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Yields below are based on the Q2-09 dividends. ASBC, CMA, FMBI, FMER, FULT, HBAN, MBFI, ONB, SNV, SUSQ and USB have reduced their Q2-09 dividends - and BBT its Q3-09 div Ten Ways Banks Take Your Money Jennifer Waters, WSJ 7-04 Consumers need to keep their guard up as financial institutions increasingly impose new fees and charges. Banks and credit-card companies have gone on the offensive in advance of new consumer protections the Obama administration is asking Congress to enact. For many consumers, that could mean an unexpected financial sting. "The fee income is becoming increasingly more important as interest income is falling as a percentage of total revenues," says Bob Hammer, chief executive of bank-card advisory firm R.K. Hammer. Late fees, loan-origination fees, over-the-limit and overdraft charges helped generate 53% of banking-industry income in 2008, according to R.K. Hammer, up from 35% of income in 1995. The average bounced-check fee is $28.95, up about $1 from last year, says Greg McBride, senior analyst at Bankrate.com. And it's a charge that rises every year. At $19 billion, credit-card penalties for late payments and over-limit charges were up 80% between 2003 and 2008. Fees aren't necessarily bad, consumer advocates say, as long as they are reasonable. There's a lot more involved in a loan origination, for example, than there is in using an ATM. But Adam Levine, chairman of Credit.com, says banks are drawing wide margins around what's considered "reasonable." One thing to keep in mind: It's worth the time to ask for a pass on fees. No bank is going to advertise that it waives fees on a regular basis, but many will do so when asked. Here are 10 fees you should keep a close eye on: 1. Checking account This is the privilege-of-using-your-own-money charge that many banks did away with years ago. But such fees are starting to creep back into the system, experts warn. Consumers shouldn't assume their checking accounts are fee-free or, if they are, that they will always continue to be so. Charges vary from a flat monthly fee to one that is dependent on how many transactions you have or on a minimum account balance. "The type of checking account to now look for is one that does not have a monthly service charge, minimum balance requirement or limit on the number of transactions you can make," says Bankrate's Mr. McBride. 2. ATM If you use an ATM that doesn't belong to your bank or doesn't have an agreement with your bank, you could get whacked twice -- once by your bank and once by the bank whose ATM you're using. Fees typically range between $2 and $4. And the bite is getting bigger. 3. Overdraft Charges can add up when you unknowingly bounce a check or go over your account balance. Many consumers argue that banks should deny them cash at the ATM if the withdrawal is going to overdraw the account. But most banks don't do so because allowing the transaction to go through and charging the subsequent penalty brings in money. 4. Deposit returned If a check deposited in your account bounces, you're charged a fee just as if you had bounced the check yourself. 5. Tellers Banks drew fire from consumers in the 1990s when they tried charging a fee if human interaction occurred when depositing or withdrawing money. There are scattered reports of these fees popping up again, mostly for "excessive" use of tellers. Some banks give you two free teller visits per month, but charge you after that -- say, $2 or $4 for each extra visit. 6. Inquiries This is the phone version of teller fees. Make a call to ask about your account balance, a charge or to order new checks and you could get hit with a service fee ranging from 50 cents to $5. 7. Closing accounts Many banks will charge you a fee if you close an account within 90 days -- and sometimes within six months -- of opening it. Bankrate has seen fees between $5 and $25. 8. Currency conversions Fees to convert currency are on the rise -- both what you're charged when withdrawing local currency from a foreign ATM and what you pay to convert any unspent money back to dollars at your local bank. 9. Credit cards Legislation going into effect next year will put caps on some credit-card late and over-limit fees and on how they're charged against old and new balances. Until then, expect to see them grow. Grace periods also are expected to end or be severely restricted. 