Banking

Bank of America Earnings on Uptrend

October 18, 2013 by Twila Van Leer

Third-quarter earnings for Bank of America showed a hefty rise, suggesting that the country’s leading financial institutions are continuing to pull out of the recent recession, although slowly. The bank’s quarterly profits rose to $2.5 billion – 20 cents a share – over the same period a year earlier. The earlier year was affected by litigation costs and other charges.

Analysts had anticipated a 19-cents-per-share increase in this quarter, but were happy to be making even more progress “in an environment that did have its challenges,” according to Bruce Thompson, Bank of America’s chief financial officer.

The company’s wealth management operations, which include Merrill Lynch, contributed to the quarterly good news, with a 26 percent increase over the previous year. But not all of the banking giant’s components did as well. Large mortgage operations reported a $1 billion loss in the third quarter, worse even than the same quarter last year. Mortgage refinancing has slowed with increasing interest rates. Although there are signs that the American housing situation is improving, it will take a big jump to regain stability.

One bright spot in the report was a 36 percent increase in net income for the unit that does traditional branch bank lending to consumers and small companies. Strong revenue and lower expenses in the unit contributed to the jump.

Overall, there was a slight drop in quarterly total revenues, from $22.5 billion last year to $22.2 billion this year.

This disparity among the company’s businesses is a cause for concern. Whether investors will continue to settle for uneven progress, with some elements waning and others regaining their equilibrium, is a question.

Looking ahead, Bank of America financial gurus predict continuing progress in the fourth quarter. The bank is not alone in its struggle to climb out of the recession abyss. Most of the country’s large financial institutions are fighting the same battles against a flaccid market.

Is 30-Year Subsidized Mortgage In Imminent Danger?

October 16, 2013 by Twila Van Leer

The federal government is looking for ways to trim its outlay and subsidization of home mortgages has slipped onto the list of possible programs to delete. The possible demise of the subsidies might spell the end to home ownership for many Americans.

The history goes back more than 40 years to a time when promotion of home ownership led the feds to boost support for potential buyers who couldn’t meet financial guidelines.

Now the tentative talk in the Obama administration is to eliminate Fannie Mae and Freddie Mac, the huge government programs created to administer the program. That would not eliminate 30-year mortgages, but would leave the market to people with modest incomes who could afford to purchase from a private lender. At this point, the 30-year fixed-rate loan is the most popular in the United States. Some 80 percent of mortgages fall into this category, which means that Fannie and Freddie can guarantee them, as long as they’re below a maximum amount. Spreading payments over such a long span costs more in the long haul, but makes ownership affordable for many buyers.

Part of the conversation centers on massive default statistics, in which the government has been left holding the bag as subsidized homeowners opt out before completing payment. Throw in management and accounting scandals at Fannie and Freddie and there seems plenty of ammunition for those willing to scrap the program. The costs to the country’s taxpayers reach into the billions of dollars, they say. But the availability of government guarantees has given many lower-middle-class Americans entrée into home-ownership. How those two factors will balance out as the discussion goes forward remains to be seen.

Critics argue, on the other hand, that subsidization has created the highest-priced housing available in the world. Over-building and selling too-large homes have resulted, they contend. Because down payments are low, it appears that the homeowner is less reluctant to default on a whim. The loss is not great. The financial experts suggest that requiring a 20 percent – or more – payment up front would discourage people from walking away before the loan has been paid down.

Should the government bow out of the mortgage business, 30-year mortgages would not disappear, but they likely would be higher-priced and there would be fewer of them, experts predict. The percentage of buyers seeking these loans likely would drop to the 30 percentage neighborhood, they say.

History shows that the government’s involvement as a provider of subsidies significantly changed the housing market. In the 1920s, for instances, the more common scenario was for a buyer to put down 40 percent of the cost of the house and obtain a low-interest loan for 10 years. Refinancing was common.

Other countries have devised ways to help low-income citizens get into a home, some say, and have higher homeowner rates than the U.S. In some, subsidization is not an option.

As talk heats up in Congress, dozens of arguments will have their bearing. There is little expectation of a fast resolution of the question and when the dust clears, there could be little difference — or a huge revision in how Americans buy or don’t buy their homes.

Are Banking Jobs Worth Dying For?

August 26, 2013 by Sherry Tingley

Bank Of America Employee Found Dead

Entrance into the competitive financial job market is sometimes accomplished through internships. Recently Moritz Erhardt, an intern for Bank of America in their City of London offices was found dead in his apartment.

