Alpine Capital Bank Newsletter                                             January 2011
In This Issue
FDIC Insurance
Investment Resolutions
NY Market Review
Special Events
Meet the People



Alpine Capital Bank is pleased to introduce its new Marketing Associate Jillian Hall, who recently joined the Alpine team in August 2010. Leveraging previous organizational experience acquired in non-profit fund raising work, Jillian now handles all marketing, special events, and communications  initiatives for the Bank.


Jillian earned a BA in Economics and a BA in Studio Art from Claremont McKenna College, and a Museum Studies Certificate from Tufts University. She currently resides in Brooklyn Heights with her husband John, and dog Gizmo. In her free time, Jillian enjoys museum-hopping, eating adventurously, playing board games, and working through her lengthy Netflix queue.

President's Corner

As we march into 2011 and leave 2010 behind, it's natural to reflect on the past while cautiously hoping for an improved tomorrow. In 2010, the global economy experienced its second consecutive year of disappointingly slow recovery from the recession triggered by the 2008 financial crisis.

Despite these difficult financial times, Alpine Capital Bank reported steady profitability, and strong asset quality. As we enter 2011, the markets suggest that the worst may be behind us. In addition to celebrating a new year with countless opportunities, we at Alpine Capital Bank have much to anticipate. In 2011, we plan to launch our new website and Visa debit cards.


We hope you find the contents of our Winter 2011 newsletter to be both interesting and informative. Please enjoy a review of the 2010 New York real estate market, and suggested investment resolutions to kick off the new year. I would like to extend heartfelt thanks to our newsletter contributors!



David M. Aboodi

President and CEO


Temporary FDIC Insurance Coverage for

Transaction Accounts


Effective December 31, 2010 through December 31, 2012


All funds in a "noninterest-bearing transaction account" are insured in full by the Federal Deposit Insurance Corporation from December 31, 2010 through December 31, 2012. This temporary unlimited coverage is in addition to, and separate from, the coverage of at least $250,000 available to depositors under the FDIC's general deposit insurance rules.


The term "noninterest-bearing transaction account" includes a traditional checking account or demand deposit account on which the insured depository institution pays no interest. It does not include other accounts, such as traditional checking or demand deposit accounts that may earn interest, NOW accounts, and money-market deposit accounts.


As an FDIC insured bank, Alpine Capital Bank will participate in this FDIC insurance program, effective immediately. For more information about temporary FDIC insurance coverage of transaction accounts, visit


Investment Resolutions

 By: Justin Frankel and Jeremy Berman - Wavecrest Asset Management

A new year often means a fresh start, but as with any resolution, execution is more difficult than declaration.  2010 was ultimately a positive year for stocks, commodities and bonds.  While we may still long for the conditions that existed before the recent crisis, the current environment can be just as rewarding provided investors establish reasonable expectations for risk and return.  The start of the new year is an excellent opportunity to rethink your investment strategy, revisit your past assumptions, and decide if they still make sense.  Thinking about risk tolerance, income needs, planned distributions, and expenses can help you construct a portfolio that will keep you on track regardless of what the markets have in store for 2011. 

The most important decision you can make regarding your portfolio requires no formal advice, training or advanced analytics.  Deciding how much risk you can bear only requires an honest assessment of your budget and your tolerance for loss.  Think about how you felt during the fall of 2008 and spring of 2009. How would you have felt if your portfolio was allocated differently?  It is important to construct a portfolio that reflects your view on risk.  Reasonable allocations between assets classes and then within each asset class can be done to reflect everything from conservative to more risky views.

Once you have decided on how much risk you are willing to take, the next step is to think about how much you need in terms of income and growth.  Based on your current net worth, planned expenses, and philanthropic goals, what kind of yield or return do you need to meet your expected obligations?  In a low yield environment, many investors are tempted take on more risk than they should in order to achieve higher levels of income.  This additional risk can come in the form of either lower quality, longer duration, or more illiquid investments. 

Over the past decade, passive investments in global equities, commodities, and bonds have become more accessible and inexpensive.  Index funds and other passive investment vehicles may make sense, but should be used within the context of a more active planning based approach.  It is a good idea to think of these investments as tools, and as with any tool, it needs to be married correctly to the task.  An investment tool that is appropriate for one job (i.e. using FDIC insured CDs to increase yield as a cash substitute) may not be good for others (i.e. using the same structure for a higher growth investment).  High dividend yielding stocks, high yield bonds, and alternatives like MLPs (Master Limited Partnerships), structured notes, or annuities may make sense depending on risk tolerance and liquidity concerns.  A qualified financial advisor can help you select the right tool for the job and help you prioritize your financial planning needs.