10. Annual membership In the early days of credit cards, issuers charged consumers a yearly fee for the right to use the card. Competition drove most annual fees away, but it looks like they may make a comeback. An annual fee could cost you $29 or more. S&P cuts ratings, outlooks on 22 U.S. banks Business Week & Reuters 6-17 Standard & Poor's on Wednesday cut the ratings and outlooks on 22 U.S. banks, citing expectations of more difficult operating conditions due to volatile financial markets and tighter regulation. "We believe the banking industry is undergoing a structural transformation that may include radical changes with permanent repercussions," said Standard & Poor's credit analyst Rodrigo Quintanilla. "Financial institutions are now shedding balance-sheet risk and altering funding profiles and strategies for the marketplace's new reality. Such a transition period justifies lower ratings as industry players implement changes. As a result of the most recent downgrades, as well as those since mid-2007, the counterparty ratings on U.S. banks (at the operating subsidiary level) have fallen by an average of two notches, to BBB+ today from A before the crisis began in June 2007. However, says Quintanilla, "the high number of firms with negative outlooks suggests that the ratings could still decline if the credit cycle is longer and/or deeper."
Ten of the nation's largest banks were given the green light Tuesday to repay $68 billion in government bailout money, freeing them from restrictions on executive compensation that they say are making it hard to keep their top-performing executives. All eight banks that took TARP money and last month passed government "stress tests" confirmed they received permission to repay the bailout funds. They are: JPMorgan Chase, American Express, Goldman Sachs, U.S. Bancorp, Capital One Financial, Bank of New York Mellon, State Street and BB&T Corp. Morgan Stanley did not pass the government test, but on Tuesday said it had raised enough capital quickly and was approved to repay its TARP money. Northern Trust was not among the 19 banks subjected to stress tests, but the company said it also had received permission to repay the bailout funds. Credit-Card Delinquencies Increase Aparajita Saha-Bubna, WSJ 6-09 Delinquencies on plastic issued by banks jumped in the first quarter from a year ago as strapped borrowers used their tax refunds to meet daily expenses instead of paying down their credit-card balances. For the first three months of the year, the delinquency rate in the U.S. rose to 1.32% for consumers who were three months or more behind payments on their cards, up 11% from 1.19%By a year earlier, according to a report published Monday by credit-reporting bureau TransUnion LLC. The delinquency rate for the first quarter jumped 9.1% from the previous quarter. This report comes amid new restrictions on credit-card companies that would ban extra fees and fluctuating rates. The legislation is expected to bite into industry profits. Delinquencies were the highest in Nevada, followed by Florida and Arizona, states where large swaths of homeowners are also struggling with foreclosures. Fitch lowers Fifth Third rating Business First of Columbus 6-23 Fitch Ratings lowered Fifth Third Bancorp’s long-term issuer default rating to “A-” from “A,” with a negative outlook. The ratings agency cited some of the problems that have troubled FITB and other banks as the reason for the downgrade: Asset quality deterioration, earnings pressure and the stress and uncertainty resulting from the recession. Fitch added that these pressures will make its difficult for the bank to return to profitability this year. The downgrade follows a move from Standard & Poor’s last week to cut its ratings on 22 banks, including Fifth Third. The agency reduced the bank to a “BBB” rating from an “A-.” S&P also downgraded HBAN, Central Ohio’s largest bank. The Federal Deposit Insurance Corp. is levying an emergency assessment on the banking industry to boost funds in its Deposit Insurance Fund. The amount charged to banks will be based on the mix of bank assets at the end of the second quarter. Lou Crandall [chief economist of Wrightson ICAP] has a solution: Require banks to report a daily average balance, rather than a one-day quarter-end snapshot. The net result would be a more stable system where banks leverage themselves less, and there would be fewer disruptive quarter-end tap dances. (WSJ 6-25) Ratings & Dividend Changes - June On 6-10 SNV declared a dividend of $0.01/share payable on July 1, 2009 to shareholders of record as of June 18, 2009. On 6-16 USB declared a dividend of $0.05/share payable July 15, 2009, to shareholders of record at the close of business on June 30, 2009. On 6-16 FULT declared a dividend of $0.03/share payable July 15, 2009 to shareholders of record as of June 26, 2009. On 6-17 FITB declared a dividend of $0.01/ share payable on July 23, 2009 to shareholders of record as of June 30, 2009. On 6-03 Credit Suisse Initiated BBT at Underperform. On 6-04 RBC Capital Markets Upgraded FULT from Underperform to Sector Perform. On 6-10 Soleil Initiated CMA at Buy. On 6-19 Davenport Initiated coverage of WL at Buy. On 6-22 Sun Trust Rbsn Humphrey Upgraded MBFI from Reduce to Buy. On 6-25 