Dollars And Nonsense

NORFOLK, Va., Apr 23, 2010 (GlobeNewswire via COMTEX) — – 4th quarter earnings impacted by $56.9 million non-cash goodwill impairment charge and $65.7 million provision for loan losses — Balance sheet restructuring continued during the 4th quarter: — Core deposits increased $310 million (22%) — Construction and development loans declined $49 million (6%) — Allowance for loan losses increased $33.5 million, net of charge-offs, to $132.7 million or 5.47% of loans — Nonperforming assets increased to $257 million at year end — Goodwill impairment and loan loss provision expense lead to reported net loss of $96.2 million

Hampton Roads Bankshares, inc. (the “Company”) /quotes/comstock/15*!hmpr/quotes/nls/hmpr (HMPR 2.53, +0.02, +0.80%) , the holding company for Bank of Hampton Roads and Shore Bank, today announced financial results for the fourth quarter and full year 2009. The Company reported a net loss of $96.2 million for the quarter; the net loss attributable to common shareholders was $97.6 million. The fourth quarter loss was primarily due to an additional $56.9 million non-cash goodwill impairment charge related to the 2008 acquisition of Gateway Bank and a $65.7 million provision for loan losses.

For the full year, including previously reported losses, the net loss was $145.5 million; the net loss available to common shareholders was $154.2 million. Full year 2009 results included $84.8 million in non-cash goodwill impairment expense and $134.2 million in non-cash loan loss provision expense.

“We entered 2009 expecting that the weak economy and high unemployment would continue to challenge many customers in our communities and pressure our earnings as we increased reserves, enhanced our management of non-performing loans, reduced expenses, implemented our capital management strategy and worked to restructure our balance sheet,” said John A. B. “Andy” Davies, Jr., President and Chief Executive Officer. “While our regional economy is not out of the woods yet and we still have work to do to return to profitability, I am pleased with how our people have pulled together to address the related challenges. I believe we made significant progress during this past quarter and the year to position the Company well for the future.”

Davies continued: “In the fourth quarter, we added $34 million to loan loss reserves, reduced our reliance on wholesale borrowings by $94 million and reduced our core noninterest expense. We had a very successful money market campaign that generated $310 million in core deposits, with two-thirds coming from new customers. We also experienced a slowdown in the growth rate of delinquent loans and foreclosed real estate compared with the prior quarter. As the economy recovers in 2010, we will continue to lend prudently, evaluate strategies to strengthen our balance sheet, reduce expenses while maintaining customer service, help our borrowers work through difficulties, and invest in the communities we serve. Longer term, we believe that our regions have a great future and we are committed to being a sound, trusted provider of financial services to our communities for decades to come.”

Balance Sheet and Capital Management

The Company continued to implement its capital management plan. in previous quarters, it suspended its common and preferred stock dividends to preserve capital, reducing dividend payments by approximately $16 million per year. during the third and fourth quarters, the Company reduced its risk-weighted assets, partially due to a restructuring of the investment portfolio, which positively impacted regulatory capital ratios. The Company continues to evaluate a variety of capital management strategies.

As of December 31, 2009, total assets were $3.0 billion, total loans were $2.4 billion, and total deposits were $2.5 billion. Compared with the third quarter of 2009, deposits increased $180.7 million on the strength of the Company’s fourth quarter money market promotion. Loans declined $88.1 million during the quarter, due to charge-offs and lower loan demand. Increases in core deposits, coupled with the reduction in loan balances, allowed the Company to reduce wholesale funding by $93.8 million, increase its investment securities portfolio by $59.3 million, and increase its cash and overnight funds by $118.0 million. during the quarter, the Company completed an early repayment of approximately $17.5 million in FHLB borrowings, incurring an early payment expense of approximately $2.0 million, which was recorded as a reduction of noninterest income. This transaction also reduced interest expense by approximately $2.4 million, related to fair value adjustments associated with the Gateway acquisition in 2008.

Nonperforming Assets Increase to 8.64% of Assets; Allowance Increases to 5.47% of Loans

Nonperforming assets equaled 8.64% of total assets at December 31, 2009, up from 6.28% at September 30, 2009 and 1.34% at December 31, 2008, due largely to increases in nonaccrual loans. Foreclosed real estate declined slightly from September 30, but is expected to increase in coming quarters, as problem loans migrate from nonaccrual loan status into foreclosed real estate. Net loan charge-offs were $32.1 million for the quarter, an annualized net charge-off rate of 5.12% of average loans. For the full year 2009, net charge-offs were $52.7 million, equal to 2.06% of average loans, compared with 2008 net charge-offs of $235,000, or 0.04% of average loans. during this difficult economic period, many borrowers have experienced a decline in their business activity and personal income, making it more difficult to meet their loan payment obligations. As a result, higher provisions for future potential loan losses are prudent and necessary. The provision for loan losses was $65.7 million in the fourth quarter, which increased the allowance for loan losses to $132.7 million, or 5.47% of loans. The provision expense for the full year 2009 was $134.2 million, compared with $1.4 million in 2008. National and local economic conditions remain under stress and continue to negatively impact credit quality and profitability throughout the industry. However, in the fourth quarter, the growth rate of the Company’s delinquent loans (including nonaccrual loans) and foreclosed real estate declined compared with the third quarter. Accordingly, management has begun shifting resources from problem loan management to foreclosed property management and sales, in order to facilitate the disposition of foreclosed real estate and maximize proceeds.

Net interest Income Increases, Aided by Early Payoff of FHLB Borrowings

Net interest income totaled $26.7 million for the fourth quarter of 2009, compared with $8.6 million for the year-earlier quarter and $26.5 million for the third quarter of 2009. Fourth quarter interest expense was reduced by $2.4 million for acquisition fair value adjustments related to FHLB borrowings which were repaid early, and by $1.6 million in other acquisition fair value adjustments that will not recur. interest income totaled $34.8 million during the fourth quarter, compared with $37.4 million in the previous quarter, and $13.6 million in the year earlier quarter. The sequential decline reflected the adverse impact of higher levels of nonaccrual loans. For the full year, net interest income was $105.2 million in 2009 and $27.3 million in 2008.

