Trust Preferred Securities; How big a problem for community banks? 

Trust Preferred Securities provided a capital option for banks with high growth plans in the early 2000's. In some cases, this access to capital accelerated the type of growth that ultimately led banks into trouble.

AiA researched Minnesota banks on Consent Orders that have Trust Preferred obligations at the holding company level.  As of 6/30/2012, there are 44 banks in Minnesota that are on a consent order, which is 12% of all banks. Of these banks, 18 hold Trust Preferred obligations in their holding company.

The average assets of banks holding Trust Preferred obligations are $160 million and the average obligation is $8.9 Million. Four of the 18 banks have deferred the interest, which is allowable for up to 5 years.

As a side note, bank insurance underwriters have historically analyzed only the bank's financial statements and have not reviewed the holding company. Over the last year, the underwriters have recognized the added risk that these obligations present and are very interested in the plan to service this obligation.

Eide Bailly has recently published a great article on the subject of Trust Preferred Securities. The article was written and published in July 2012 by Eide Bailly LLP and is republished with permission. Copyright Eide Bailly 2012. 

Bank and Insurance Industries Seek to Operate .bank and .insurance Domain Names.

The American Bankers Association and The Financial Services Roundtables announced that they have applied to the Internet Corporation for Assigned Names and Numbers (ICANN) for the right to operate two new Web domains, .bank and .insurance on behalf of the financial services industry. The plan is to strengthen consumer confidence when they are on a .bank site because a trusted third party is administering the domain names.

Check out the story that was recently printed in the American Banker. 

Investment Alternatives for Bank Executives and Officers

If you or your clients are looking for ways to improve your return in this low rate environment, consider a single premium whole life contract. This program is perfect for the Investor that:

• Is planning for retirement
• Wants a tax deferred investment that can be held long term
• Plans to pass the money to a future generation - give more and make it tax free

If your bank has an investment / insurance department, you may want to inquire with one of your representatives. An illustration for a 55 year old is linked as well as a brochure. 

Please feel free to contact AiA's Dennis P Begley CLU ChFC CBC for any questions regarding whole life contracts and group benefits.
 

Associated Insurance Agents, Inc.

Minneapolis based AiA is a proven leader in providing insurance solutions since 1980. AiA provides a totally unique combination of bank industry experience and a deep knowledge of insurance. With AiA, your bank's story is told by bankers, which provides a higher level of comfort with the carriers and ultimately a better insurance program for the bank. AiA is able to provide a variety of options for banks of every size and financial condition through a network of over 30 insurance carriers.