Category Archives: Banking

SBA Loan Totals Show Webster On Top For 6th Year

by Categorized: Banking, Public finance Date:

The Small Business Administration loan totals in Connecticut for the fiscal year that ended Sept. 30 show Webster Bank ahead in both number of loans and dollar total, leading both categories for the sixth straight year.

In all, the Connecticut SBA office backed 572 loans totaling $227 million, a 22 percent dollar increase over fiscal 2012.  Webster’s total in the recent year was 78 loans for $34.4 million.

The totals include the so-called 504 program of loans to Certified Development Corporations; that total was $42.4 million in 70 deals.

Top Five Lenders in Fiscal 2013 by Number of Loans:

BANK Number of Loans Dollar total
Webster Bank 78 $34,439,000
First Niagara Bank 60 $30,168,000
Farmington Bank 52 $7,009,000
Wells Fargo Bank 31 $14,736,000
Thomaston Savings Bank 27 $6,004,000

“We’re starting to see, and we’ve been seeing, businesses really come out and get confident enough to come out and borrow,” said Robert J. Polito, senior vice president and director of government guaranteed lending at Webster.

Borrowers are firms “across the board,” he said. “It’s from an ice cream shop to a law firm, from a gynecologist to a plumber.”

SBA loans up to $5 million can be backed by the federal agency from 50 percent of value to 90 percent.

the list has led to some competing claims among banks. In its annual report earlier this year for 2012, Farmington Bank said: “Our success in the small business segment resulted in Farmington Bank being named the No. 1 Small Business Administration lender in the state of Connecticut for the SBA fiscal year ending 2012.”

In that fiscal year, Farmington Bank had a total of 57 regular small business loans backed by the SBA, for a total of $8.6 million.  Webster had 50 loans totaling $12.4 million.  Including the community development loans, Farmington Bank had 59 deals for a total of $10.3 million and Webster had 60, totaling $20.5 million.

 

BANK Number of Loans Dollar total
Webster Bank 78 $34,439,000
First Niagara Bank 60 $30,168,000
Farmington Bank 52 $7,009,000
Wells Fargo Bank 31 $14,736,000
Thomaston Savings Bank 27 $6,004,000

Connecticut’s Tally From Huge Mortgage Bank Settlement: $448 Million For 6,260 Homeowners

by Categorized: Banking, Housing, Real Estate, Wall Street Date:

A preliminary tally is in for Connecticut’s take in the $25 billion foreclosure settlement with the nation’s five largest mortgage loan servicers: $448 million in loan restructuring for 6,260 borrowers, Attorney General George Jepsen said Thursday.

That’s an average of $71,618 that the homeowners won’t have to pay those banks, and they saw their mortgage interest rates fall by an average of 2 1/4 percentage points. On top of it, the state received $27 million for foreclosure prevention programs and 5,000 Connecticut residents who had already lost their homes to foreclosure received $7 million.

The February, 2012 settlement with Bank of America, Citigroup, Ally Financial, J.P. Morgan Chase Bank and Wells Fargo followed an investigation into abusive practices.

“The settlement has been a tremendous success in Connecticut, helping many distressed borrowers to keep their homes,” Jepsen said in a written statement.

“It was the goal we envisioned during long months of negotiations,” said Jepsen, who helped in the talks between the lenders, the federal government and 49 states.

Loan modifications and workouts continue but appear to be winding down as the banks reach their settlement targets. Nationally, nearly 644,000 borrowers have received $51 billion in mortgage relief, with an average benefit of $79,742.

 

 

For Nappier And Other Activists, Only A Moral Victory in Dimon Vote at JPMorgan Chase

by Categorized: Banking, Corporate finance, Management, Public finance Date:

Shareholder activists including state Treasurer Denise L. Nappier, who tried to force JPMorgan Chase Chairman and CEO Jamie Dimon to give up his chairman post, will have to be satisfied with a moral victory. Their bid fell short Tuesday at the company’s annual meeting.

Nappier, fiduciary of the $26 billion pension and trust funds, was among the ringleaders of the effort. Despite support from unions and other pension funds, the nonbinding vote to create an independent, non-employee chairman, was defeated with one-third of shares voting favoring the split.