Noninterest Income Impacted by Increases in Mortgage Revenue and Special Items

Noninterest income totaled $3.0 million for the fourth quarter of 2009, compared with $7.2 million in the previous quarter and $1.3 million in the fourth quarter of 2008. Fourth quarter noninterest income was impacted by the following nonrecurring items:

— $1.6 million positive impact from net gain on sales of securities; — $2.0 million negative impact from early extinguishment of FHLB borrowings; and — $2.1 million negative impact from impairment of equity securities.

The gain on sales of securities was realized as part of the Company’s strategy to reduce investment credit risk and improve regulatory risk-based capital ratios by restructuring the investment portfolio. Net gains on sales of securities were $2.7 million in the previous quarter. As discussed previously, the Company repaid certain funds borrowed from the FHLB prior to the scheduled maturity. The early payment fee reduced noninterest income. This amount was more than offset by a reduction of interest expense. in the fourth quarter, the Company recorded $2.1 million in other-than-temporary impairment expenses related to its equity investments, whose values have been adversely impacted by the economy.

Mortgage banking revenue increased in the fourth quarter by $247,000, or 36%, over the third quarter of 2009. For the full year, mortgage banking revenue was $4.6 million. Revenues from insurance services declined $236,000 or 19% from the third to the fourth quarter of 2009. For the year 2009, insurance revenue was $4.9 million. For the full year, noninterest income was $22.3 million in 2009 and $6.0 million in 2008.

Noninterest Expense Impacted by Goodwill Impairment and Special Charges; Core Noninterest Expense Decreases From Prior Quarter

Noninterest expense totaled $78.9 million in the fourth quarter of 2009, compared with $21.7 million in the prior quarter, and $5.7 million in the fourth quarter of 2008. Noninterest expense included a $56.9 million goodwill impairment charge reflecting a decline in the estimated fair value of the net assets acquired in the Shore Bank and Gateway Bank acquisitions in 2008. because economic conditions have been weak and credit losses have risen subsequent to those acquisitions, the estimated fair value of these net assets is currently below the levels recorded at the time of acquisition. The goodwill impairment charge is a non-cash accounting entry and does not impact the Company’s regulatory capital ratios.

During the quarter, the Company consolidated two financial centers into nearby financial centers, and incurred costs to exit the leases early. This consolidation will lead to increased efficiencies and lower long-term costs for the Company. For the full year, noninterest expense, including goodwill impairment charges, was $170.8 million in 2009, compared with $21.0 million in 2008.

Acquisition of Shore Financial Corporation and Gateway Financial Holdings

Hampton Roads Bankshares, inc. acquired Shore Financial Corporation on June 1, 2008, and Gateway Financial Holdings, inc. on December 31, 2008. As a result of those acquisitions, the substantial increases in income statement comparisons from the fourth quarter of 2008 to 2009 are primarily due to the inclusion of the operating results of Gateway, the increased provision for loan losses, and goodwill impairment charges. The substantial increases in income statement comparisons for the full year of 2009 compared with the full year of 2008 are primarily due to the inclusion of both Shore and Gateway, along with the increased provision for loan losses and goodwill impairment charges.

About Hampton Roads Bankshares

Hampton Roads Bankshares, inc. is a bank holding company that was formed in 2001 and is headquartered in Norfolk, Virginia. The Company’s primary subsidiaries are Bank of Hampton Roads, which opened for business in 1987, and Shore Bank, which opened in 1961. The Banks engage in general community and commercial banking business, targeting the needs of individuals and small to medium-sized businesses. Currently, Bank of Hampton Roads operates twenty-eight banking offices in the Hampton Roads region of southeastern Virginia and twenty-four offices in Virginia and North Carolina doing business as Gateway Bank & Trust co. Shore Bank serves the Eastern Shore of Maryland and Virginia through eight banking offices and fifteen ATMs. through various affiliates, the Banks also offer mortgage banking services, insurance, title insurance and investment products. Shares of the Company’s common stock are traded on the NASDAQ Global Select Market under the symbol HMPR. Additional information about the Company and its subsidiaries can be found at www.hamptonroadsbanksharesinc.com.

Use of Non-GAAP Financial Measures

This earnings press release contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding our results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the Form 8-K filed related to this release, which can be found on the SEC’s EDGAR website at www.sec.gov or our website at www.hamptonroadsbanksharesinc.com.

