FDIC WARNS CONSUMERS OF FRAUDULENT E-MAILS

FROM:  FEDERAL DEPOSIT INSURANCE CORPORATION
E-mail Claiming to Be From the FDIC – January 30, 2013

The Federal Deposit Insurance Corporation (FDIC) has received numerous reports of fraudulent e-mails that have the appearance of being sent from the FDIC. While the e-mails exhibit variations in the "From" and "Subject" lines, the messages are similar. The fraudulent e-mails are addressed to the attention of the “Accounting Department” and meant to notify recipients that that that “ACH and WIRE transactions” are being blocked until “a special security software” is installed. They then instruct recipients to go to a Web site for instructions on how to download the necessary files by clicking on a hyper-link provided (Note: the Web site addresses (URL) vary widely). This e-mail and link are fraudulent. Recipients should consider the intent of this e-mail as an attempt to collect personal or confidential information, or to load malicious software onto end users' computers. Recipients should not click on the link provided. The FDIC does not issue unsolicited e-mails to consumers or business account holders.

U.S. AGENCIES ISSUE STATEMENT REGARDING FINANCIAL INSTITUTIONS AND BORROWERS AFFECED BY HURRICANE SANDY

Photo Business During Hurricane.  Credit:  U.S. Navy.

FROM U.S. FEDERAL DEPOSIT INSURACE CORPORATION

Agencies Issue Statement on Supervisory Practices Regarding Financial Institutions and Borrowers Affected by Hurricane Sandy

WASHINGTON—The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (the agencies) recognize the serious impact of Hurricane Sandy on the customers and operations of many financial institutions and will provide regulatory assistance to affected institutions subject to their supervision. The agencies encourage institutions in the affected areas to meet the financial services needs of their communities.
A complete list of the affected disaster areas can be found at www.fema.gov.

Lending: Bankers should work constructively with borrowers in communities affected by Hurricane Sandy. The agencies realize that the effects of natural disasters on local businesses and individuals are often transitory, and prudent efforts to adjust or alter terms on existing loans in affected areas should not be subject to examiner criticism. In supervising institutions affected by the hurricane, the agencies will consider the unusual circumstances they face. The agencies recognize that efforts to work with borrowers in communities under stress can be consistent with safe-and-sound banking practices as well as in the public interest.

Community Reinvestment Act (CRA): Financial institutions may receive CRA consideration for community development loans, investments, or services that revitalize or stabilize federally designated disaster areas in their assessment areas or in the states or regions that include their assessment areas. For additional information, institutions should review the Interagency Questions and Answers Regarding Community Reinvestment at http://www.ffiec.gov/cra/pdf/2010-4903.pdf.

Investments: Bankers should monitor municipal securities and loans affected by the hurricane. The agencies realize local government projects may be negatively affected. Appropriate monitoring and prudent efforts to stabilize such investments are encouraged.

Reporting Requirements: Institutions affected by Hurricane Sandy that expect to encounter difficulty submitting accurate and timely regulatory report data for the September 30, 2012, report date should contact their primary federal regulatory agency to discuss their situation. These regulatory reports include the Consolidated Reports of Condition and Income (Call Report) and holding company Y reports. The agencies do not expect to assess penalties or take other supervisory action against institutions that take reasonable and prudent steps to comply with regulatory reporting requirements if those institutions are unable to fully satisfy those requirements by the specified filing deadlines because of the effects of Hurricane Sandy. The agencies' staffs stand ready to work with affected institutions that may be experiencing problems fulfilling their reporting responsibilities, taking into account each institution's particular circumstances, including the status of its reporting and recordkeeping systems and the condition of its underlying financial records.

Publishing Requirements: The agencies understand that the damage caused by the hurricane may affect compliance with publishing and other requirements for branch closings, relocations, and temporary facilities under various laws and regulations. Institutions experiencing disaster-related difficulties in complying with any publishing or other requirements should contact their primary federal regulatory agency.

