November 14, 2012Daily Rates & Viewpoints From the Officers & Staff of TIB.

Noninterest Income and Community Banks-What's Next?

As you may recall, service charges came under pressure in 2010 as a result of revisions to Regulation E. Key elements included changes to overdraft fees on ATM transactions and one-time debit card transactions if a customer did not "opt in" for the overdraft service. While service charges have decreased significantly from their peaks in 2009, in nominal terms, they are more in line with the amount of service charges earned across the industry 10 years ago.

However, this return to "normalcy" was not evenly applied across the banking spectrum in 2011:
·         Big banks – service charges actually climbed
·         Banks with less than $10 billion in assets – service charges fell by over 20%
·         Banks with less than $1 billion in assets – service charges fell by over 30%
·         Banks with less than $500 million in assets – service charges fell by over 40%
Relatively speaking, service charges are now a smaller slice of the noninterest income pie. In the first six months of 2012, service charges for banks under $10 billion in assets as a percentage of noninterest income was 24%, down from 36% in 2002. 
So, as a community banker, what are your next steps to turn the tide? The first step is a commitment to ongoing education for your staff to have a solid working knowledge of all products and services offered by your bank. The next step is to increase customer awareness about your offerings, and more importantly, that those products and services are competitive with what is available in the general marketplace.
As your bank works diligently to ensure its core product offerings are competitive and profitable, your credit card program can inadvertently be overlooked as a very valuable customer relationship tool and source of fee income. If your bank has partnered with TIB or has another solution in place, we welcome the opportunity to provide a complimentary review of your portfolio to make sure the program is addressing the current needs of your bank and your customers.

James Hudson James Hudson
Sr. Vice President/Card Services

Market Levels @ 8:30 AM CST

TIB Fed Funds & MMDA Rates - Previous Day
Agent 0.20% Prin 0.05% MMDA 0.30%
STAR Prin 0.10% STAR MMDA 0.35%
Key Indices/Commodities
1 - Month LIBOR 0.20% Dow Jones 12758.14
3 - Month LIBOR 0.31% NASDAQ 100 2883.88
1-Yr LIBOR 0.86% S&P 500 1377.10
1-Yr CMT 0.18% Spot Gold 1729.50
Prime 3.25% Spot Silver 32.63
3-yr LIBOR Swap/Offer 0.44% Spot Crude Oil 85.46
5-yr LIBOR Swap/Offer 0.77% CRB Index 292.16
3 Mo - Fed Fund Futures 0.13% 6 Mo - Fed Fund Futures 0.13%
US Treasury Yields US Non-Callable Agency Yields
Yield Maturity Yield Spread
0.00% 90 - Days    
0.04% 180 - Days    
0.20% 2 - Year 0.25% 5bp
0.29% 3 - Year 0.35% 6bp
0.61% 5 - Year 0.78% 17bp
1.59% 10 - Year 1.77% 18bp
2.73% 30 - Year    
139 BPs Yield Curve(2's-10's)
Sample 1x Callable Agency Issues
Description Call Date YTC YTM
FHLMC 2 05/26/23 11/14 2.00% 2.00%
Select MBS Levels
Description Coupon Yield Spread/Duration*
15-Yr FNMA 3.00% 1.42% 96 / 3.62
30-Yr GNMA 3.50% 2.3% 93 / 7.27
*Duration @ 12 month Historical CPR
Morning Commentary: David Terrell

Advance retail sales were down in October 0.3%, but after subtracting Autos, sales were flat.  Business inventories are up 0.7% which is a positive for GDP. Producer Price Index dropped 0.2% compared to an expected increase of 0.2%.  PPI year over year is still at a modest 2.3%.  Treasury prices and equities are slightly down on the day.  President Obama will meet with top business leaders (expect Wall Street leaders) to discuss the Fiscal Cliff and meet with congressional leaders Friday. The rumor is that the president will seek twice the tax revenue he sought in 2011. 

Information contained herein is based on sources we believe to be reliable but its accuracy is not guaranteed. Customers should rely on their own outside counsel or accounting firm for specific circumstances. The securities, yields or levels discussed herein are for illustration purposes and are not guaranteed, not obligations of any bank, thrift or other entity and are not insured by the FDIC.

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