Erhardt was employed in the firm’s investment-bank division, in a 7 week internship contract. Erhardt’s salary during this time was forty-two hundred dollars a month.

Friends of Erhnardt’s reported that he been forced to work through the night eight times in a two week period in an effort to secure long term work with the firm. It seems that Erhardt was personally driven to be the best in many areas of his life, a habit that started in elementary school. He was always in over-drive to perform well.

He had recently worked through several nights and had not slept for 72 hours. The intern had an epileptic condition which also added to the tragedy.

So there are several motivating factors that push people to work beyond their limits. A strong desire to accomplish something for themselves or for their companies can push people past their reasonable points. Another desire is to advance their careers to assure high salaries in the finance industry.

What ever the reasons people have for over working, it is the employers who need to be aware of how intensely their employees are driven and try to put limits in place to help them stay reasonable. One might wonder if a workplace culture that acknowledged workers’ needs as much as employers’ bottom lines might have helped prevent the tragedy of Erhardt’s death.

Bank of America is looking into the causes of his death as well as looking at what they can do to change employee working conditions. Nothing is as important as assuring good working conditions and reasonable work expectations in the corporate world. This tragedy is heart breaking for many and can serve as a stepping stone to change policies to prevent this from happening again.

We want to offer condolences to the family in this sad time of loss.

Preventing Tragedies Like This

Be sure to take care of yourself if you know you are putting in too many hours. Keep life activities in balance by saving time for enjoying life with family and friends. Get required sleep and eat a healthy diet. Without those basics, life can get scarey and have bad outcomes.

Upset Business man Sitting on Briefcase

Behind The Scenes At BankRate.com

July 24, 2013 by Sherry Tingley

If you have ever wanted to know things like rates on mortgage loans or car loans you may have found the answers to your questions at www.bankrate.com. The website provides current rates on many financial products and has a goal of helping you make informed financial decisions when it comes to buying a house, a car or signing up for a credit card. It has been online since 1996 and has become one of the most trusted sources of personal financial information on the Internet today.

When you read about the history of this company and the mound of information it aggregates, you can’t help but be impressed.

In 1976, a company called Bank Rate Monitor produced a printed newsletter that provided bank rates for consumers in the United States. It became a recognized brand among those interested in personal finance. Twenty years later the company took it’s services online at www.BankRate.com. By 2009, Apax, a UK private equity and venture capitalist firm bought the company for $571 million dollars. Now it is attracts over 15 million unique visitors per month.

Amazingly, the site as it stands now, gets loan rates and bank data from all 50 states. Data is pulled from 4,800 banking institutions. Their primary focus is to provide consumers with information to help them with purchases of homes, automobiles, loans, CD’s, Money Market accounts and an additional 300 financial products.

Their databases of information includes 172,000 individual rate tables, 30,000 stories with 155+ new articles coming out each week. They run 13 blogs which are updated 2 – 3 times per week. They conduct 9 exclusive research studies per year and offer 14 opt-in email newsletters.

Their readers are educated, financially savvy and self-directed. The average FICO score for visitors is 775+. So if you visit this site on a regular basis, consider yourself in good company.

Bankrate.com is often quoted in high quality financial news organizations like The Wall Street Journal, USA Today, NBC News, The New York Times, The Los Angeles Times and The Boston Globe.

Their social presence on Facebook reaches 100,000+ users and on Twitter, they have 64K+ followers. They receive 7,000 social mentions on blogs and social media per month. They have 12,191,108 backlinks referring to them from other web sites with NBCnews.com using 1,295,337 links in reference to BankRate.com.

The current President and CEO – Thomas R. Evans has a background as the CEO of the GeoCities. Prior to that he was President and Publisher of U.S. News & World Report, Fast Company and Atlantic Monthly Magazines.

For personal finance bloggers, this company is the one to look for expert personal finance content and current rates on anything dealing with money and investing.

Behind the scenes of Bankrate Inc. you see a fast growing, reliable company providing financial information for millions of people. A leader in data aggregation and the use of technology to help people in all walks of life.

Four Biggest Banks In The US Using Social Media Strategies

July 10, 2013 by Sherry Tingley

The four biggest banks in the US, Bank of America, Citi Bank, JPMorgan Chase and Wells Fargo Bank together have assets of $7.883 trillion dollars.
It is interesting to learn about each bank and exactly how successful they are. In this article we will compare assets, their online presence and what strategies each bank uses on Facebook and Twitter.

