July 3, 2008

“A real patriot is the fellow who gets a parking ticket and rejoices that the system works.”  -- Bill Vaughan

The Fourth of July gives us an opportunity to reflect on the idea of patriotism.  The topic is still high-profile and has been since 9/11, maybe since 1776.  Flag lapel pins, ribbon car decals, bumper stickers, flags, “Stars and Stripes Forever”…they all remind us every day that we live in America, the land of the free and the home of the brave. In our younger days, we never missed the Fourth of July parade in our hometown (population 30,000). Decades later, it’s still a tradition there, with politicians waving from vintage convertibles and pretty girls atop floats built by schools and local businesses. We remember when our big sister dressed up as Mae West to ride a float sponsored by the bank where she worked. What Mae West has to do with the Fourth of July we’ll never know, but it certainly was memorable. Here in D.C., we probably won’t attend the parade, but we will find some place to watch the fireworks from afar, basking in our only summer holiday and all that it commemorates.

Senate Confirms Virginia Banker Betsy Duke For Federal Reserve Board Post

Virginia banker Elizabeth (Betsy) Duke received Senate confirmation last Friday to fill an open position on the seven-member Federal Reserve Board of Governors. The 55-year-old senior vice president and chief operating officer of TowneBank in Hampton Roads, Va., will serve as a Federal Reserve governor for a term ending in January 2012.   Duke will be the only current Board member with a background in commercial banking. 

Duke is well-known in banking circles, having served as chairman of the American Bankers Association in 2004-2005. She also served as president of the Virginia Bankers Association in 1999 and served on the board of the Federal Reserve Bank of Richmond from 1998 to 2000. 

Before joining TowneBank in 2005, she served as executive vice president of the merger project office at Wachovia Bank. Previously, she served as executive vice president of community bank development of SouthTrust Bank. Earlier in her career, Duke served as president & chief executive officer of Bank of Tidewater, Virginia Beach, Va. , which she helped organize. She received her bachelor's degree from the University of North Carolina at Chapel Hill and her MBA from Old Dominion University. She is also a graduate and former instructor of the Stonier Graduate School of Banking.

Neil Milner, president and CEO of the Conference of State Bank Supervisors, commended the Senate on confirming Duke’s nomination. “We are very pleased that Ms. Duke will be joining the Federal Reserve Board. We know that she will bring a strong community banker perspective to the board’s policy-making at a critical time for the banking industry,” he said.

Banking By The Numbers; 72% Are State-Chartered

State-chartered banks continue to out-number their national and federally-chartered brethren, according to first quarter statistics. The agency’s Quarterly Banking Profile, released on May 29, showed there were 6,122 state-chartered commercial and savings institutions as of March 31, 2008,   down from 6,190 at the same time last year. There were 2,372 national banks and federal savings institutions, compared to 2,459 on March 31, 2007. National banks and federal thrifts continue to hold the lion’s share of assets, with a 71.8 percent asset share while state-chartered financial institutions’ assets stood at 28.2 percent.

Reflecting the current economic downturn, state commercial banks had an average return on assets of 0.86 compared to 1.23 at the same time last year. For national banks, ROA was 0.61 for national banks, compared to 1.24 last year. State savings institutions had an ROA of 0.48, compared to 0.73 as of March 31, 2007, while federal savings banks had an ROA of -0.09, down significantly from last year’s 1.02. Total number of employees (FTEs) at state chartered commercial banks and savings associations as of March 31, 2008 stood at 733,706, down from 771,402 a year  earlier.  Net interest margin for state chartered commercial banks as of March 31, 2008 averaged 3.45, down from 3.66 a year earlier. More detailed data on the nation’s banking system may be queried from the FDIC State Banking Performance Summary at More Information

Around The States

Utah: To conserve energy, Utah Governor Jon Huntsman recently announced that he will extend state government service hours from 7 a.m. to 6 p.m., Monday through Thursday, and close non-essential offices on Friday. The new hours will begin the first week of August. Essential public services that already run on extended hours and during the weekends will remain open. "As we go forward with this initiative, we will conserve energy, save money, improve our air quality, and enhance customer service," Huntsman said. The 'Working 4 Utah' initiative will be critically evaluated after a one-year period to make any necessary adjustments. More Information

Around The Agencies

FDIC/FRB/OCC: Federal banking regulators reminded financial institutions that most of them face a July 30 deadline for their June 30 Call Reports. The joint notice by FDIC, the Federal Reserve and the Office of the Comptroller of the Currency reminded the bankers of the new reporting items that were previously optional, but are now mandatory.  In the call report for this quarter, banks must report the number and amount currently outstanding of loans to small businesses and small farms; the number of deposit accounts (other than retirement deposit accounts) of $100,000 or less; and the number of retirement deposit accounts of $250,000 or less. More Information