Financial Highlights Unaudited (in thousands, except per share data) Operating Results Q4 2009 Q3 2009 Q4 2008 ————– ————– ————– interest income $34,798 $37,388 $13,610 interest expense 8,097 10,911 5,039 ————– ————– ————– Net interest income 26,701 26,477 8,571 Provision for loan losses 65,666 33,662 594 Noninterest income 2,998 7,232 1,264 Noninterest expense 78,911 21,706 5,671 Income tax expense (benefit) (18,650) (8,282) 1,225 ————– ————– ————– Net income (loss) (96,228) (13,377) 2,345 ————– ————– ————– Preferred stock dividend and accretion of discount 1,370 1,360 — ————– ————– ————– Net income (loss) available to common shareholders (97,598) (14,737) 2,345 ============== ============== ============== per Share Data Earnings (loss) per share: Basic $(4.45) $(0.68) $0.18 Diluted (4.45) (0.68) 0.18 Common dividends declared — – 0.11 Book value per common share 2.08 6.94 9.70 Book value per common share – tangible 1.50 3.92 5.18 Balance Sheet at Period-End Total assets $2,975,558 $2,938,994 $3,085,711 gross loans 2,426,692 2,514,789 2,599,526 Allowance for loan losses 132,697 99,178 51,218 Total securities 190,841 131,524 177,432 Intangible assets 12,839 66,033 98,367 Total deposits 2,495,040 2,314,293 2,296,146 Total borrowings 277,469 315,177 429,588 Shareholders’ equity 180,996 286,309 344,809 Shareholders’ equity – tangible 168,157 220,276 246,442 Common shareholders’ equity 46,026 151,704 211,267 Common shareholders’ equity – tangible 33,187 85,671 112,900 Daily Averages Total assets $3,067,669 $2,979,941 $926,355 gross loans 2,488,972 2,557,046 801,954 Total securities 164,780 148,518 40,340 Intangible assets 65,376 67,825 30,246 Total deposits 2,461,746 2,314,806 663,274 Total borrowings 300,100 340,363 142,664 Shareholders’ equity 280,298 299,596 109,618 Shareholders’ equity – tangible 214,922 231,771 79,372 Common shareholders’ equity 145,538 165,229 109,618 Common shareholders’ equity – tangible 80,162 97,404 79,372 Interest-earning assets 2,842,542 2,765,698 848,364 Interest-bearing liabilities 2,476,365 2,409,976 684,566 Financial Ratios Return on average assets -12.45% -1.78% 1.01% Return on average common equity -266.05% -35.39% 8.51% Return on average common equity – tangible -483.03% -60.03% 11.75% Net interest margin 3.73% 3.80% 4.02% Efficiency ratio 280.63% 69.99% 57.66% Efficiency ratio excluding goodwill impairment 78.14% 69.99% 57.66% Tangible common equity to tangible assets 1.12% 2.98% 3.78% Allowance for Loan Losses Beginning balance $99,178 $84,491 $8,692 Provision for losses 65,666 33,662 594 Charge-offs (32,559) (19,080) (172) Recoveries 412 105 44 Allowance acquired through merger — – 42,060 ————– ————– ————– Ending balance 132,697 99,178 51,218 ============== ============== ============== Nonperforming Assets at Period-End Nonaccrual loans – SOP 03-3 $60,688 $66,104 $31,302 Nonaccrual loans – all other 187,615 109,339 1,583 ————– ————– ————– Nonaccrual loans 248,303 175,443 32,885 Loans 90 days past due and still accruing interest — 172 3,219 Other real estate owned 8,867 8,934 5,092 ————– ————– ————– Total nonperforming assets 257,170 184,549 41,196 ============== ============== ============== Asset Quality Ratios Annualized net chargeoffs (recoveries) to average loans 5.12% 2.94% 0.06% Nonperforming loans to total loans 10.23% 6.98% 1.39% Nonperforming assets to total assets 8.64% 6.28% 1.34% Allowance for loan losses to total loans 5.47% 3.94% 1.97% Noninterest Income Service charges on deposit accounts $1,931 $2,054 $1,222 Income on bank owned life insurance 441 412 — Gain on sale of investment securities 1,579 2,695 — Mortgage banking income 925 678 — Insurance income 839 1,064 — Title insurance income 168 179 — Retail brokerage income 115 108 — Other income (3,000) 42 42 ————– ————– ————– Total noninterest income 2,998 7,232 1,264 ============== ============== ============== Noninterest Expense Salaries and benefits $10,139 $10,366 $3,327 Occupancy expense 2,728 2,232 291 Equipment expense 1,029 1,215 97 Data processing expense 1,403 1,472 348 FDIC insurance expense 1,032 1,328 99 Impairment of goodwill 56,861 — – Other expense 5,719 5,093 1,509 ————– ————– ————– Total noninterest expense 78,911 21,706 5,671 ============== ============== ============== Composition of Loan Portfolio at Period-End Commercial $361,256 $381,985 $451,426 Construction 757,702 806,292 897,288 Real-estate commercial 740,570 744,209 673,351 Real-estate residential 524,853 542,928 528,760 Installment 42,858 40,207 50,085 Deferred loan fees and related costs (547) (832) (1,384) ————– ————– ————– Total loans 2,426,692 2,514,789 2,599,526 ============== ============== ============== Composition of Deposit Portfolio at Period-End Noninterest bearing demand $248,682 $274,688 $240,813 interest bearing demand 869,312 473,732 438,687 Savings 82,860 109,178 118,001 Time deposits less than $100,000 550,943 583,891 619,290 Time deposits $100,000 or more 356,845 392,641 394,536 Brokered deposits 386,398 480,163 484,819 ————– ————– ————– Total deposits 2,495,040 2,314,293 2,296,146 ============== ============== ============== Other Data Number of employees (full-time equivalent) 700 696 786 Number of full service offices 60 62 61 Number of loan production offices 1 1 2 Number of ATM’s 72 74 73 (1) Represents acquired loans which were recorded at their estimated present values at the acquisition date, in accordance with ASC 310-30. Financial Highlights Unaudited (in thousands, except per share data) twelve months ended December December 31, 31, Operating Results 2009 2008 ———– ———– interest income $149,445 $45,177 interest expense 44,294 17,917 ———– ———– Net interest income 105,151 27,260 Provision for loan losses 134,223 1,418 Noninterest income 22,325 5,980 Noninterest expense 170,795 20,987 Income tax expense (benefit) (32,075) 3,660 ———– ———– Net income (loss) (145,467) 7,175 ———– ———– Preferred stock dividend and accretion of discount 8,689 — ———– ———– Net income (loss) available to common shareholders (154,156) 7,175 =========== =========== per Share Data Earnings (loss) per share: Basic $(7.07) $0.60 Diluted (7.07) 0.59 Common dividends declared 0.22 0.44 Book value per common share 2.08 9.70 Book value per common share – tangible 1.50 5.18 Balance Sheet at Period-End Total assets $2,975,558 $3,085,711 gross loans 2,426,692 2,599,526 Allowance for loan losses 132,697 51,218 Total securities 190,841 177,432 Intangible assets 12,839 98,367 Total deposits 2,495,040 2,296,146 Total borrowings 277,469 429,588 Shareholders’ equity 180,996 344,809 Shareholders’ equity – tangible 168,157 246,442 Common shareholders’ equity 46,026 211,267 Common shareholders’ equity – tangible 33,187 112,900 Daily Averages Total assets $3,072,474 $759,264 gross loans 2,561,685 646,211 Total securities 162,298 41,711 Intangible assets 76,438 17,950 Total deposits 2,325,606 562,390 Total borrowings 397,616 94,101 Shareholders’ equity 316,381 94,030 Shareholders’ equity – tangible 239,943 76,080 Common shareholders’ equity 181,519 94,030 Common shareholders’ equity – tangible 105,081 76,080 Interest-earning assets 2,663,347 700,584 Interest-bearing liabilities 2,464,977 545,824 Financial Ratios Return on average assets -4.73% 0.95% Return on average common equity -84.93% 7.63% Return on average common equity – tangible -146.70% 9.43% Net interest margin 3.95% 3.89% Efficiency ratio 138.63% 64.02% Efficiency ratio excluding goodwill impairment 69.77% 64.02% Tangible common equity to tangible assets 1.12% 3.78% Allowance for Loan Losses Beginning balance $ 51,218 $ 5,043 Provision for losses 134,223 1,418 Charge-offs (53,536) (337) Recoveries 792 102 Allowance acquired through merger — 44,992 ———– ———– Ending balance 132,697 51,218 =========== =========== Nonperforming Assets at Period-End Nonaccrual loans – SOP 03-3 $ 60,688 $ 31,302 Nonaccrual loans – all other 187,615 1,583 ———– ———– Total nonaccrual loans 248,303 32,885 Loans 90 days past due and still accruing interest — 3,219 Repossessed assets 8,867 5,092 ———– ———– Total nonperforming assets 257,170 41,196 =========== =========== Asset Quality Ratios Annualized net chargeoffs (recoveries) to average loans 2.06% 0.04% Nonperforming loans to total loans 10.23% 1.39% Nonperforming assets to total assets 8.64% 1.34% Allowance for loan losses to total loans 5.47% 1.97% Noninterest Income Service charges on deposit accounts 8,117 3,379 Income on bank owned life insurance 1,658 — Gain on sale of investment securities 4,274 457 Mortgage banking income 4,642 — Insurance income 4,104 — Title insurance income 797 — Retail brokerage income 354 — Other income (1,621) 2,144 ———– ———– Total noninterest income 22,325 5,980 =========== =========== Noninterest Expense Salaries and benefits $42,285 $11,518 Occupancy expense 9,044 2,261 Equipment expense 4,735 663 Data processing expense 5,368 1,189 FDIC insurance expense 5,661 262 Impairment of goodwill 84,837 — Other expense 18,865 5,094 ———– ———– Total noninterest expense 170,795 20,987 =========== =========== Composition of Loan Portfolio at Period-End Commercial $361,256 $451,426 Construction 757,702 897,288 Real-estate commercial 740,570 673,351 Real-estate residential 524,853 528,760 Installment 42,858 50,085 Deferred loan fees and related costs (547) (1,384) ———– ———– Total loans 2,426,692 2,599,526 =========== =========== Composition of Deposit Portfolio at Period-End Noninterest bearing demand $248,682 $240,813 interest bearing demand 869,312 438,687 Savings 82,860 118,001 Time deposits less than $100,000 550,943 619,290 Time deposits $100,000 or more 356,845 394,536 Brokered deposits 386,398 484,819 ———– ———– Total deposits 2,495,040 2,296,146 =========== =========== Other Data Number of employees (full-time equivalent) 700 786 Number of full service offices 60 61 Number of loan production offices 1 2 Number of ATM’s 72 73 (1) Represents acquired loans which were recorded at their estimated present values at the acquisition date, in accordance with ASC 310-30.