Maxim Group Initiated coverage of NAL at Hold. On 6-12 Jim Cramer shrugged off talk that the financials were weak, saying the only thing that matters is the resurgence of nearly failed banks thanks to secondary offerings. He pointed to successful secondaries held by Fifth Third, Huntington Bancshares and Marshall & Ilsley, which sold new shares today. “That’s what matters – are people making money on the secondaries?” Cramer said, “and they are.” “It’s really rather extraordinary how these deals all worked,” he said. FBR Capital Markets Resumes Coverage at Underperform for MTB On 6-23 FBR Capital Markets resumed coverage of M&T Bank Corp. with an underperform rating driven by a valuation that it says is too rich. FBR analyst Bob Ramsey raised his price target on the stock to $35 from $30, however, saying M&T's loan portfolios should perform better than peers. Still, he said the underperform rating is "based on M&T's premium valuation, and our below-consensus earnings outlook." J.P. Morgan Chase Upgrades CMA On 6-03 J.P. Morgan Chase upgraded CMA to overweight and said that they believe that CMA's low valuation and a recovering Michigan economy will drive strong returns for the firm. "Although the GM bankruptcy will translate into more immediate pain in the Michigan economy, we believe that over the next year the market will start discounting an end to the bleeding witnessed over the past several years, particularly given substantial direct government support to the auto sector. Accordingly, we look for CMA's deep discount valuation to narrow over the next year and drive outperformance of the shares," the analysts said in their research report. Fitch lowers Fifth Third rating Fitch Ratings lowered Fifth Third Bancorp's long-term issuer default rating to "A-" from "A," with a negative outlook. The ratings agency cited some of the problems that have troubled FITB and other banks as the reason for the downgrade: Asset quality deterioration, earnings pressure and the stress and uncertainty resulting from the recession. Fitch added that these pressures will make its difficult for the bank to return to profitability this year. The downgrade follows a move from Standard & Poor's last week to cut its ratings on 22 banks, including Fifth Third. The agency reduced the bank to a "BBB" rating from an "A-." S&P also downgraded HBAN, Central Ohio's largest bank. SunTrust Upgrades SNV On 6-15 SunTrust Robinson Humphrey analyst Jennifer H. Demba upgraded Synovus Financial [SNV] to "Buy" from "Neutral", citing the regional bank's efforts to control expenses and improve earnings. Demba wrote that a rising net interest margin, a wave of mortgage refinancing and improved loan and deposit pricing could boost pre-tax provision earnings at SNV. The bank's credit outlook also appears to have improved from just a few weeks ago, Demba added, since the bank is "being more aggressive" with its problem loan portfolio. The largest percentage of the company's non-performing assets sit in the Atlanta area, and the housing market there appears to be improving, Demba wrote. Synovus management is putting its loan portfolio through a stress test to determine if the company needs to raise additional capital to weather the economic downturn. The bank accepted $968 million in funds from the federal government's Troubled Asset Relief Program and will likely "take its time" in repaying the money, Demba wrote. Deutsche Bank Upgrades USB On 6-17 Deutsche Bank upgraded U.S. Bancorp to buy from hold, saying the shares are cheaper than they initially seem after accounting for likely large amounts of excess capital within a few years and positive book value growth. The broker said that, assuming an economic recovery starts in 2010, U.S. Bancorp's Tier 1 capital will be 2 percentage points higher than its peers by the end of 2011. Some of the excess will likely support higher loan growth, but there will still be more than $3 billion that could be deployed to lift earnings per share to $3, the broker said. "U.S. Bancorp could also be one of the first large banks to meaningfully boost its dividend," Deutsche Bank added. On 6-04 HBAN announced that it priced an offering of 90.0 million shares of its common stock at a price to the public of $3.60 per share, or $324.0 million in aggregate gross proceeds. On 6-04 RBC Capital Mkts Upgraded FULT from Underperform to Sector Perform. On 6-09 Bernstein Initiated NTRS at Market Perform. On 6-10 Soleil Initiatedcoverage of CMA at Buy. On 6-15 Sun Trust Rbsn Humphrey Upgraded SNV from Neutral to Buy. On 6-17 Sun Trust Rbsn Humphrey Initiated NTRS at Neutral. On 6-19 Davenport Initiated WL at Buy. On 6-22 Sun Trust Rbsn Humphrey Upgraded MBFI from Reduce to Buy. On 6-25 Maxim Group Initiated NAL at Hold. Home Page Factoids Previous Update | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||