AMERICAN BANKER MAIN 08-08-06 A 1 ABNEWS 8/7/2006 5:32 PM Page 1 SUBSCRIPTIONS: 800-221-1809 TUESDAY AUGUST 8,2006 YESTERDAY’S MARKETS American Banker 225 ▼ 0.6% American Banker 50 ▼ 0.3% THE FINANCIAL SERVICES DAILY Dow Jones Industrial Average ▼ 0.2% Standard & Poor’s 500 ▼ 0.3% Volume CLXXI No. 151 www.americanbanker.com 10-year Treasury yield 4.921%, up 0.026 Part of Irwin An Innocent WASHINGTON Rep. Ney, who heads the House Lending Unit Question? Financial Services housing subcommittee, said he would Has Acquirer not seek reelection. Page 3 Small Banks ■ BY JODY SHENN COMMUNITY BANKING More than six months after Don’t Buy It putting its first mortgage business Five banks are backing a on the block, Irwin Financial ■ BY JOE ADLER Florida effort to redevelop poor Corp. said that it has a deal to sell WASHINGTON — It was just a brief areas through for-profit the origination platform, and that mention of an idea, a single ques- community development the $19.2 billion servicing portfo- tion in a 152-page plan distrib- companies. Page 5 lio should be sold soon. uted by the Federal Deposit Insur- The Columbus, Ind., company ance Corp. last month. INDUSTRY SNAPSHOT has said since January that it was The question: Whether to Credit unions with the most seeking to divest its Irwin Mort- change the treatment of Home assets and deposits. Page 6 gage Corp. to refocus on commer- Loan Bank advances for federal cial banking, small-business lend- On track: Deals to sell a mortgage servicing portfolio and an asset manage- deposit insurance rate-setting CARDS ing, and a struggling home equity ment unit “are totally consistent” with the “five-year plan,” Killinger says. purposes. business it recently restructured. The weeks since have seen a City Holding of W.Va. will sell Irwin Financial has also said it did backlash from community bankers most of its credit card portfolio not want to commit the capital and industry representatives who to Elan Financial, a U.S. necessary to garner acceptable Wamu on Latest Alterations see in the question the possibility Bancorp subsidiary. Page 9 profits in the highly commoditized of a policy change that they say conforming mortgage business. Shift to banklike sheet tests Wall St. patience would undermine the Home Loan MORTGAGES “Six months was longer than ■ BY JIM COLE sheet that had been put together Bank System and unfairly punish we hoped” to wait for a deal, “but To some outsiders, Washington in significant measure by acquisi- thousands of community banks First American, a title insurance we think this is a very good out- Mutual Inc. seems to be in a state tions. In July, Wamu embarked on that use advances for funding. giant, bought Offutt Systems, come,” Will Miller, Irwin Finan- of perpetual flux. the sale of a big chunk of its mort- “We will scream to the high which sells multiple listing cial’s chairman and chief execu- But Kerry K. Killinger, the $351 gage servicing portfolio to reduce heavens about this,” said Camden service technology. Page 10 tive, said on a conference call billion-asset Seattle thrift compa- earnings volatility. Also last Fine, the president of the Inde- Monday. The company did not say ny’s chairman and chief executive, month, it agreed to sell its asset pendent Community Bankers of TECHNOLOGY how much it would get for the says the changes that it is undergo- management unit and said it America. origination platform, and it hint- ing, while significant, are bringing would increase its focus on core The agency touched on the Harland’s earnings fell, but ed that it is still not sure whether it closer to its intended aim: a businesses. idea in its July 11 proposal out- growth in the check printer’s selling the servicing portfolio more banklike business less reliant See page 2 See page 3 software division helped offset would produce a gain or loss. on conventional mortgages. declining check sales. Page 11 The privately held Mt. Laurel, The goal has the company jetti- Cyphermint has developed a See page 10 soning some elements of a balance mobile payment system linked First Deal Outside Region to its prepaid cards. Page 12 Won’t Be Chicagoan’s Last INSURANCE/INVESTMENT Receiving Images 4.0 ■ BY BEN JACKSON executive, said in an interview Fri- PRODUCTS Bank routing/transit numbers that are 3.7 With its deal for Piedmont day that even before making the image-capable, from the Federal Reserve Bancshares Inc. of Atlanta, Private- Piedmont deal, his $3.7 billion- Citistreet has added products and Eccho. Numbers in thousands 3.5 and sales staff as it wades Bancorp Inc. is following through asset company