Forward-Looking Statements

This press release contains certain “forward-looking statements” within the meaning of federal securities laws that involve significant risks and uncertainties, including statements regarding our plans, expectations, goals, and projections. For example, forward-looking statements include those about steps we are taking to strengthen our balance sheet and capital position, suspending our dividend payments, improving our credit quality, reducing the rate of increase in our nonperforming assets, plans for and timing of our return to profitability, integrating acquired companies, and increasing deposits and shareholder value. such statements are based on our assumptions and analyses and other information we believe are appropriate in the circumstances and available to us at the time of the press release. Actual results could differ materially from those contained in or implied by such statements for a variety of risks including: (1) deterioration in the loan portfolio; (2) managing problem loans; (3) changes in economic conditions; (4) movements in interest rates; (5) competitive pressures on product pricing and services; (6) success and timing of other business strategies; and (7) the nature, extent, and timing of governmental actions and reforms, including existing and potential future restrictions and limitations imposed in connection with the Troubled Asset Relief Program’s voluntary Capital Purchase plan or otherwise, among other reasons. Consequently, all of the forward-looking statements in this press release are qualified by these cautionary statements and the cautionary language in our most recent Form 10-K report and other documents we file with the Securities and Exchange Commission. Hampton Roads Bankshares, inc. does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date of this press release.

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Hampton Roads Bankshares, inc.

CONTACT: Hampton Roads Bankshares, inc.Neal A. Petrovich, Executive Vice PresidentChief Financial Officer(866) 867-8500

(C) Copyright 2010 GlobeNewswire, inc. all rights reserved.

Hampton Roads Bankshares Announces Fourth Quarter and Full Year 2009 Financial …

By Paul Gores
Milwaukee Journal Sentinel

Melissa Destree wanted a line of credit for her Madison architectural firm last year so she could manage fluctuations in cash flow as the company awaited payments from customers.

Destree said when she went to her longtime bank — where she was current on her original business loan — to ask for the line of credit, she was taken aback by what the banker told her: try to cut costs instead.

“Basically, they suggested I lay somebody off,” said Destree, owner of Destree Design Architects inc.

Destree said she’d already had gone through cost cutting and was determined to fire no one. her staff, which now stands at six, is crucial to the business, she said.