The Connecticut funds hold 1.5 million JPMorgan shares, valued at $74.5 million as of April 30, and $38 million in JPMorgan debt, Nappier’s office said.

Management and the JPMorgan board, and of course, Dimon himself, had worked hard to defeat the measure, so the one-third rebuke is something of an accomplishment.  Still, a similar bid got 40 percent of shares a year ago, and some had hoped that the scandal of 2012, in which a London trader lost $6 billion, would lead to a larger vote for a split.

Nappier’s statement, in part:

“The Connecticut Retirement Plans and Trust Funds and many other shareholders realize that highly integrated companies such as JPMorgan Chase, in order to ensure long-term value, should be managed by a CEO overseeing the business, and an independent chairman leading the board in its oversight and evaluation of the CEO’s performance. Independent Board leadership is an important governance variable to ensure that the company looks beyond today’s profits to future growth and success.”

Nappier sent Suzanne Hopgood, a corporate governance expert, former chair and CEO of a New York Stock Exchange company, and chairwoman of the Capital Region Development Authority, to represent her office at the JPMorgan shareholder meeting in Tampa, Fla.

Questions by shareholders about the board operations lasted more than an hour, said Hopgood, who conveyed Nappier’s respect for Dimon and his abilities, but also her concerns “that he has two positions.”

“They are two very difficult, challenging jobs,” Hopgood said.

Three directors on the risk committee were re-elected with votes of between 53 percent and 59 percent, Hopgood said, which are low totals reflecting the shareholders’ concerns.

Nappier is a veteran activist in corporate governance, especially this issue — the splitting of the roles of chairman and CEO. She led a successful campaign to persuade The Walt Disney Co. to split the roles in 2005, a move the company later reversed and Nappier is trying to restore, but her bid was turned back in March.

As with all of her activism, Nappier argues that her interest is in shareholder returns, not political points.  Tuesday, she cited a 2012 report by GMI Ratings that said 5-year returns were 28 percent higher at companies with a separate CEO and board chair than at companies with a consolidated office.

Nappier’s office, citing shareholder advisory firm Institutional Shareholder Services, said 21.5 percent of Standard & Poor’s 500 firms had an independent chair in 2012, up from 18 percent two years earlier.

 

 

 

Homespun Advice from a Business Legend

by Categorized: Banking, Management Date:

Larry Bossidy was never the CEO of a Connecticut-based company, but he’s been a big force in business here and elsewhere for decades at General Electric, Allied Signal, Honeywell International and lately, as a board member at Berkshire Bank, which owns the former CBT franchise .

On Friday, Bossidy brought a combination of homespun advice and hardnosed pragmatism to an economic conference of the Connecticut Business and Industry Association, at the Sheraton Hartford South in Rocky Hill.

Bossidy

Larry Bossidy at CBIA economic conference
Dan Haar/The Hartford Courant
May 17, 2013

 

The precepts he offered are basic but the execution of them is not so easy, and Bossidy has the track record to back it up.  Know yourself, be humble, reward doers, anticipate change, create systems that root out errors and, mostly, be flexible, not rigid.

“People who have their minds made up are the ones who end up falling by the wayside,” Bossidy said.

Bossidy started his career at General Electric in 1957, where he rose to be chief operating officer of GE Credit, now GE Capital, and vice chairman of the company, the right-hand man to chairman and CEO Jack Welch.  Bossidy later turned Allied Signal into a top-performing company and sold it to Honeywell, which he ran in two stints, before and after Honeywell was nearly acquired by United Technologies, then General Electric, in 2001.

“I always discouraged a lot of philosophers around my place,” said Bossidy, 78. “You want good ideas but you want to get things done.”

That’s the theme of one of the two books Bossidy co-authored after retiring from Honeywell in 2002, “Execution: The Discipline of Getting Things Done.”  He later co-wrote “Confronting Reality: Doing What Matters to Get Things Right.”

