First Republic Bank, the San Francisco-based bank that caters to wealthy individuals, people familiar with the matter said.

Carlyle and Blackstone, the largest private-equity firms, and David Bonderman’s TPG may partner with First Republic Chairman James H. Herbert II, said one of the people, declining to be identified because the discussions are private. Bank of America, the biggest U.S. lender by assets, is selling businesses to raise capital after receiving $45 billion in government rescue funds.

First Republic, inherited by Charlotte, North Carolina- based Bank of America through its takeover of Merrill Lynch & Co., may fetch $700 million, according to CreditSights Inc. analyst David Hendler. Merrill Lynch bought the bank, which had assets of $15.3 billion at the end of 2007, for $1.8 billion that same year.

Buyout firms invested more than $1 billion in U.S. banks in May after financial companies worldwide racked up almost $1.5 trillion in writedowns and credit losses in the past two years. Washington, D.C.-based Carlyle is pursuing bank deals through a team headed by former U.S. Treasury Undersecretary Randal Quarles and former UBS AG banker Olivier Sarkozy. Carlyle and Blackstone are part of a group that agreed to buy BankUnited Financial Corp. last month.

Columbia Management

Representatives of Carlyle, Blackstone and TPG declined to comment, as did spokesmen at Bank of America and First Republic, which has banking or trust offices in 10 cities including New York, Las Vegas and Los Angeles. Blackstone is based in New York, while TPG is based in Fort Worth, Texas.

Bank of America is considering selling businesses including First Republic and Columbia Management Group as it seeks to raise capital, Chief Financial Officer Joe Price said on a conference call last month. Chief Executive Officer Kenneth Lewis was called before Congress last week to testify about the circumstances of his purchase of Merrill Lynch.

Carlyle has $85.5 billion of assets, trailing only New York-based Blackstone. Carlyle last July invested $75 million in Boston Private Financial Holdings Inc., the owner of private- banking companies.

Carlyle, TPG Said to Weigh Buying First Republic Bank (Update1) - Bloomberg.com

Mutual Fund Fees for Beginners - Loads, Expense Ratios, and Share Classes

Mutual funds are one of the most common investment tools for the average investor. You’ll find them in your 401(k) plan, in your IRA, and everywhere in-between. Mutual funds are popular for good reason. They provide instant diversification without a lot of money. Instead of having to pick all of the individual stocks you want to own and buy them yourself, you can simply purchase a share of a mutual or index fund and automatically get pieces of all the underlying companies.

Like anything, this convenience comes at a cost. Whether you’re investing in an actively managed mutual fund or an index fund, it costs money to run these investments. Some funds charge up-front fees and recurring expenses, others charge a back-end fee, and some just charge a regular recurring fee. It can get confusing for a new investor but with a little help you can learn how to spot what type of fees you’ll be paying and how to minimize those fees. After all, the less you pay in fees the greater your overall returns will be.

Load vs. No-Load

A load is one of the most important fees to watch out for. A load just means it’s an expense in addition to the underlying fund expenses. Typically these come in the form of front-end loads. You pay the load up-front when you purchase the shares. Loads can vary greatly between fund companies, how much money you’re investing, and more. But it isn’t uncommon to see equity funds with a front load as high as 5.75%. To put that into perspective, if you wanted to invest $10,000 in ABC fund with a 5.75% load, you’d immediately lose $575 to the front-load fee. Ouch!

The good news is that you don’t have to use loaded funds. While nobody will stop you from purchasing shares in a fund with a front-load, you’re typically going to be presented these funds by someone in the financial industry who works on commission. That’s because most of that load is a salesperson’s commission. So if you think about it, it’s no wonder they might try to steer you to a fund with a high load since they are going to instantly put a few hundred bucks in their own pocket. So you have to ask yourself whether the advice they gave you was worth that fee. In most cases, probably not. A fee-only financial planner won’t steer you into loaded funds since they aren’t earning a commission based on how much money you invest and where.

What about if you’re investing on your own? Obviously, you want to stay far away from front-load funds if you’re investing on your own. There’s no need to throw money away to a one-time fee just for purchasing the fund. So, how do you spot funds with fees? Morningstar is my favorite tool for this task. It packages all of the important information on an easy to use page that highlights everything from return, fees, yield, and more. Here is an example of using Morningstar to pull a quote on the Franklin Income Fund (FKINX):

You can easily see the front load listed on the first page. This fund has a 4.25% front load. If you had typed in a no-load fund it would show 0.00%.

Stick to No-Load Funds

It’s probably quite obvious, but you should stick to no-load funds. There’s almost never a situation where it’s worth losing a few percentage points off each investment just by investing in a load fund. Not sure where to start with no-load funds? While there are many options available you’ll probably end up with one of the four main no-load fund providers: Vanguard, T. Rowe Price, Fidelity, and Schwab.