Destree then went to Summit Credit Union, where she does her personal banking, to see whether it could help with her business needs. she said that within five days Summit set her up with loan at a lower interest rate to pay off the remainder of her debt to the bank and agreed to give her a $50,000 line of credit.

“It’s really been wonderful over the last year to have that,” she said.

Credit unions say there would be more stories like Destree’s — lending that supports local employers — if Congress dismisses the protests of bankers and approves a change in federal law to allow credit unions to increase business lending.

In asking for the authority to make more commercial loans, credit unions essentially are telling banks: if you’re not going to lend to businesses in the slow economy, get out of the way and let us make the loans.

But banks, in turn, have a message for credit unions: if you’re going to go after our bread and butter, get ready for a fight.

Banks argue the change in law to roughly double the amount of a credit union’s loans that can be made to businesses — to 25 percent from 12.25 percent of assets — is unnecessary and risky, in part because credit union regulators aren’t as familiar as bank regulators with analyzing business loans. Only a few credit unions nationwide are even at or near the 12.25-percent cap, bankers say.

Banks also contend that if credit unions — which they consider competitors with an unfair advantage because their not-for-profit status means they don’t pay income taxes — want to be just like banks, they ought to pay taxes. especially right now, bankers say.

“You are looking at a time when government coffers at the local, state and federal levels are bare and everybody is being asked to pay more,” said Kurt Bauer, chief executive of the Wisconsin Bankers Association. “Everybody else is being asked to do more, and the credit unions are getting away scot-free.”

Brett Thompson, chief executive of the Wisconsin Credit Union League, bristles at that argument. It’s intended to steer the discussion away from the point that credit unions stand ready to pick up the slack from banks that have financial troubles or are nervous about lending in the current economic environment, he said.

“There is no logical reason why this should not happen, other than an extremely strong lobbying effort on behalf of the banks to stop it — to the detriment of our economy,” Thompson said.

The Credit Union National Association, an advocate for credit unions, says business lending by banks dropped about 18 percent nationally last year while rising almost 10 percent at credit unions. in Wisconsin, CUNA says, business lending by banks fell 15 percent while increasing 13 percent at credit unions.

CUNA estimates that if the 12.25-percent-of-assets cap is lifted, it would generate $362 million in new credit union business loans in Wisconsin and $10 billion nationally in the first year.

Banks, profit-driven financial institutions owned by stockholders, and credit unions, not-for-profit financial cooperatives owned by their members, rarely see eye-to-eye.

Thompson said credit unions always have been making business loans, but in 1998, federal law limited the amount.

Bankers view today’s effort to raise the business-lending threshold as part of a relentless campaign by credit unions to expand — expansion banks say comes with an income-tax exemption that allows for credit unions to offer higher rates of interest on savings and lower rates on loans.

Banks also assert that credit unions, unlike banks, aren’t under pressure from regulators to lend in all areas, rich or poor, of communities where they operate. Bankers, in fact, accuse credit unions of paying less and less attention to their mandate of providing financial services to people of “modest means” and instead striving to become bigger and more bank-like.

Wisconsin now has six credit unions with more than $1 billion in assets, which is larger than 96 percent of the state’s banks.

“The distinctions between banks and credit unions have basically been blurred,” Bauer said.

Thompson said credit unions aren’t meant to serve only people of low or moderate incomes.

“Credit unions’ purpose by law and by statute is to serve their members — all members — regardless of their means,” Thompson said.

Bauer said Wisconsin credit unions can ask the state regulator to let them exceed the 12.25-percent limit if it’s justified. Raising the cap at the federal level is risky because it would let credit unions offer business loans without the state regulator first determining whether they have enough expertise and strength to manage commercial loans, Bauer said.

Thompson disputes the contention that the change in law would lead to risky loans by credit unions.

“Regardless of the reason behind it, we all know that bank lending went down in the state of Wisconsin in 2009,” said Thompson. “Banks have every opportunity to lend to their customers. Credit unions have the willingness, have the market and the desire to make business loans. we are inhibited by a cap that really has no purpose.”

Battle over commercial lending looms between credit unions and banks

Dollars and Nonsense » Blog Archive » Battle over commercial …

Web retailers are reaping overseas sales without actively pursuing them By Bill Siwicki

Three-fourths of web retailers that responded to a recent Internet Retailer survey accept orders from outside the United States, and for some, international customers represent a significant part of their business. but relatively few offer features tailored to foreign consumers.

That may change in coming years, and lead to still-greater international sales for U.S. e-retailers, some experts say.

14.5% of the 75.2% of merchants selling internationally, which includes Canada, report that in 2009 more than 25% of their total web sales came from customers outside the United States, according to Internet Retailers new international e-commerce survey of 247 web-only retailers, chain retailers, catalogers and consumer brand manufacturers. 4.8% report 21% to 25% of sales came from outside the borders of the country, 7.0% report 16% to 20%, and 5.9% report 11% to 15%, the survey finds.

9.1% say 8% to 10% of 2009 sales were derived from international shoppers, 12.4% report 5% to 7%, 18.3% say 2% to 4%, and 28.0% report less than 2%.

Of the 24.8% not selling internationally, 60.3% are assessing the viability of selling to consumers outside of the United States; and of those merchants, 70.3% plan to start selling internationally within a year.

Theres currently great interest in the international space, in part because of the pressures of the U.S. economy and the lack of growth, and that it simply is a new day and people are looking at things more globally, says Bobby Frank, CEO of BorderJump LLC, a provider of international e-commerce technology and services. And the survey shows the types of merchants and the products they sell cross all lines, so the action and interest is pretty universal.

Whether theyre selling internationally or not, U.S. retailers are being visited in significant numbers by shoppers from foreign lands, according to the Internet Retailer survey of IRNewsLink e-newsletter readers conducted last month with e-mail marketing and survey firm Vovici Corp.

16.7% of merchants report more than 20% of their total web traffic stems from outside U.S. borders, the survey finds. 15.0% report 11% to 20%, 19.5% say 6% to 10%, 32.9% report 1% to 5%, and 15.9% say less than 1%.