FFIEC: The Federal Financial Institutions Examination Council (FFIEC) this week announced the appointment of Paul Sanford as executive secretary of the Council.   He replaces Tamara Wiseman, who returned to the Office of the Comptroller of the Currency.   Sanford will be responsible for coordinating interagency staff task forces that have been established by FFIEC and for directing the council’s staff. Sanford comes to the post from serving as a senior instructional designer for Educational Program Development at OCC. Immediately prior to joining OCC, Sanford served with FFIEC as a senior program administrator in the Education Office. He also has served at FDIC as an examiner. Sanford holds a Bachelors degree in Business Administration from the University of Massachusetts and a Masters of Science in Finance from Boston College. FFIEC Chairman and Federal Reserve Governor Randall S. Kroszner said, "Mr. Sanford's background and experience in bank supervision and examiner education make him particularly well-suited for the position." The Council, established by the Financial Institutions Regulatory and Interest Rate Control Act of 1978, is responsible for prescribing uniform principles and standards for the federal examination of financial institutions and making recommendations to promote uniformity in the supervision of those financial institutions. Nebraska Director of Banking and Finance John Munn represents state financial regulators on the Council.

NCUA: The National Credit Union Administration on Tuesday liquidated two state-chartered California credit unions -- Sterlent Credit Union of Pleasanton and Cal State 9 Credit Union of Concord.  Patelco Credit Union purchased assets and assumed most shares of both institutions. At the time of liquidation, Sterlent Credit Union had approximately $94.6 million in assets. Sterlent was established in 1936 as EBTEL Federal Credit Union and became a California state chartered credit union in 2002. The Cal State 9 Credit Union liquidation and purchase and assumption by Patelco Credit Union was announced May 22 and was completed on July 1. Cal State 9 had been operating under NCUA conservatorship since November 2007.  Cal State 9 was originally chartered to serve University of California employees. It had assets of $339 million and served nearly 29,000 members. Patelco Credit Union is a state-chartered, federally insured institution with $4.1 billion in assets serving more than 242,000 members primarily located in California. Patelco has 39 branches nationwide and 25,000 automated teller machine locations.  More Information

Upcoming Events

July 4 – Independence Day federal holiday. CSBS offices will be closed.

July 8 – The FDIC hosts a forum on strategies for promoting responsible and sustainable mortgage lending to low- and moderate-income families. Speakers include: Treasury Secretary Henry M. Paulson Jr., Federal Reserve Chairman Ben S. Bernanke and JPMorgan Chase & Co. Chairman and Chief Executive Officer James Dimon. – 7:50 a.m. – 3:45 p.m., L. William Seidman Center, Arlington, Va.

July 9 - The FDIC's Advisory Committee on Economic Inclusion (ComE-IN) will convene to examine ways to encourage mortgage credit availability to lower-income households. - 8:30 a.m. - 12 noon, 6th Floor Board Room, FDIC headquarters, 550 Seventeenth Street NW, Washington, D.C. 

July 9 – The American Enterprise Institute will hold a discussion on the future of insurance regulation. – 8:30 a.m. – 4 p.m., AEI 12^th Floor conference center, 1150 Seventeenth Street, Washington, D.C. 

July 9 – Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, will be the luncheon speaker at the National Economists Club. – 12 noon -1:30 p.m., Chinatown Garden Restaurant, 618 H Street NW, Washington, D.C.

July 9 – The Securities and Exchange Commission will hold a roundtable discussion on fair value accounting. 9 a.m. – 12:30 p.m., SEC's headquarters, 100 F Street NE, Washington, D.C. The roundtable discussions will be available via webcast on the SEC Web site.

July 10 – The House Financial Services Committee will hold the first in a series of hearings on financial market regulatory restructuring. Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke have been invited to testify at the first hearing. Subsequent hearings will be scheduled later in July and continuing into the fall. – 10 a.m., 2128 Rayburn House Office Building.

Closing Comment

“Like the Cyclops, the regulatory system would have only one eye.” - Cam Fine, president and CEO of the Independent Bankers Association of America, discussing the Treasury Department's Blueprint for a Modernized Financial Regulatory Structure, quoted in the June 18 Credit Union Times.

CSBS EXAMINER
Mary White, Editor
Teresa Dean, Contributing Writer