If you’re looking for a more comprehensive search, I’ll again have to refer you to Morningstar and their Fund Screener. Here, you can easily select to only search no-load funds and then further narrow down your search by other criteria. You’ll probably be amazed at how many no-load funds there actually are to choose from.

Expense Ratios

You’ve found a no-load fund so that means you’re all set, right? Not so fast. Loads are only one of the fees to look out for. While not all funds have loads, all funds do have expenses. These expenses are expressed in the form of an expense ratio. This makes it easy to compare apples to apples when looking at multiple funds since the fee is shown as a percentage. Looking at the example above with the Franklin Income Fund you’ll see the expense ratio is 0.62%. That means if you had $10,000 invested in this fund for a year it would basically cost you $62.

Unlike a front load you don’t see this expense deducted directly from your account. Instead, the expenses are built into the fund’s overall return. So if you pull up your account statement and it shows that your fund had a 4.3% return, that is your net return after expenses already. You won’t have a quarterly or annual fee deducted from your account. That’s why these expenses can be tricky because they are almost hidden and people don’t really consider the effect they have on returns.

So, make sure you’re also looking at a fund’s expense ratio before making an investment. The lower the expense the better. If you’re looking for the absolute lowest fees you should probably stick to index funds. Since these aren’t actively managed and simply track an index they can keep costs down. This means you’re looking at usually only 0.10-0.25% expense ratios on index funds. Once you get into actively managed funds it’s a different story. You might find one fund charging 0.3% and another charging 1.3%.

Share Classes

While this won’t apply to most of you simply investing in no-load funds, it is important to be aware of the different fund classes in the event you find yourself talking to a financial advisor or otherwise who might bring them up. While not as common today as they were, there are three main types of share classes. Each share class invests in the same assets, but the difference lies in how the load is applied.

• Class A - Your standard front-end load funds as discussed above.
• Class B - Deferred sales load. No up-front load, but if you sell prior a predetermined holding period you’re charged a back-end load.
• Class C - A fixed load applied every year.

Thankfully, class B and C shares are heading the way of the dinosaurs, but that doesn’t mean they aren’t still used by some financial salesmen. They are often used to encourage an investment where they can still earn a commission by putting you into something that doesn’t appear to have a big front load like A shares. While none of these share classes are good, you most certainly want to stay away from B and C.

In addition to these primary share classes you may also stumble across other odd share classes in your research. You might see something like R shares or Z shares. These are typically special share classes offered by a fund company to be used in employer-sponsored retirement plans, sold by advisors, or to institutions. You may not be eligible to invest in these classes, so make sure you check the details and investment requirements.

Recap

As you can see, understanding the fees associated with your funds isn’t all that difficult, but you can probably also see how it’s easy to underestimate the impact the fees can actually have on your returns. An expense ratio of 0.6% might not sound like much, but when you’re talking about tens or hundreds of thousands of dollars over 30+ years that can significantly eat away at your return. And with the different share classes, loads, and no-load funds available you can see how some people, namely commission brokers, will steer you into a fund that could end up costing you.

Hopefully now that you’re armed with the basics you can make sure you’re getting the most out of your funds, both with new purchases and existing holdings. Now would be a good time to dig into the details of your current investments and see how much they are costing you. If it seems high, you can always use something like Morningstar to explore your other options.

Mutual Fund Fees for Beginners - Loads, Expense Ratios, and Share Classes : Generation X Finance

Some Quirky Ways Banks Attract New Customers

Hanmi Bank Will Give You  a Bag of Rice

To celebrate their 20th anniversary, Hanmi is giving away a free checkbook (valued at $75), a premium coffee mug and a bag of rice (while supplies last) if you open a regular checking account (personal or business) by 6/30.  To learn more please click here.

PlainsCapital Bank Will Connect You With a 1GB Flash Drive

To promote their eGreen Checking, PCBank is offering a 1GB flash drive if you open an account online.  Requirements include a $50 minimum deposit, the use of eStatements, and a write-up of 5 checks a month. To learn more click here.

Riverside Bank Will Stick a Bumper Sticker

Love your bank? Well, Riverside wants you to prove it by placing a “Riverside Loves Me” or “Riverside Loves My Business” bumper sticker on your car.   By participating in this contest, your license plate number may be one of the five selected to win $100.  Winners are chosen weekly. To learn more click here.

Redneck Bank

Last but not least, we have to give the award for most creative bank branding to Redneck Bank. “Redneck Bank is here for you with experience and good old-fashioned service.” We at My Bank Tracker, give credit to their ability as forward-thinking bankers in the field of lifestyle bank branding. To visit the site for “Redneck Rewards” click here.