Yet, relatively few of the merchants surveyed are catering to these shoppers on their U.S. sites by offering features and functions designed for international shoppers, or creating standalone e-commerce sites designed for individual countries. nor are many of them working with vendors that specialize in globalizing e-commerce sites or that handle the logistics of delivering orders to consumers in other countries.

Only 17.9% of merchants selling internationally operate any e-commerce sites designed for other countries separate from the U.S. site. Of those merchants, 35.3% operate one such site, 20.6% two, 8.8% three, 5.9% four, and 29.4% five or more.

Consumers from other countries dont always want to buy from sites tailored to their countries, says Frank of BorderJump.

BorderJump recently conducted a survey of 7,600 consumers in Latin America and the Caribbean. The majority of respondents said they prefer shopping U.S. e-commerce sites as opposed to sites specially crafted for their country.

They want to get the same web shopping experience as in America; they just wish it was easier to pay for purchases, Frank says. The local site doesnt have the same cach in certain markets that coming to the U.S. dot-com holds. there is not necessarily a right or wrong answer to this question, they are just different strategies.

There is a growing number of companies that offer bundled services, from adding payments and shipping to the site and handling delivery, customs and taxes, to building native web sites. but the survey does not indicate a lot of interest in these companies.

28.5% of merchants selling internationally use a third-party provider to sell and service consumers outside of the United States. And of those that do not, only 14.4% are currently evaluating the use of a third-party provider.

That could change, some experts say, as more vendors, including larger ones, offer services aimed at servicing online shoppers from other countries.

Behind the scenes is exciting because we have seen and talked to some pretty big companies that are willing to invest in this market to provide technology and services to retailers, says Jim Okamura, senior partner at global retail consulting firm J.C. Williams Group ltd. It may not be a retailers highest priority to devote their in-house resources, but these outside solutions give more choice and improve upon customer-facing experience issues as well as behind the scenes operational matters. We are bullish, and know there is a lot of thinking going on among retailers; combine that with the international e-commerce companies coming to market and that will create some interesting partnerships.

Key features and functions

Many retailers are indeed thinking international sales, but of those selling internationally, few have added to their U.S. e-commerce sites features and functions to aid foreign shoppers.

According to the Internet Retailer survey, 18.6% offer a currency converter, 15.4% show the fully landed cost of delivering an item to the consumers door in local currency, 15.4% offer product content in a local language, 15.0% feature customer service content in a local language, and 14.2% offer telephone support in a local language.

The fact that fewer than 1 in 5 have a currency convertor, yet that is one of the most important features to have, shows how much upside there will be. If 14.5 % of retailers are doing in excess of 25% of their sales internationally and most have not done much to enhance the customer experience, the more they enhance the experience, like adding a currency convertor, the greater the opportunity for more sales, Okamura says. So whether it is currency conversion or fully landed cost, its telling in terms of how early it is.

Retailers understand what they are offering to international shoppers is not up to par, Okamura says, adding that J.C. Williams Group expects adoption of key international shopping features and functions by U.S. retailers to rise rapidly during the next two years.

And as U.S. e-commerce sites do a better job of serving international shoppers, those shoppers will spend more at the U.S. sites, Okamura says.

We are poised for an inflection point where were going to take a big leap on the growth curve, Okamura predicts. We will see a significant increase in international sales in the next two years, much of it tied to the effort retailers put into creating a good experience.

bill@verticalwebmedia.com

Internet Retailer Survey: International E-Commerce

UPDATE: Sunday @3:45ST. ALBANS, W.Va. (WSAZ) — an elderly man died Sunday morning when he was hit by a train.

According to Lieutenant James Agee, the man is Ronald E. Hoover. He is 84-years-old and from Amandaville.

Agee says that mr. Hoover was an alzheimers patient and a former rail road worker, so he was comfortable around trains.

According to a witness at the train crossing, along with the train’s engineer and conductor, Hoover didn’t seem to speed up or slow down while the train was blowing its horn and ringing its bell. The train was going 48 mph and was not able to stop in time. Police did say at first it appeared he was able to clear the tracks.

Police will review the video from the CSX train as a part of their investigation.

Hoover was walking at the B Street Crossing around 10:45 a.m. Sunday when the incident happened.

ORIGINAL STORY

ST. ALBANS, W.Va. (WSAZ) — Dispatchers in Kanawha County say a man is dead after being hit by a train in St. Albans.

Dispatchers say the man was hit and killed in the 300 block of B Street about 11 a.m. Sunday morning. St. Albans Police say the victim was from Amandaville and they believe he was in his 80s.

His body has been sent to the state medical examiner’s office for an autopsy.

BREAKING NEWS UPDATE: Man Hit and killed by Train Identified

February 18, 2010, 10:28 PM EST

Feb. 19 (Bloomberg) — Asian stocks, U.S. stock futures and oil declined while the dollar gained as the Federal Reserve unexpectedly raised its discount rate, spurring concern the global recovery will slow as stimulus programs are unwound.

The MSCI Asia Pacific Index dived 1.6 percent to 115.94 as of 12:25 p.m. in Tokyo, with banks and commodity stocks leading the decline. The dollar advanced to a nine-month high against the euro and the strongest in five weeks versus the yen. Oil dropped for the first time in four days. Standard & Poor’s 500 index futures expiring in March slid 1.1 percent.

The Fed’s move to raise the discount rate from 0.5 percent to 0.75 percent marks another step by the Fed in a gradual retreat from its unprecedented actions to halt the deepest financial crisis since the Great Depression. Singapore said its economy will expand faster than initially expected this year, adding to evidence of a sustained regional recovery that has prompted policy makers to end some stimulus measures.

“The U.S. has started moving toward the exit of stimulus measures,” said Kenichi Hirano, general manager and strategist at Tokyo-based Tachibana Securities co. “Though it’s necessary, the move is making investors jittery and is a short-term negative for the market.”