Temporary Banking Facilities: The agencies understand that many banks face power, telecommunications, staffing and other challenges in re-opening facilities after the hurricane. In cases where operational challenges persist, the appropriate primary federal regulator will expedite any request to operate temporary banking facilities to provide more convenient availability of services to those affected by the hurricane. In most cases, a telephone notice to the primary federal regulator will suffice initially. Necessary written notification can be submitted later.

FDIC AND AMERICAN EXPRESS CENTURION BANK SETTLE UNFAIR AND DECEPTIVE PRACTICES CASE

Yellow Diamond Ring.  Photo:  U.S. Marshals service

FROM:  FDIC

FDIC Announces Settlement With American Express Centurion Bank for Unfair and Deceptive Practices in Debt Collection and Credit Card Marketing

The Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB) have reached a settlement with American Express Centurion Bank (Bank), Salt Lake City, Utah, for deceptive debt collection and credit card marketing practices, in violation of section 5 of the Federal Trade Commission Act.

This action results from a FDIC and Utah Department of Financial Institutions examination, in which the Consumer Financial Protection Bureau (CFPB) joined last year. The CFPB, the Office of the Comptroller of the Currency (OCC), the Utah Department of Financial Institutions, and the Board of Governors of the Federal Reserve System took separate actions against various entities related to the Bank (collectively referred to as American Express). Under the settlements, American Express agreed to the issuance of Consent Orders, Orders for Restitution, and Orders to Pay (Orders) which result in total restitution from all entities of approximately $85 million to more than 250,000 affected consumers, and the imposition of civil money penalties totaling approximately $27 million.

The FDIC and the CFPB determined that the Bank violated federal law prohibiting unfair and deceptive practices by, among other things:
Misrepresenting to consumers that if they entered into an agreement to settle old debt (that was no longer being reported to consumer reporting agencies), such settlement would be reported to consumer reporting agencies and thereby improve the consumers' credit scores. In fact, no such reporting occurred.
Using settlement solicitations that implied that consumers who entered into settlement agreements to partially pay such debts would have the remaining balance of their debts forgiven, when in fact the balance remained a debt owed to American Express.
Using solicitations that misrepresented the points and awards consumers would receive upon enrollment in one of American Express' credit card products.
In addition to restitution and CMP, the Consent Order requires the Bank to correct all violations, provide clearly written disclosures on debt collection statements, and stop using deceptive credit card solicitations. In addition, the Bank will improve its compliance management system and improve board oversight of affiliates and third-party service providers in order to adequately manage third-party risk.

In agreeing to the issuance of the Order, the Bank neither admits nor denies any liability.

CEO OF PUBLIC RELATIONS FIRM CHARGED BY SEC WITH INSIDER TRADING

FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., Sept. 5, 2012 – The Securities and Exchange Commission today charged the CEO of a Los Angeles-based public relations firm with insider trading on nonpublic information she learned from a client that was about to acquire a bank in a deal assisted by the Federal Deposit Insurance Corporation (FDIC).

The SEC alleges that Renee White Fraser and her firm Fraser Communications were contacted by Pasadena-based East West Bancorp (EWBC) for marketing and public relations support during its acquisition of San Francisco-based United Commercial Bank. The very next day after agreeing to take on EWBC as a client, Fraser bought 10,000 shares of EWBC stock. She sold all of her shares after EWBC’s stock price jumped 55 percent after the public announcement of the acquisition.

Fraser agreed to settle the SEC’s charges by paying $91,530.36, which is more than double what she gained in illegal profits from her alleged insider trading.

"Fraser’s client entrusted her with highly sensitive nonpublic information, and she tried to turn that into a quick side profit," said Michele W. Layne, Director of the SEC’s Los Angeles Regional Office. "Consultants in public relations or any career field cannot exploit their client relationships for an illegal payday in the stock market."

According to the SEC’s complaint filed in U.S. District Court for the Central District of California, EWBC contacted Fraser Communications on Oct. 14, 2009, and shared material, nonpublic information about its upcoming FDIC-assisted transaction for the confidential corporate purpose of allowing Fraser and her employees to prepare marketing and public relations materials ahead of that acquisition. EWBC formally engaged Fraser’s firm on October 15 to assist EWBC with public relations work.