Some Quirky Ways Banks Attract New Customers | Bank News, Bank Deals, My Bank Tracker

Mexico’s Salinas May Seek Hispanic Banking Customers in U.S.

May 23 (Bloomberg) — Banco Azteca, controlled by Mexican billionaire Ricardo Salinas, says the financial crisis offers the bank a chance to enter the U.S. market and lure Hispanic customers.

The bank is considering bringing its core products — money transfers, loans of less than $300 and life insurance for $4 a week — to California, Salinas said in an interview yesterday in San Diego. Hispanics make up a third of the state’s population of about 37 million, according to the U.S. Census Bureau.

“With the credit crunch there is tremendous opportunity,” Salinas said. “Our bank is very stable. We can afford to poke our nose around.”

Azteca is Mexico’s 10th-largest bank in terms of lending, with 23.2 billion pesos ($1.76 billion) in its credit portfolio at the end of March, according to government statistics. The company, a unit of Salinas’s Grupo Elektra SA, operates in seven other countries, including Brazil, Peru and Honduras.

Salinas, 53, took over as chief executive officer of Grupo Elektra in 1987, replacing his father, who founded the company in 1950. He restructured it to avoid bankruptcy and then entered new markets, including television and telecommunications.

Grupo Salinas, his holding company, also controls TV Azteca SA, Mexico’s second-largest broadcaster, and Grupo Iusacell SA, the third-biggest mobile-phone carrier. Elektra’s primary market is families with monthly incomes of about 5,500 to 59,990 pesos, or about $418 to $4,500, according to a March presentation.

Salinas and his family are worth about $4.2 billion, according to a Forbes magazine report in March.

Bank Accounts

About 58 percent of U.S. Hispanic adults said they had a bank account in a 2006 poll by the Pew Hispanic Center in Washington. Overall, more than 90 percent of U.S. households have some sort of bank or transaction account, according to a Federal Reserve study in 2007.

A move into the U.S. market could boost revenue as sales slump in Mexico. Elektra’s stores are feeling the impact of the recession there, Salinas said. Sales of electronics goods have slid 36 percent this year. Refrigerators, washing machines and other so-called white goods have dropped 8 percent, he said.

Elektra, which had planned to open 1,500 stores in Brazil over the next five years, may scale back that expansion, Salinas said.

“We need to review the whole investment strategy given the credit crunch,” he said. “Given the uncertainty in the market, will the funding be available to do that aggressive expansion? We don’t have an answer to that.”

Motorcycle Sales

Motorcycle sales at Italika, an Elektra unit, have fallen 30 percent this year, driven primarily by the 21 percent decline in the peso from a year ago. The company controls about 60 percent to 70 percent of the Mexican market, Salinas said.

Iusacell is in the process of renegotiating its foreign debt. The company’s costs have risen because of the declining value of the peso.

The company will raise additional capital if it can’t come to terms with its debtors, he said. Salinas said he has no plans to sell the company.

“We are telling our debtors we will pay and need more time,” Salinas said.

Elektra gained 8.4 pesos to 644.50 pesos yesterday in Mexico City trading. The shares have climbed 11 percent this year. TV Azteca rose 19 centavos, or 3.7 percent, to 5.37 pesos. Iusacell advanced 4.17 pesos to 48.39 pesos.

‘Within Its Rights’

TV Azteca may face government sanctions for offering a service that transmits digital TV channels to set-top boxes sold in Elektra stores. Mexico’s Federal Telecommunications Commission said last week the service may fall outside the scope of TV Azteca’s broadcast license. The agency recommended starting a sanctions process, which requires a review by the Ministry of Communications and Transportation.

The company is within its rights to offer more channels, Salinas said. He said Elektra has sold about 1,000 of the set- top boxes, which cost 1,999 pesos and can receive 20 channels, including some that can’t otherwise be viewed. The company may sell up to 2 million of the devices, Salinas said.

TV Azteca has a legal defense prepared if regulators try to clamp down on the company, he said.

“We’re willing to take it all the way if necessary, even to the international courts,” Salinas said.

Mexico’s Salinas May Seek Hispanic Banking Customers in U.S. - Bloomberg.com

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Financial Planning: The Three Banking Regulations / Laws That You Should Know

Ah, the convoluted rules by which banks require us to live. This is the stuff that truly inspires excitement — about as much excitement as watching another re-run of Everybody Loves Raymond.

Taking the fun factor aside, here are three common banking regulations that you will come across every day, which you should know just a little bit more about. Why? Because if you accidentally run afoul one of them, it will cost you in fees and headaches. Staying on top of them is simply good financial planning.

Federal Regulation D - a.k.a. Federal Limit on Electronic Transfer

This little bugger limits the number of electronic transactions on savings and money market accounts to six outgoing transfers per month, per account.