It’s the smart, tough, results-based management style that’s at the heart of GE culture. Bossidy was close to Harry Gray, who converted the old United Aircraft Co. into United Technologies, and who greatly admired Bossidy.  Like a lot of people, I assumed Gray had tried to recruit Bossidy in the tumultuous last years of Gray’s tenure at UTC in the mid-’80s.

Not true, Bossidy told me Friday. “We were friends, but  wouldn’t have gone to a GE competitor. I woudn’t have gone to UTC.”

He’s a Red Sox fan and UTC, he said, was “the Yankees.”  That was a different era, of course, and nowadays Red Sox and Yankees players jump ship for the Benjamins all the time.

“The quality and performance of U.S. companies is a lot better than it was ten years ago,” Bossidy said.

He sees more difficulty in the economy this year and no great boom in 2014 — in contrast to Ryan Sweet, an economist at Moody’s Analytics, who told the audience that U.S. GDP growth could reach 5 percent next year. But Bosssidy said he’s “an optimist for the country,” and that we’ll solve the problems of long-term liabilities and other major structural worries over the economy.  Yolanda Kodrzycki, a vice president of the Federal Reserve Bank of Boston and director of the New England Public Policy Center, had said earlier that those concerns could hamper economic growth for years.

But Bossidy’s main message transcended business, to the realm of leadership and more broadly, humanity. It’s very hard to promote innovation and teamwork at the same time, and it’s important to remember there are no cookie-cutter solutions to tough problems.

Bossidy was in some ways very much in the mold of typical speakers at business conferences — an accomplished CEO, still with a hand in the game. But he was broader than most, something CBIA appreciated, said Peter Gioia, the association’s vice president and head of research.

For example: As the more gregarious brother of a pair of twins, Bossidy said he learned humility from his mother. She told him, “It’s not thinking less of yourself, it’s thinking of yourself less.

Morgan Stanley Investor Poll: Upbeat Overall, Fearful of Foreign Markets

by Categorized: Banking, Consumer, Wall Street, Wealth Date:

Investors are generally optimistic about the economy and financial markets but are fearful of foreign stocks, according to a new poll by Morgan Stanley. And that’s odd, since the financial services giant is among many that are recommending more overseas investment in 2013.

The poll of 1,000 investors nationwide by Morgan Stanley Wealth Management shows that people listed foreign stocks and mutual funds as a bad investment more often than any other asset, other than U.S. government debt. Twenty-six percent said foreign stocks were bad, compared with 22 percent who said that’s a good investment in 2013.

morganstanley2

It depends on the asset, of course, but investors are clearly afraid of the unknown when it comes to foreign investments — despite the advice they’re getting. By contrast, 45 percent said the familiar Standard & Poor’s 500 stocks are a good investment, compared with 9 percent who called the blue chips a bad place for their money in 2013, and gold was the most popular choice as a “good” investment, cited by 48 percent.

Investors favor gold and U.S. stocks (top) rather than bonds and foreign assets (bottom).   Credit: Morgan Stanley Wealth Management

Investors favor gold and U.S. stocks (top) rather than bonds and foreign assets (bottom).
Credit: Morgan Stanley Wealth Management

“On balance, Morgan Stanley recommends between international and emerging markets, that you have at least two times invested there as you do in U.S. markets,”  said Rick Ryan, regional director in New England and upstate New York for Morgan Stanley’s global wealth management business, in an interview.

“I can assure you there are very, very few investors that have that kind of profile,” Ryan added. “It’s a conversation investors ought to be having with their advisers.”

In other areas, chiefly the big picture, investors in the poll align with the mainstream advice they’re getting. Thirty-nine percent said their household’s financial condition is better now than it was a year ago, compared with 18 percent who said it’s worse. And 42 percent see more improvement in 2013, compared with 14 percent who see a deterioration.

They were even more ebullient about their financial portfolios — which makes sense, since the S&P 500 index was up 16 percent in 2012, including dividends, and is up further this year.

When it comes to the U.S. economy, 46 percent expect improvement over the next 12 months, compared with 33 percent who expect a decline.  A smaller group of 326 investors with at least $1 million in financial markets said they were even more optimistic about their own portfolios and the nation’s economy — and were less fearful about foreign investments.