The SEC alleges that Fraser, who lives in Santa Monica, purchased 10,000 EWBC shares on October 16 after learning the previous day about the impending EWBC-United Commercial Bank transaction. EWBC announced the acquisition of United Commercial Bank’s banking operations on November 6. Fraser proceeded to sell 7,500 of her EWBC shares on November 10, the second trading day after the announcement. She sold the remaining 2,500 shares on June 24, 2011, for total combined profits of $43,868.

In settling the SEC’s charges without admitting or denying the allegations, Fraser agreed to pay $43,868 in disgorgement, $3,794.36 in prejudgment interest, and a $43,868 penalty. She consented to a permanent injunction from further violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Fraser also agreed to a permanent bar prohibiting her from serving as an officer or director of a public company.

The SEC’s investigation was conducted by Wendy E. Pearson and Finola H. Manvelian in the Los Angeles Regional Office. The SEC acknowledges the assistance of Financial Industry Regulatory Authority (FINRA).

AGENCIES ISSUE PROPOSED RULE ON APPRAISALS FOR HIGHER-RISK MORTGAGES

FROM: FDIC

Board of Governors of the Federal Reserve System
Consumer Financial Protection Bureau
Federal Deposit Insurance Corporation
Federal Housing Finance Agency
National Credit Union Administration
Office of the Comptroller of the Currency

WASHINGTON— Six federal financial regulatory agencies today issued a proposed rule to establish new appraisal requirements for "higher-risk mortgage loans." The proposed rule would implement amendments to the Truth in Lending Act enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Under the Dodd-Frank Act, mortgage loans are higher-risk if they are secured by a consumer's home and have interest rates above a certain threshold.

For higher-risk mortgage loans, the proposed rule would require creditors to use a licensed or certified appraiser who prepares a written report based on a physical inspection of the interior of the property. The proposed rule also would require creditors to disclose to applicants information about the purpose of the appraisal and provide consumers with a free copy of any appraisal report.

Creditors would have to obtain an additional appraisal at no cost to the consumer for a home-purchase higher-risk mortgage loan if the seller acquired the property for a lower price during the past six months. This requirement would address fraudulent property flipping by seeking to ensure that the value of the property being used as collateral for the loan legitimately increased.

The proposed rule is being issued by the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the National Credit Union Administration, and the Office of the Comptroller of the Currency.

The Federal Register notice is attached. The agencies are seeking comments from the public on all aspects of the proposal. The public will have 60 days, or until October 15, 2012, to review and comment on most of the proposal. However, comments related to the proposed Paperwork Reduction Act analysis will be due 60 days after the rule is published in the Federal Register. Publication of the proposal in the Federal Register is expected shortly.

FDIC INSURED BANKS EARNED OVER $35 BILLION IN THE FIRST QUARTER OF 2012

Photo Credit:  Wikimedia  
FROM:  FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)
Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported an aggregate profit of $35.3 billion in the first quarter of 2012, a $6.6 billion improvement from the $28.8 billion in net income the industry reported in the first quarter of 2011. This is the 11th consecutive quarter that earnings have registered a year-over-year increase. However, loan balances declined by $56.3 billion (0.8 percent) after three consecutive quarterly increases.

FDIC Acting Chairman Martin J. Gruenberg said, "The condition of the industry continues to gradually improve. Insured institutions have made steady progress in shedding bad loans, bolstering net worth, and increasing profitability." He also noted, "The overall decline in loan balances is disappointing after we saw three quarters of growth last year. But we should be cautious in drawing conclusions from just one quarter."
More than two-thirds of all institutions (67.5 percent) reported improvements in their quarterly net income from a year ago. Also, the share of institutions reporting net losses for the quarter fell to 10.3 percent from 15.7 percent a year earlier. The average return on assets (ROA), a basic yardstick of profitability, rose to 1.02 percent from 0.86 percent a year ago.