What qualifies as an electronic transfer?

• Online, overdraft, telephone and preauthorized transfers
• Checks clearing each month from any savings or any money market account.
• Faxes, ACH Debits, money market checks.

Basically, these include most type of transactions where you’re not present. While that might limit you, you can still make an unlimited number of transfers through these methods:

• Mail, ATM, and good old-fashioned in-person visit sto the branch

The bottom line is to keep Federal Regulation D in mind when you move money from your savings account to other accounts — especially those utilizing high-yield online savings accounts. In many instances, it’s not a physical limit; thus, you may actually exceed the six outgoing transfer limit unintentionally and have your account suspended, closed, or tackled with fees. Ack!

Check 21 - a.k.a. Check Clearing for the 21st Century Act

Enacted in Oct 28 of 2003 and thrown into effect on Oct 28 of 2004, this psuedo-complicated regulation allows paper check recipients (i.e., banks) to create digital versions, eliminating the need for the recipient to keep the actual paper check. The whole point is to create a more efficient check truncation.

How does it affect you?

• You probably already know from experience that this means you won’t be able to get your original paper checks back, because your banks aren’t keeping them any more.
• Contrary to what some banks claim, checks you write will generally clear faster than before. The funny part is that banks aren’t required to speed up the time they make your check funds available to you from the time you deposit. The lesson here is: don’t write checks unless the funds are already in your account.
• If you need to have checks back, you can request substitute checks from your bank for a fee. You should shop around to find a reasonable fee on substitute checks.
• In the case of an error where a check was paid twice or with an incorrect amount, you can request a “re-credit” to your account within 10 days and receive a refund of up to $2,500.

If you don’t write a lot of checks, Check 21 probably hasn’t affected you much. If you still write a lot of checks for various amounts to numerous payees, you really should examine your bank’s Check 21 process, and request substitute checks for the added protection in the case of a banking error. The last thing anyone would want is to find a non-sufficient fund fee on their account statement!

EFT Act - a.k.a. the Electronic Funds Transfer Act

Implemented way back in 1978 (and probably in need of some amendment), this law establishes the rights and liabilities of the consumer, as well as the responsibilities of all participants in EFT activities (including financial institutions).

What falls under electronic fund transfers?

• ATM and POS (point of sale) transactions, like using your debit or check card at the grocery store.
• Telephone transfers and preauthorized transfers — in other words, whenever you tell your bank to make some type of automatic transfers for you. Monthly direct deposits and monthly mortgage payments all count.

What happens when there’s an error? (New: Does all that financial planning go to waste? Not necessarily…)

• Report the error no later than 60 days from the date of the statement containing the error (write or call).
• The financial institution must promptly investigate the error and resolve it in 45 days. Errors involving new accounts, POS and foreign transactions may take up to 90 days.
• If it takes longer than 10 days for the investigation to resolve, the financial institution must re-credit the amount in question while it finishes its investigation.
• The financial institution must report the result of the investigation to you and correct the error (make the re-credit final) or in the case when there is no error, explain to you in writing and inform you of any amount deducted from the re-credit.

Lost or Theft of ATM/Debit Card?

• Your loss is limited to $50 if you notify the financial institution within 2 business days.
• Loss may be up to $500 if you don’t notify the institution within 2 business days.
• If loss is not reported within 60 business days, the liability could be unlimited.

Your liability under federal law for the use of your ATM or debit card depends on how quickly you report the loss — an often-mention difference between debit and credit cards.

For credit cards, under the Fair Credit Billing Act, your maximum liability for unauthorized charges is $50. If you report the card lost before it’s used, you cannot be held responsible for any unauthorized charges. If the loss involves your credit card number but not the actual card itself, you have no liability for unauthorized use.

On the flip side, debit/check cards generally have additional protections with them from the bank that issued them (e.g. Bank of America’s Zero Liability Protection), or the zero liability that comes with a VISA and MasterCard check card. Of course, credit cards usually have these additional protections too (even if they don’t need them).

Banking Regulations Check-List

1. Check if you ever got dinged for any type of fees that may involve one of these regulations, such as an insufficient fund fee or an over-transfer-limit fee.
2. If you’ve received such a fee, read up on the regulations above so you can be better informed on why they hit you with it.
3. If this was your first time hit with these fees, call your financial institution and explain to them that you were unaware of such regulations, and ask them politely to waive the fee out of courtesy for you, their important customer.
4. If you use debit cards frequently, make sure you understand the EFT Act — because if your card was lost, stolen, or used without authorization, you have a limited set time frame to report these problems. If you neglect to report the lost or theft of your card, after 60 business days, your liability could be unlimited!

Financial Planning: The Three Banking Regulations / Laws That You Should Know | Mint.com Blog | Personal Finance News & Advice