Bond funds and other fixed income investments have seen a surge in demand as investors flocked to safety with the permanence and definition that come with owning high quality bonds.  These investors, whose primary goal was preserving wealth, had to accept lower yields but were willing to trade return on capital for return of capital.  As monetary policy around the world remains accommodative, some investors are concerned about looming inflation threats and are beginning to think about ways to protect against a sell-off in bonds.  If this concern is a part of your personal risk assessment, a barbell strategy might be worth considering. In this strategy, cash and near cash instruments with short maturities are matched with longer dated bonds.  The shorter duration bonds mitigate reinvestment risk while preserving capital, while the longer dated bonds help meet current income needs.  There is never a "free lunch" when it comes to investing, but this is a reasonable strategy to defend against a rising rate environment.  For those with a higher tolerance for risk, more speculative high-yield bonds could present an attractive alternative.  Historically, high-yield bonds have performed relatively well when interest rates rise.  The yield curve could steepen as the Federal Reserve keeps short-term rates low.  In this scenario, high-yield bonds may be attractive as an alternative to both more conservative fixed income and more speculative equity investments.

In addition to portfolio construction, proper wealth management often requires sophisticated tax and estate planning.  Low interest rates might not be good for income portfolios, but they can help in your estate planning.  The IRS rate for wealth transfers are currently near all time lows, so intra-family loans are a great idea for transferring wealth to your heirs as long as the money earns enough to repay the loan and generate a gain.  Shorter term loans for up to 3 years are less than 0.5% but longer term loans are about 1.5% to 3.5% depending on terms (3-9 yrs / 9+ years).  This low yield environment may also be a good time to fund a GRAT.  Carefully reinvesting the money should ensure that there is enough to fund the liabilities of the loan while still growing the assets.  A qualified tax advisor can tailor a specific strategy to your needs, and a qualified financial advisor can construct a plan to help grow these assets while mitigating volatility and the potential for loss.

Whatever you decide, keep in mind that markets move quickly and any plan requires maintenance.  Tax and regulatory changes will likely impact your decisions, so stay vigilant or engage an advisor who can help you stay on the right investment path.  Changes in the economic environment, market climate, or your own personal situation may require changes in your portfolio, so it makes sense to conduct a review at least semiannually, if not more frequently.  The best investment resolution you can make this year is to find a trusted advisor to help build a financial plan that matches your tolerance for risk with your investment goals.

Important disclaimer: The contents of this article are for discussion purposes only and should not be considered to be legal or tax advice.  Each individual should consult with their own legal and tax advisors before making any investment decisions.  Neither Wavecrest Asset Management nor its' Managing Partners, Justin Frankel or Jeremy Berman, are registered as investment advisors.

Justin Frankel & Jeremy Berman have over 20 years of combined institutional experience trading, building, and marketing structured investments and equity derivatives. They are the founders and managing partners of Wavecrest Asset Management, and recently managed different components of the structured investments business at Morgan Stanley. They believe a disciplined approach to risk-managed investing leads to smoother returns and less volatility, and manage both a hedge fund and separate accounts based on this investment philosophy.


2010 Greater New York Market Review

By: Andrew Larew - Larew, Doyle & Associates, LLC


For real estate specialists, 2010 will go into the books as a year of real challenges.  Broad declines across the spectrum of the property categories of office, retail, multi-family, industrial, and hotel characterized the market as it faced strong headwinds.  Larew, Doyle & Associates is fortunate in that we have an opportunity to view real estate investment from a national perspective through our relationships with life insurance companies.  The Metro New York marketplace has performed exceptionally well against its counterparts in the South, Midwest, and West Coast throughout the current downturn.


Commercial Mortgage Backed Security (CMBS) performance data is now widely available as never before and broad inferences can be gained as to the general health of the overall commercial real estate marketplace.  As a lagging indicator, it should come as no surprise that CMBS loan delinquencies continued to rise throughout the year and reached just under 10% in early fall, and leveled off thereafter.  It remains to be seen in 2011 whether they will begin a downward trend, or plateau and climb further.


Capital remained constricted, with fixed income broker/dealers remaining out of the marketplace for most of the first of the year.  Life insurance companies too were inactive for the first 9 months of the year as they worked at identifying problem areas in their whole loans, direct investment, and securitized portfolios.  Loan origination volumes are 85% lower than their peak year of 2007, which represents a drop in new loans of almost a quarter trillion dollars, or $250,000,000,000 per year.