Lower provisions for loan losses and higher noninterest income were responsible for most of the year-over-year improvement in earnings. First-quarter loss provisions totaled $14.3 billion, almost one-third less than the $20.9 billion that insured institutions set aside for losses in the first quarter of 2011. Net operating revenue (net interest income plus total noninterest income) totaled $169.6 billion, an increase of $5 billion (3.1 percent) from a year earlier, as gains from loan sales rose by $2.3 billion. Realized gains on investment securities and other assets were $2 billion higher than in the first quarter of 2011.
Asset quality indicators continued to improve as insured banks and thrifts charged off $21.8 billion in uncollectible loans during the quarter, down $11.7 billion (34.8 percent) from a year earlier. The amount of noncurrent loans and leases (those 90 days or more past due or in nonaccrual status) fell for an eighth consecutive quarter, but the percentage of loans and leases that were noncurrent remained high by historical standards.
Financial results for the first quarter of 2012 are contained in the FDIC's latest Quarterly Banking Profile, which was released today. Among the findings:

Total loan balances fell. Credit card loans had a seasonal decrease of $38.2 billion, closed-end 1-4 family residential real estate loans fell by $19.2 billion, and home equity lines of credit dropped by $13.1 billion. Balances in constructon and development loans declined by $11.7 billion. However, loans to commercial and industrial borrowers increased by $27.3 billion, and auto loans were up by $4.5 billion.

The flow of money into insured deposit accounts slowed. Deposits in domestic offices increased by $67.8 billion (0.8 percent) during the quarter, after rising by more than $200 billion in each of the previous three quarters. Balances in large noninterest-bearing transaction accounts, which have temporary unlimited deposit insurance coverage, fell by $77.3 billion. In contrast, in the previous three quarters the balances in these accounts increased by more than $532 billion. Most of the current quarter's decline occurred at a few of the largest banks that previously received a major share of the inflows. Balances in interest-bearing deposits at domestic offices rose by $100.1 billion.

The number of "problem" institutions fell for the fourth quarter in a row. The number of "problem" institutions declined from 813 to 772. This is the smallest number of "problem" banks since year-end 2009. Total assets of "problem" institutions declined from $319 billion to $292 billion. Sixteen insured institutions failed during the first quarter. This is the smallest number of failures in a quarter since the fourth quarter of 2008, when there were 12.

The Deposit Insurance Fund (DIF) balance continued to increase. The DIF balance — the net worth of the fund — rose to $15.3 billion at March 31 from $11.8 billion at the end of 2011. Assessment revenue and fewer bank failures continued to drive growth in the fund balance. The contingent loss reserve, which covers the costs of expected failures, fell from $6.5 billion to $5.3 billion during the quarter. Estimated insured deposits grew 0.7 percent in the first quarter.

"In summary, indicators of financial strength and asset quality continued to improve in the first quarter, but the process of recovery is clearly still ongoing," Acting Chairman Gruenberg said. He added, "The improved financial condition of the industry has not yet translated into sustained loan growth. We will continue to watch this indicator closely."
The complete Quarterly Banking Profile is available at http://www2.fdic.gov/qbp on the FDIC Web site.

SBA AND FDIC OFFER EDUCATION AND MENTORING SUPPORT FOR NEW ENTREPRENEURS

FROM:  SMALL BUSINESS ADMINISTRATION

FDIC and SBA Team Up to Offer Financial Education and Mentoring Support to New and Aspiring Entrepreneurs

WASHINGTON – The Federal Deposit Insurance Corporation and U.S. Small Business Administration today announced new resources to support small businesses across the nation.  Acting Chairman Gruenberg and SBAs Associate Administrator for Entrepreneurial Development Michael Chodos released Money Smart for Small Business, a training curriculum for new and aspiring business owners.

Developed in partnership between both agencies, this curriculum is the latest offering in the FDIC’s award-winning Money Smart program.

