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Wealth Management

Wealth Management

Advisors can generate fee income for banks.

By Dan Overbey

Several weeks ago, I exchanged emails with the chief financial officer of a $1.2 billion bank. In response to our wealth program administration proposal, he responded, “We’re not interested. We had a relationship with your broker dealer several years ago and we walked away because of poor performance.”

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Vying for the Top Earners

By Toni Lapp

As community banks remain challenged by the rising cost of complying with new regulations, not to mention the narrow margins afforded by a still-low interest rate environment, they also face the need to transform their businesses in an effort to reach new customer segments. One such segment is the high-net-worth customer.

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Banks Find Value in Catering to Investment Clients

January 27 – Consumers who purchase an investment where they bank will keep their deposit and credit products longer, say researchers with LPL Financial and Kehrer Bielan Research & Consulting. That finding was  the main take-away from a co-sponsored study, “The Value of an Investment Client to a Bank or Credit Union.” (more…)

Japan, We Are Not!

Japan has been in a deflationary spiral for more than two decades, and its economy and markets still do not show much promise for improvement. My research reveals that Japan’s average inflation rate over the past 15 years has been a negative 1.5 percent. Let’s investigate how this deflationary spiral happened, why they have not been able to recover, and how different our economy is in the U.S from theirs.

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Trust and the Community Bank

As we all know, community banks face many challenges when competing with mega-banks, but they must and do find ways to not just level the playing field but define it and win. One major challenge has been to find a professional yet cost-effective way to serve the needs of the high net worth client, which every community bank has. The fact that a bank may be relatively small or located in a small community has no bearing on the trust or investment needs of its best and highest net worth customers.

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Recalibration of Moody’s Municipal Bond Ratings

Moody’s Investors Service will recalibrate long-term state and local municipal bond ratings to enhance the ability of investors to compare quality across a spectrum of bond investment alternatives. Previously, Moody’s published separate ratings scales for state and local municipal bonds and a global rating scale for sovereign, sub-sovereign, financial institution, project finance, structured finance and corporate obligations. The reasoning for the change is that municipal credits have a historically low default rate, and the dual system resulted in a perceived penalty for issuers in the form of higher borrowing costs or interest rates paid by the issuers. Moody’s employed the old scale for rating municipal credits since 1918. According to Moody’s, there are approximately 18,000 state and local government entity bond issuers, with security combinations covering nearly 70,000 ratings.

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2010: Be Patient!

I cannot remember a more frustrating confluence of economic and market extremes than we as bond investors face for 2010. There have been many similar “nothing seems to make sense” markets in the past (e.g.1993, 1998, 2001) but last year was perhaps the worst combination of supply and demand extremes since WWII.

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Liquidity-Risk Management: A Focus on Investments

Anyone involved with community banking in recent years has witnessed distinct changes in the way depository institutions fund their asset growth. In particular, there has been a steady increase in alternative sources of wholesale funding available to bank managers. As core deposits dropped relative to total assets, bankers recognized that managing liquidity was not as easy as it once was, and therefore increased reliance on brokered CDs, FHLB advances and other wholesale sources to fund the extension of credit.

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Raising Equity Capital in a Difficult Market

Is There a Treasury Bond Bubble?

If you rewind the financial big-picture tape over the last seven years and then hit replay, you will see money gushing like a springtime Colorado mountain stream into stocks, then to real estate, then to commodities and finally in record amounts to Treasury bonds for safety. Do we have a Treasury bond bubble now, and will it eventually burst like the other bubbles before it?

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