Hong Kong’s Hang Seng Index slumped 2.4 percent, while Japan’s Nikkei 225 Stock Average lost 0.7 percent. The Kospi Index fell 1.7 percent in Seoul as YTN television reported North Korea declared a firing zone off its west coast near the maritime border with South Korea.

NAB, Cnooc Decline

National Australia Bank Ltd., Australia’s fourth-largest bank, fell 3.2 percent to A$25.11 after reporting first-quarter profit that was unchanged from a year ago. Trend Micro inc., the world’s third-biggest maker of security software, sank 4.9 percent to 3,195 yen in Tokyo after forecasting lower profit this quarter.

Commodity companies fell as oil, gold and copper prices slumped. Cnooc Ltd., China’s largest offshore oil producer, declined 2.9 percent to HK$11.90 and PetroChina co., the country’s biggest oil company, dropped 2.1 percent to HK$8.53.

Lihir Gold Ltd. slipped 3.2 percent to A$2.70 in Sydney. RBC Capital was among brokerages that cut its rating on the Australian stock exchange’s second-largest gold mining company, which reported earnings yesterday.

The dollar rose to as high as $1.3444 per euro, the strongest since May 18 and to 92.09 against the yen, the highest since Jan. 12.

“The Fed’s action came as a surprise and enhanced speculation that it will withdraw stimulus ahead of major peers,” said Tomokazu Matsufuji, a dealer in Tokyo at SBI Liquidity Market co., a unit of financier SBI Holdings inc. “This will drive the dollar higher.”

Bonds Climb

U.S. and Japanese government bonds climbed amid concern policy makers will accelerate removal of stimulus measures, prompting declines in stocks and increased demand for the relative safety of debt.

Treasuries also gained as investors snapped up 10-year yields at a five-week high.

The yield on the benchmark 10-year note fell two basis points, or 0.02 percentage point, to 3.79 percent, according to BGCantor Market Data. The rate earlier climbed to 3.82 percent, matching the highest level since Jan. 12.

South Korea’s won weakened 0.8 percent to 1,159.7 per dollar as the discount rate increase cooled demand for higher- yielding currencies. The Indonesian rupiah and the won gained 30 percent and 28 percent respectively in the past year as near- zero rates in the U.S. gave traders cheap financing for investing in developing nations. The rupiah dropped 0.5 percent to 9,360 per dollar.

‘Knee-Jerk’ Selling

“We’ve seen a knee-jerk sell-off in most currencies against the U.S. dollar and that includes Asia,” said Mitul Kotecha, head of global foreign-exchange strategy for Credit Agricole CIB in Hong Kong. “We’ll see a bigger impact on the currencies more sensitive to risk, like the Korean won and Indonesian rupiah.”

The Fed said the increase in the discount rate will encourage financial institutions to rely more on money markets, rather than the central bank, for short-term loans. it was the first increase in the discount rate in more than three years, and the move widens the discount rate spread over the top range for the federal funds rate to 0.5 percentage point.

The central bank also cited last month’s statement, which said economic conditions are likely to warrant “exceptionally low” levels of the federal funds rate, or the target rate for overnight loans between banks, for “an extended period.”

‘Further Normalization’

“These changes are intended as a further normalization of the Federal Reserve’s lending facilities,” the central bank said yesterday in a statement. “The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy.”

Singapore’s gross domestic product will increase 4.5 percent to 6.5 percent in 2010 after shrinking 2 percent last year, the trade ministry said in a statement today. That compares with a previous prediction for growth of 3 percent to 5 percent this year. The economy contracted an annualized 2.8 percent from the previous three months last quarter after climbing a revised 11.5 percent from July to September.

Dollar-denominated commodities fell as the U.S. currency strengthened. Three-month copper on the London Metal Exchange declined as much as 0.9 percent to $7,200.50 a metric ton. Gold for immediate delivery dropped as much as 0.8 percent to $1,099.41 an ounce.

“There are few incentives for gold buying at the moment as the rising dollar continues to keep investors away,” said Hwang Il Doo, a senior trader with KEB Futures co. in Seoul.

–With assistance from Michael P. Regan in new York, Jake Lloyd- Smith, Kyoungwha Kim and Shamim Adam in Singapore, Bob Chen in Hong Kong, Darren Boey and Rocky Swift in Tokyo. Editors: Clyde Russell, Patrick Chu.

To contact the reporters on this story: Clyde Russell in Singapore at +65-6311-2423 or crussell7@bloomberg.net; Satoshi Kawano in Tokyo +81-3-3201-2483 or skawano1@bloomberg.net.

To contact the editor responsible for this story: Patrick Chu in Tokyo at +81-3-3201-8460 or pachu@bloomberg.net

Stock Futures, Treasuries Drop, Dollar Gains on Discount Rate

Last year we reported this.

Henry hired Palermo Galindo as Fort Wayne’s Hispanic-immigrant liaison back in June. Palermo Galindo operates Centro De Dinero, one of those high-priced check cashing services whose target audience is the Hispanic market, and undoubtedly Fort Wayne’s illegal alien population.

Yesterday at the state of the city address Henry announced a new and exciting program to help people stay away from the leeches that operate payday loan sites.

Tonight I am also excited to announce my intent to create the “Bank on Fort Wayne” program. this new initiative will generate opportunities for any Fort Wayne residents who have relied on expensive check-cashing services and payday loan operations. this initiative will allow them to open bank accounts at local financial institutions while also receiving financial tools. Founded on the success of similar programs in Evansville and other cities, I see Bank on Fort Wayne as a win-win. It will allow some of Fort Wayne’s hardest working residents to keep more of the money they earn, save for the future, and establish relationships with local banks. I look forward to working with Councilman Hines with his banking experience, as well as the financial institutions here in Fort Wayne on this important project.

Henry’s not addressing the real problem here.

Galindo and his company, Centro De Dinero, are raking in annual percentage rates that the mafia would admire. While we could not get anyone on the phone at Centro, we did check online and it appears most all of the payday loan operators charge the same fees, the maximum allowed by the state.