 Money Smart for Small Business provides an introduction to day-to-day business organization and planning and is written for entrepreneurs with limited or no prior formal business training.  It offers practical information that can be applied immediately, while also preparing participants for more advanced training.  FDIC and SBA will form a Training Alliance for organizations that support small businesses through training, technical assistance or mentoring. 

 Money Smart for Small Business provides an introduction to day-to-day business organization and planning and is written for entrepreneurs with limited or no prior formal business training.  It offers practical information that can be applied immediately, while also preparing participants for more advanced training.  FDIC and SBA will form a Training Alliance for organizations that support small businesses through training, technical assistance or mentoring. 

 “We are excited to join the FDIC in its expansion of the Money Smart curriculum for small business,” said SBA Administrator Karen Mills.  “The FDIC is a vital ally in our efforts to help small business owners start, grow and create jobs.  Money Smart for Small Business will help to put more information on the business basics of financial management at entrepreneurs’ fingertips and make it easier for them to build their knowledge and skill set.”

 “We are excited to join the FDIC in its expansion of the Money Smart curriculum for small business,” said SBA Administrator Karen Mills.  “The FDIC is a vital ally in our efforts to help small business owners start, grow and create jobs.  Money Smart for Small Business will help to put more information on the business basics of financial management at entrepreneurs’ fingertips and make it easier for them to build their knowledge and skill set.”

 Gruenberg and Chodos were joined by Training Alliance partners at the launch of Money Smart for Small Business, hosted by the District of Columbia’s Affinity Lab, a small business incubator. “We are proud to launch Money Smart for Small Business,” said Gruenberg.  “We value our partnerships – with SBA and the Money Smart Alliance members – and recognize their importance to our work.  Small businesses play a vital role in supporting a vibrant economy.”

 Gruenberg and Chodos were joined by Training Alliance partners at the launch of Money Smart for Small Business, hosted by the District of Columbia’s Affinity Lab, a small business incubator. “We are proud to launch Money Smart for Small Business,” said Gruenberg.  “We value our partnerships – with SBA and the Money Smart Alliance members – and recognize their importance to our work.  Small businesses play a vital role in supporting a vibrant economy.”

Each of the 10 instructor-led modules in Money Smart for Small Business provides financial and business management for business owners and includes a scripted instructor guide, participant guide and overhead slides.  The FDIC will host an online “town hall” for potential Training Alliance partners in the months ahead.

FDIC REPORTS COUNTERFEIT MONEY ORDERS IN CIRCULATION

FROM:  FDIC E-MAIL TO:	CHIEF EXECUTIVE OFFICER (also of interest to Security Officer)
SUBJECT:	Counterfeit Money Orders
Summary:	Counterfeit money orders bearing the name Northrim Bank, Anchorage, Alaska, are reportedly in circulation.

Northrim Bank, Anchorage, Alaska, has contacted the Federal Deposit Insurance Corporation (FDIC) to report that counterfeit money orders bearing the institution's name are in circulation.

The counterfeit items display the routing number 125200934, which is assigned to Northrim Bank. The items are dissimilar to authentic money orders and when copied display a three- column "VOID" background. A security feature statement is embedded in a darkened top border and along the bottom border between two padlocks.
Authentic money orders display a three-sided ornate border with open squares in each top corner and solid circles in each lower corner. A security feature statement is centered below the top border. The wording "NOT VALID OVER $2,500.00" is printed below the dollar amount line.
 Be aware that the appearance of counterfeit items can be modified and that additional variations may be presented.

Information about counterfeit items, cyber-fraud incidents and other fraudulent activity may be forwarded to the FDIC's Cyber-Fraud and Financial Crimes Section, 3501 North Fairfax Drive, CH-11034, Arlington, Virginia 22226, or transmitted electronically to alert@fdic.gov. Questions related to federal deposit insurance or consumer issues should be submitted to the FDIC using an online form that can be accessed at http://www2.fdic.gov/starsmail/index.asp.

