Colorado Springs Financial Briefs: August 31, 2007

There appears to be no shortage of banks in Fountain.

Within the city limits, there are nine banks, including freestanding and supermarket branches. And, just outside the city limits, there are another three.

But that hasn't dissuaded People's National Bank from moving into the market.

The bank opened a branch on Fountain Mesa Road on Aug. 27.

Fountain Deputy City Clerk Sylvia Mascarena, for one, isn't sure the city needs another financial institution.

"Another bank?" she said. "I think we have more banks than people. We need a new mall."

Mascarena said seeing banks crop up in Fountain is common. And, it seems she she's right about there being more banks than people.

People's President and CEO Bill Kauper said that's the case in many emerging communities. The banks are racing ahead of the population to protect their market share.

Kauper said that when national big box retailers like The Home Depot and Wal-Mart feel confident moving into a growing community, it lets banks know the waters are safe for them also.

"Typically those are indicators that it's a strong retail, business and housing market," he said. "And that means more business will be moving there in the future, too."

So, maybe that means Fountain will soon get that new mall Mascarena was talking about.

Banks report Q2 income

Commercial banks and savings institutions insured by the Federal Deposit Insurance Corp. reported net income of $36.7 billion for the second quarter of 2007.

That's $1.3 billion, or 3.4 percent, below the level of a year ago, but still the fourth-highest quarterly earnings ever reported, according to the FDIC.

Higher expenses for bad loans and narrower net interest margins are blamed for the decline.

"Banks continued to face two key challenges -- a difficult interest rate environment and ongoing weakness in residential mortgage lending," said FDIC Chairwoman Sheila Bair. "However, under the circumstances, the industry's second quarter earnings performance was very solid. What we see is a banking industry that is generally well capitalized, well diversified and profitable, and is in good position as we go through this period of market adjustment."

The earnings are detailed in the FDIC's latest Quarterly Banking Profile. Other findings include:

Provisions for loan losses increased. Insured banks and thrifts set aside $11.4 billion in loan-loss provisions during the quarter, the most since the fourth quarter of 2002. Second-quarter loss provisions were $4.9 billion more than the industry set aside during the second quarter of 2006.

Troubled real estate loans continue to accumulate. The amount of loans and leases that were not current grew for the fifth quarter in a row, rising by $6.4 billion. Loans secured by real estate accounted for most of the growth.

Business loan demand was strong. Loans to commercial and industrial borrowers had the largest increase of any loan category during the second quarter. They grew by $51.3 billion, the largest quarterly increase ever reported by the industry.

Insured deposit growth slowed. The amount of deposits insured by the FDIC had its smallest increase for 15 quarters because large banks turned to foreign deposits, which are not insured, to fund their asset growth.

The complete report is available at www2.fdic.gov/qbp.

New name for state employees credit union

The Colorado State Employees Credit Union has changed its name.

The state's fifth largest credit union is now the Credit Union of Colorado.

It is the first name change for the nonprofit financial institution since it was founded 73 years ago.

The decision was spurred by a desire to reflect the fact that the credit union already serves more than just state employees -- and further evidence that credit unions are moving in on the traditional banking market.

"This represents a marketing push to attract a broader base of members, and frankly a move to compete with the Wells Fargos of the world," said spokesman Jon Pushkin.

Most of the credit union's branches are located in Denver, where most state employees work. There is one branch in Colorado Springs, at 3609 Austin Bluffs Parkway.

However, with the push to attract members, there's a good chance more branches will be added in the Springs.

Founded in 1934, the state employees credit union has about $720 million in assets and 80,000 members.

Hedge Fund managers bring home the bacon

CEOs of the largest U.S. companies took home salaries averaging $10.8 million last year - 364 times more than the average American worker who earned 29,500, according to a joint study by the Institute for Policy Studies and United for a Fair Economy.

While many reading this might be saying, "Man, I should have been a CEO" they should be saying, "Man, I should have been a hedge fund manager."

The typical hedge fund manager took home $657.5 million last year.

That's about 22,255 times more than the average American salary, and 3,315 times more than officials in the federal government's executive branch made, including the president.

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