Using a $500 loan amount, we used their online calculators and found the rates identical.

You Borrow: $500.00
You Payback: $567.00
Finance Charge: $67.00
APR: 349.36%

That’s for a two week loan.

View larger Map

Payday loans strap borrowers with triple digit interest rates, and it’s almost always families that are living on the financial edge. they generally locate in black and poor neighborhoods, preying on those that are financially weak.

Cities are now passing ordinances that restrict both the density of payday loan operations and the distance between them. A good start would be a a temporary moratorium on any new payday loan operations, with an eventual restriction on the number of operators. many cities also require a special use permit. in DeSoto, KS they don’t allow payday loan operations at all.

Fort Wayne has an extensive ordinancelink governing the operation of pawn shops and those that deal in precious metals and stones. just last week I received an email from someone that had been contacted by the Fort Wayne Police Department for offering to buy gold on Craig’s List. He was told it was illegal. I checked and indeed, without a license it is.

In Indiana Payday loan operators are regulated by the Indiana Department of Financial Institutions. I’m not certain if the city of Fort Wayne can regulate the rates. Mitch?

Many cities have enacted ordinances that do, where allowed by state law. in 2007, several cities in Virginia passed resolutions asking their state General Assembly to cap payday interest rates at 36%. in 2008, it became state law.

Henry never explained any details about the “Bank on Fort Wayne” program. I suspect it’s just another feel-good gesture to give folks a warm fuzzy feeling.

Payday loan operators are supposed to be licensed . We did check the licensing databaselink for Centro De Dinero. We could not find them.

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Tags: Centro De Dinero, Fort Wayne, Palermo Galindo, Payday loans, Tom Henry

This entry was posted on Tuesday, February 16th, 2010 at 4:20 pm and is filed under City & County Government, Fort Wayne. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

~ Angry White Boy ~ » Henry's payday loan hypocrisy

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No Credit Check Car Loans for Students are Easily Available

Co-signed credit cards: Unloved option poised for comeback?Experts say don’t sign one, issuers rarely offer it, yet … by Dana Dratch

Co-signed credit cards have been disdained by experts as financial folly and shunned by credit card issuers as a troublesome product.

Yet, despite their reputation as the ugly ducklings of the credit world, co-signed credit cards may be poised for a comeback, pushed back into use by a changing regulatory landscape and a recession that has card issuers looking to spread risk.

One of the top credit card issuers in the United States, Discover, plans tooffer it in the coming months, by the time the major provisions of the Credit CARD Act of 2009 kick in Feb. 22, 2010. “We will be offering co-sign capabilitiesby the time the new law takes effect,” says Matthew Towson, a spokesman forDiscover.another, Capital one, is considering it.

But co-signing is a touchysubject. many of the top U.S. card issuers refused to comment to CreditCards.com onwhether they plan to offer them. Several wouldn’t even disclose whether they currentlyoffer co-signed credit cards.

Co-signing’s problemCo-signed credit cards aren’t the industry’s most cuddly product. by definition, credit card co-signers get a bad deal. They have all the legal responsibility for the debt, and none of the charging privileges. That has made co-signing for credit cards an undesirable choice, say financial experts.

Co-signed cards typically have been used within families, allowing relatives with bad credit — or youngsters with no credit — access to a credit card, since a more responsible family member has agreed to pay if something goes wrong. it often does. the National Foundation for Credit Counseling’s advice is typical: “Think long and hard before agreeing to co-sign a loan,” say its tips on lending to family.

In recent years, with the rise of other waysof accessing plastic — from becoming an authorized user or joint account holderto whipping out a debit card — there was little reason for card issuers to offer co-signing to theircustomers. Of the top 10 credit cardissuers, only two — or possibly three, depending on who you ask — allow a third-party to co-sign for someoneelse’s debt. (See chart: “Which credit card issuers offer co-signed cards?”)

But that could change. InFebruary, a provision of the Credit Card Responsibility and Disclosure (CARD) Act willprohibit those under 21 from obtaining credit cards unless they can:

• Show that they have sufficient income to pay the bills; or
• Get a co-signer.

Themeasures are meant to prevent young adults (especially college students) whohave little income from getting inover their heads with plastic.

What happens in February?Observers see the new law giving issuers a nudge toward offering co-signed cards to young consumers and their more-established relatives. “I would expect to see morecompanies perhaps evaluating that option,” says Lynne Strang, a vice presidentof the American Financial Services Association, a Washington, D.C.-based industry group.

“I expect to see it among someissuers, and others won’t” offer it, she says. “I think it’s going to be mixed,depending on what their research and their customers tell them.”

And one consumer advocatebelieves that more issuers will offer co-signing if they want to continue tocompete for the lucrative college-student market.

“Ithink that the companies, if they want to provide cards to people between theages of 18 and 21, will have to” offer co-signing, says Linda Sherry, directorof national priorities for Consumer Action, a Washington, D.C.-based advocacy group.”Otherwise, they’ll be at a disadvantage to the rest of the market.”

A long-term risk for co-signersOne consumer group points to a gap in the CARD legislation as one which could potentially leaveadult co-signers on the debt hook for decades.

“Thereis nothing in the CARD Act that prohibits the card issuer from saying theco-signer is still liable even after the cardholder turns 21,” says Chi Chi Wu,staff attorney for the Boston-based National Consumer Law Center. Andco-signers, who think they are just vouching for young adults for a finiteperiod before their 21st birthdays, may not understand that, shesays.

“Soa parent or guardian could still be on the hook for that debt” 10, 20 or 30years later, Wu says.

Advocatesare suggesting that the Federal Reserve, which is still reviewing theregulations, either set a finite time line for responsibility or require aco-signer to check a box if he or she agrees to be responsible for the billafter the cardholder turns 21, says Wu.

See related: A guide to the Credit CARD Act, 4 questions to ask before co-signing

Published: December 17, 2009 CreditCards.com’s newsletter

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Co-signed credit cards: Unloved option poised for comeback?