“I happen to believe, and I know our firm believes, that the world economies are healing and recovering,” Ryan said, citing U.S. housing markets, Japan and even Europe as areas where improvement is happening.

Investors in the tri-state area were especially upbeat about the national economy, but the difference might not be statistically significant.

Some prognosticators are calling for a correction in the stock markets, which are at or near record highs, but Morgan Stanley, like other major financial firms, is generally advising a balanced portfolio, not a flight out of the markets.

Investors’ single biggest worry is the government budget deficit, with 65 percent saying they are very concerned. They might have even more to worry about if the government were to sharply cut spending, thereby potentially choking off the recovery.

“I’m not sure they are extrapolating what would happen to the economy if we do something about it,” Ryan said.

Forty-four percent said they’re very concerned about a downgrade in federal debt ratings. Forty-six percent said they’re concerned about a repeal or reduction in the home mortgage deduction and 44 percent cited “being able to afford quality health care” as a major worry.

Surprisingly, increases in taxes on dividends and capital gains tax rates were not a concern on the list, and an increase in the state tax was a major fear for 21 percent — somewhat more of the millionaire investors.

The poll has a margin of error of plus or minus 4 percentage points for the full group of 1,000 investors.

 

 

 

 

A GE Veteran To Head HR at Webster Bank

by Categorized: Banking Date:

 

Webster Bank has hired a chief of human resources who came up through General Electric, later led HR at CB Richard Ellis, and has been active in a group dedicated to transforming organizations through a holistic approach to “abundance, wellness and enlightenment.”

Jennifer Buchholz joins Webster Financial Corp., the parent of Webster Bank, as executive vice president and chief human resources officer.  She worked at GE  from 1996 to 2007, with ranking positions in Mexico and Japan, and at CB Richard Ellis, based in Los Angeles, from 2007 to 2010.

While Buchholz was at GE, the Fairfield-based conglomerate was known for ranking employees and firing some of the bottom 10 percent every year, under CEO Jack Welch, who retired in 2001. The company also had some of the more forward-thinking team-building techniques under Welch, and has expanded that under CEO Jeffrey Immelt.
Buchholz, of Stamford, earned a Black Belt in the company’s Six Sigma management methods, in which processes and manufacturing systems are designed to root out errors with fervor.

Buchholz, a University of Massachusetts graduate with an MBA from Pace University, is listed as an officer on the web site of the AWE Institute, a group that describes her as “a conduit between the spirit world and the corporate world,” and a certified yoga instructor and ordained inter-spiritual minister.

 

 

Pawlenty, Wall Street And a Common Enemy

by Categorized: Banking, Politics Date:

At least when Chris Dodd took a lobbying job, it was with a group he had known and loved, the Motion Picture Association of America.

Hilariously, former Wisconsin Governor and presidential hopeful Tim Pawlenty will now be a key lobbyist for the financial services industry, an irony captured by Andrew Ross Sorkin of the New York Times.

Sorkin describes the ways Pawlenty trashed the banking industry over the $700 billion federal TARP bailout and related programs.  But as much as Pawlenty fought Obama and the banks over that, he and the banks opposed the added regulation, largely in the form of the Dodd-Frank bill, speaking of our favorite film industry lobbyist.

High-Speed Enforcement: SEC Goes After New York Stock Exchange

by Categorized: Banking, Technology Date:

The Friday morning release from the Securities and Exchange Commission caused a double-take as reporters saw our inbox message fields: “SEC CHARGES NEW YORK STOCK EXCHANGE.”

In a historic first, the Big Board was hit with a $5 million fine and charged with giving out trading data to paying clients before the general public. No one leaked information; rather, the speed of the feed to the insiders was faster than the speed of the feed to the rest of us.

How much faster? It doesn’t matter.  What’s happening here is that the SEC is going after the built-in unfairness of ultra-high-speed trading, which accounts for a vast number of trades.

“Improper early access to market data, even measured in milliseconds, can in today’s markets be a real and substantial advantage that disproportionately disadvantages retail and long-term investors,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.

As market abuse unit chief Daniel Hawke put it, “The violations at NYSE may have been technological, but they were not technical.”