had the “internal deeper into the small-business on its pledge to expand outside the muscle” — capital, staff, back- retirement market. Page 13 2.8 2.9 Midwest and into fast-growing office capability — to pursue 2.7 2.6 2.6 southern and western markets. expansion to new markets by Fremont Michigan InsuraCorp 2.5 The Chicago company, which acquisitions or bank start-ups. reported that its second-quarter 2.3 2.2 2.2 targets wealthy households, Those markets include earnings grew 51.2%. Page 13 1.9 agreed to pay $47 million in cash Phoenix/Scottsdale and Florida and stock for the $217 million- “for sure,” Mr. Mandell said. Pri- MARKETS asset Piedmont. Ralph B. Mandell, vateBancorp currently has offices its chairman, president, and chief See page 5 Puerto Rican banking stocks received a lift when an analyst upgraded five of the island’s companies. Back page Consumer credit expanded at a rapid clip in June, led by gains in revolving credit, the Fed J J ASOND J FMAMJ ’05 ’06 reported. Back page Story on page 12 AMERICAN BANKER MAIN 08-08-06 A 2 ABNEWS 8/7/2006 5:32 PM Page 1 2 TUESDAY, AUGUST 8, 2006 AMERICAN BANKER Wamu CEO: This Transformation Is Different Continued from page 1 When it released its second- plummeted, Wamu laid off 4,500 thrift company Bank United Analysts said that they quarter results, Wamu said it was people in late 2003 and another Corp. in February 2001, and it endorse Wamu’s effort to shrink Those announcements came selling $2.6 billion of mortgage 2,900 in 2004. bought the mortgage portfolios its mortgage servicing portfolio, against a backdrop of office con- servicing rights and its Milwau- It has also announced a string of PNC Financial Services which should reduce the earn- solidation, layoffs, and the out- kee servicing facility to Wells of layoffs this year. In the first Group Inc. in October 2000 and ings volatility that comes from sourcing of back-office opera- Fargo & Co. of San Francisco. quarter it cut the number of FleetBoston Financial Corp. in valuing the servicing portfolio tions to other countries. A few days later Wamu said it home loan processing offices by June 2001. Wamu also bought quarter-to-quarter. Mr. Killinger said Wamu’s lat- was selling its asset management over a third, to 16, laying off the New York thrift company “They are looking to garner est retooling is a far cry from its unit WM Advisors to Principal 2,500 people. In May it said Dime Bancorp Inc. in January more stable income flows as 2003-04 one, when it slashed Financial Group. would cut 1,400 workers as it 2002. opposed to tying themselves to jobs and sought ways to stabilize “All these things are totally closed two call centers, and last Mr. Killinger said three of the more volatile servicing and the mortgage business after a big consistent with what we have month it cut 900 jobs in its retail Wamu’s business lines — retail production,” said Edwin slowdown a year earlier. (In the laid out in our five-year plan,” banking and home loan opera- banking, card services, and com- Groshans, an analyst at Fox-Pitt, second quarter of 2004 profits Mr. Killinger said in the inter- tions. mercial banking — are hum- Kelton Inc. “The issue is they from its home loan business view. During the 2003-04 down- ming along. can’t just cut and run from that dropped to zero, from $531 mil- In a conference call earlier turn, Wamu sold its consumer “The one business that needed business. lion in the first quarter and $611 that day, he said, “The sale of the finance division to Citigroup more of a strategic shift in direc- They are fully tied into it — million a year earlier.) MSR was about reducing the Inc. for $1.5 billion and used the tion was our home lending busi- they have a national servicing “There is really quite a differ- market risk or interest rate risk proceeds to sustain its 250- ness. What we became convinced platform, a national origination ence” between the changes the in the company. As we’ve indi- branch-a-year retail banking of was that we would be better platform, they are in retail, they company made in 2003 and 2004 cated in our strategic plan, we expansion. Analysts said, back off in focusing our efforts in the are in subprime, they are in and those taking place today, Mr. want to gradually shift to much then and recently, that Wamu’s higher margin businesses of wholesale, they are in the con- Killinger said in an interview more of a banklike balance troubles in those years were option ARMs, home equity, alt- duit channel. It is a big part of July 19, the day his company sheet.” aggravated by the failure to inte- A, and subprime,” he said.