JP Morgan Chase – (JPM)

The Chase Bank (formally referred to as JP Morgan & Chase) is the resulting company of a merger between Bank One,
Chemical Bank, Bear Stearns, the Bank of Chicago, and Washington Mutual Is the largest bank in the U.S. with assets of $2.509 trillion US dollars.

Social media reports 3,787,601 likes for their Facebook page. with 1,219 people talking about them. Majestic SEO reports 1,232,691 links to the site in the last 5 years, from 39,221 domains. They have 18,292 Twitter followers.

Topics they include on their community page include charitable contributions such as their recent $25K towards helping Uganda with clean water, holiday support like July 4th, encouraging people to plant seeds of change in their communities, and supporting military veterans to engage in service projects to help cope with post traumatic stress disorder.

Bank of America

Founded in 1904 in San Francisco as the Bank of Italy, designed to serve immigrants, this bank has become a household name, one of the most recognizable brands in banking. Assets worth $2.175 trillion US dollars and acquisitions like CountryWide Financial and Merrill Lynch added considerable wealth to the corporation.

Notable building projects have brought national attention to the company. The Bank of America Tower – a $1 billion dollar skyscraper in Manhattan, New York – is known as one of the most ecologically friendly buildings in the world. They have also built twenty eight other buildings that are located throughout U.S. as well as in Hong Kong.

Controversies and law suits against the company are numerous. American federal prosecutors filed a $1billion civil lawsuit against Bank of America for mortgage fraud (October 24, 2012). The US government filed a law suit against them in 2010 which resulted in payment of fines up to $137.7 million dollars.

Social media reports 1,044,200 likes on their Facebook page and 41,013 talking about them. Majestic SEO reports 17,645,960 backlinks to their website in the last 5 years. Twitter reports 125,276 followers.

Topics they discuss on their Facebook page deal with saving money, entertaining on a budget and encouraging going “green” in daily living habits. They even post schedules of summer activities such as upcoming state fairs. They express concern for local tragedies like the recent loss of the 19 firefighters in Arizona. Charity is high on their list of content articles. Rewards for opening new credit cards include donations to the Susan G. Koman for the Cure. Honoring our American troops is also recognized.

Citi

Citi Group also known as Citi Bank has 200 million customer accounts in 160 countries.
Assets are $1.882 trillion dollars. They have donated (3 year $6 million a year fund) to financial innovation and research. During 2012, The Citi Foundation invested $76.5 million in programs that support the economic empowerment and financial inclusion of more than 1.1 million people globally. They also make a huge effort to coordinate Global Community Day where thousands of volunteers give of their time – 1.3 million volunteer hours to be exact – to improve playgrounds, planting trees, picking up trash and improving various communities. They were the top affordable housing lender for three consecutive years.

Citigroup has 551,171 likes for their Facebook page. Majestic SEO reports 53,912,259 backlinks coming from 26,045 different domains. They have 157310 Twitter followers.

Discussions on Facebook include geography quizzes, charitable giving news and environmental contributions. Twitter updates report more of the same.

Wells Fargo

Wells Fargo assets are worth $1.437 trillion U.S. dollars. They claim to serve 70 million customers, have over 9,000 stores in more than 35 countries, and have more than 12,000 ATM’s.

Their banking philosophy is well stated here: “Now is not the time to retreat but to reach out and connect with our stakeholders and communities, to listen and understand, to do what’s right, to admit mistakes and learn from them and, most important, to tell the Wells Fargo story and what makes us different to as many people as we can.”

Wells Fargo Facebook page posts about Community Leadership Awards, interviewing tips, customizing credit cards with your own photo, tips about using credit cards when traveling outside the U.S., graphic puzzles and quizzes. They have 45,837 Twitter followers

Conclusion

Although JP Morgan Chase bank is clearly the leader in total amount of assets, and has a grand following on Facebook, Citi Group is the leader in getting inbound links and Twitter followers. Each bank has their own social media strengths and there is something to be learned from how they are using social media effectively. It seems evident that community involvement plays a big role in succeeding in developing a good online presence. For those people that have their own sites without the financial power of the big banks, you can get some good ideas about how you can improve your own online presence. Offering community service or promoting green living goes a long way.