The findings stemmed from the SEC inquiry into the “flash crash” temporary meltdown of May, 2010, Bloomberg BusinessWeek reported.

NYSE was ordered to halt the practice, which apparently started in 2008, and must hire a consultant to make sure it doesn’t happen in the future.

In a written statement, NYSE Euronext CEO Duncan L. Niederauer said the company is committed to the highest level of integrity, that the exchange was not accused of intentional wrongdoing and — echoing virtually all accused companies — that the practice has ended and the problems fixed.

“The timing differentials stemmed from technology issues, not from intentional wrongdoing by the exchange or any of its personnel,” he said.

The problem, SEC said, is that NYSE’s compliance department was not involved in the design of the system to begin with. Most any NYSE-traded company could have told the exchange that’s a problem, after Enron and Sarbanes-Oxley.

Instead, NYSE gets slapped with its first-ever SEC fine in shenanigans that started exactly as this stuff was supposedly being cleaned up.

Credit Isn’t The Problem, Business Is

by Categorized: Banking, Economy, Small Business Date:

Small business owners like to declare that they would succeed wildly if only they could get loans from banks, and bankers like to say they have billions to lend out if only they could find credit-worthy customers.

A survey released Wednesday by the Connecticut Business and Industry Association shows no great change in the equation, as 27 percent of business managers said credit is a problem for them — statistically unchanged over the last several quarters.

Only 25 percent sought financing in the second quarter of this year, down from 34 percent in the 2011 second quarter. That shows weakness in the economy and it’s a bigger concern than credit availability.

The survey, sponsored by Farmington Bank, was emailed to 1,950 businesses in July and 250 responded — three out of four with fewer than 50 employees.

As Jepsen Investigates Libor Scandal, Don’t Look For Any Refunds

by Categorized: Banking, Public finance Date:

Attorney General George Jepsen is among a handful of chief state lawyers investigating possible misconduct by banks in the interest rate manipulation scandal — but don’t look for a refund anytime soon if you think you were wronged.

That’s because Jepsen’s inquiry, in tandem with his New York counterpart, is “looking at any possible harm to state agencies, municipalities, school districts and not-for-profit entities,” said Jepsen spokeswoman Jaclyn Falkowski.

The scandal erupted in late June when banking regulators levied a $450 million fine against Barclay’s plc, Britain’s second largest bank, on charges that Barclay’s manipulated the London Interbank Offered Rate, known as the Libor.

Since then, several of the world’s largest banks have fallen under investigation, according to news reports, including UBS, which has big operations in Stamford. And, Bloomberg news reports, at least three other state Attorneys General, in Florida, Maryland and Massachusetts, are also looking into the mess.

Libor, set by a British agency, is basically the average interest rate that giant banks report as the rate at which they are able to borrow from each other in short-term transfers made to meet regulations over how much money they must have on hand.  If banks report false numbers, they’re manipulating the rate.

The trouble with finding victims, and the reason individuals are unlikely to ever see compensation in this scandal, is that higher or lower interest rates across the economy help and hurt borrowers and lenders in infinite ways.

The attorneys general are not giving details about what they’re examining, but Bloomberg News points out that some states and municipalities have been hurt by falling interest rates, if they have to pay large penalties for so-called swaps, which are agreements enabling them to control the effects of variable-rate debt.

“The city of Baltimore and the New Britain Firefighters’ and Police Benefit Fund in Connecticut consolidated and amended a complaint against Citigroup Inc., Credit Suisse AG, Bank of America Corp. and other banks alleging they artificially suppressed Libor,” Bloomberg reported, citing court documents.

Jepsen’s office “has been working jointly over the last several months with New York Attorney General Eric Schneiderman on an investigation into alleged anticompetitive conduct related to potential rigging and manipulation of benchmark interest rates,” Falkowski said in a prepared statement — meaning they’ve been at it since before the Barclay’s fine was announced.

On the question of whether consumer fraud will be targeted as part of the scandal, Falkowski said: “While we’re not ruling out that consumers may be victims, the investigation is in its early stages and it would be inappropriate to comment at this time.”