	Sandra L. Thompson
	Director Division of Risk Management Supervision

2011 WAS BEST YEAR SINCE 2006 FOR FDIC INSURED INSTITUTIONS

The following excerpt is from an FDIC e-mail:

FDIC-Insured Institutions Earned $26.3 Billion in the Fourth Quarter of 2011
Full-Year Net Income of $119.5 Billion Is Highest Since 2006

 FOR IMMEDIATE RELEASE
February 28, 2012

Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported an aggregate profit of $26.3 billion in the fourth quarter of 2011, a $4.9 billion improvement from the $21.4 billion in net income the industry reported in the fourth quarter of 2010. This is the 10th consecutive quarter that earnings have registered a year-over-year increase. As has been the case in each of the past nine quarters, lower provisions for loan losses were responsible for most of the year-over-year improvement in earnings.

FDIC Acting Chairman Martin J. Gruenberg said that "2011 represented the second full year of improving performance by the banking system. Banks reported higher positive aggregate earnings, the numbers of 'problem' banks and failures declined, and loan balances increased in the final three quarters of the year." He also noted that "insured institutions of all sizes continued to make substantial progress in improving their profitability."

A majority of all institutions (63 percent) reported improvements in their quarterly net income from a year ago. Also, the share of institutions reporting net losses for the quarter fell to 18.9 percent from 27.1 percent a year earlier. The average return on assets (ROA), a basic yardstick of profitability, rose to 0.76 percent from 0.64 percent a year ago.
Fourth-quarter loss provisions totaled $19.5 billion, about 40 percent less than the $32.7 billion that insured institutions set aside for losses in the fourth quarter of 2010. Net operating revenue (net interest income plus total noninterest income) was $3.8 billion (2.3 percent) lower than a year earlier, due to a $4.4 billion (7.4 percent) decline in noninterest income.

Asset quality indicators continued to improve as insured banks and thrifts charged off $25.4 billion in uncollectible loans during the quarter, down $17.1 billion (40.2 percent) from a year earlier. Noncurrent loans and leases (those 90 days or more past due or in nonaccrual status) fell for a seventh quarter, but the percentage of loans and leases that were noncurrent remained higher than in previous crises.

Financial results for the fourth quarter of 2011 and the full year are contained in the FDIC's latest Quarterly Banking Profile, which was released today. Also among the findings:

Growth in loan portfolios continued. Loan balances posted a quarterly increase for the third quarter in a row. Total loans and leases increased by $130.1 billion (1.8 percent), as loans to commercial and industrial borrowers increased by $62.8 billion, residential mortgage loan balances rose by $26.0 billion, and credit card balances grew by $21.3 billion.

Money continued to flow into insured deposit accounts. Deposits in domestic offices increased by $249.7 billion (2.9 percent) during the quarter. More than three-quarters of this increase ($191.2 billion or 76.6 percent) consisted of balances in large noninterest-bearing transaction accounts that have temporary unlimited deposit insurance coverage. The 10 largest insured banks accounted for 73.6 percent ($140.7 billion) of the growth in these balances.

The number of institutions on the FDIC's "Problem List" fell for the third quarter in a row. The number of "problem" institutions declined from 844 to 813. This is the smallest number of "problem" banks since first quarter of 2010. Total assets of "problem" institutions declined from $339 billion to $319 billion. Eighteen insured institutions failed during the fourth quarter. For all of 2011, there were 92 insured institution failures, compared with 157 failures in 2010.

The Deposit Insurance Fund (DIF) balance continued to increase. The unaudited DIF balance — the net worth of the fund — rose to $9.2 billion at December 31 from $7.8 billion at September 30. Assessment revenue and fewer expected bank failures continued to drive growth in the fund balance. The contingent loss reserve, which covers the costs of expected failures, fell from $7.2 billion to $6.5 billion during the quarter. Estimated insured deposits grew 3.1 percent in the fourth quarter.
In conclusion, Acting Chairman Gruenberg noted, "The industry is now in a much better position to support the economy through expanded lending. However, levels of troubled assets and 'problem' banks are still high. And while the economy is showing signs of improvement, downside risks remain a concern."