In our market area of Metro New York, 2010 can be viewed as the year of long-term winners and losers.  Most large banks focused on internal stabilization while mid-sized banks not in trouble began to seize growth opportunities generated by the takeover of smaller banks by the FDIC.  We expect to see a wave of bank consolidation in 2011 as easy distressed opportunities give way to peer to peer acquisition opportunity.


By the 4th quarter of 2010, we have seen most large money center bank institutions re-formed and re-staffed their fixed income CMBS platforms and volumes began anew again.  Life insurance companies too re-started originations in earnest as they began to search for reliable yields through long-term mortgages.


Our outlook for 2011 is cautiously optimistic.  Capital has re-formed, reliable yields are hard to come by, and most of the significant fallout in the real estate sector appears to be behind us.


In this environment, lenders that believe in a contrarian lending model with the use of sound underwriting principals should be very successful.  Given the general constraint of capital, good lending opportunities abound.  Since capital at all levels froze during late 2008 - mid 2010, even prudent borrowers have been penalized.  Now, credit is again flowing and stronger borrowers and the premier deals have many options.  What the market does not recognize are strong 2nd tier opportunities on sound real estate with good borrowers.  Here, capital is still constrained, even on properties with good histories, strong sponsorship, and lower LTV's. 


Another area of weakness in the marketplace is relationship banking.  Nearly all large and medium sized banks are requiring that depository relationships be tied to their lending services.  However, what we have seen time and time again this year is a lack of follow-through once the relationships have been delivered.  We see a complete lack of simple customer service after closing to ensure the basic happiness of the customer. 


The current stressed environment has led to multiple layers of approval and oversight, even on initial deal term sheets.  Changes to economic terms mid-stream in the approval process are common.  In a competitive environment, this will start a new relationship badly.  The changes that do appear never seem to be significant in nature, and usually do more harm than good with new relationships.  Closer attention to the needs of the client/borrower should generate better cross-selling of bank services going forward.


Larew, Doyle & Associates, LLC is a private, independent, commercial mortgage loan originator with three offices in New York, Syracuse, and Providence, Rhode Island.  Our portfolio consists of over $1,200,000,000 of commercial loans originated by us over the past seven years.  During 2010 we closed or committed approximately $100,000,000 in new mortgage loan business on 20 separate transactions.  Larew, Doyle & Associates, LLC also maintains an Equity Advisory Portfolio (EAP) of over 1,000,000sf consisting of office, medical office, industrial, structured parking, and multi-family properties located in New York State.  During 2010, the EAP structured or advised on four transactions.       

Past and Future Alpine Events


Previous Event - Lara M. Brown, Ph.D.

On October 20, 2010 Alpine welcomed guest lecturer Lara M. Brown, Ph.D. to a cocktail reception held at the Peninsula New York. Professor Brown eloquently discussed vital leadership lessons derived from her study of the presidential election process, and her newest publication Jockeying for the American Presidency.  Her discourse provided valuable insight into the fascinating, and oftentimes controversial, world of presidential aspirants, while drawing parallels to important lessons applicable to the business world. Given the then impending elections and resulting high demand for Brown's political insights, Alpine Capital Bank felt fortunate to introduce Ms. Brown to a group of clients and associates.

Upcoming Event - David Cutler, Ph.D.

On January 13, 2011, Alpine will host another cocktail reception with a special presentation by guest speaker David Cutler, Ph.D. Currently the Otto Eckstein Professor of Applied Economics at Harvard University, Professor Cutler plans to discuss the future of health care in America. Professor Cutler has earned significant academic and public acclaim for his work in health and public economics, and is the author of Your Money or Your Life: Strong Medicine for America's Health Care System, published in 2004 by Oxford University Press. In the wake of recent health care reform passed in 2010 and a potential universal health care proposal pending in Congress, Professor Cutler's presentation should provoke meaningful dialogue and debate amongst Alpine Capital Bank clients.


When Thomas Valenti, executive chef and co-owner, opened his signature restaurant Ouest in 2001, diners flocked to this succulent addition to the then nonexistent Upper West Side dining scene. Ten years later, locals and self-proclaimed foodies continue to frequent Ouest for its delectable nouveaux American cuisine and intimate setting. Award winning Chef Valenti draws crowds with his slow-cooked style of delicious, working-the-stove-all-weekend dishes. Accommodating up to 140 guests in balcony alcoves and cozy red banquettes, Ouest was masterfully converted from a dry cleaner and coffee shop by designer Peter Neimetz. While most visit Ouest for the French-inspired fare, the restaurant pays attention to the details with welcoming service to complete the dining experience.


Mention that you are a "Friend of Alpine Capital Bank",  and receive 10% OFF our A La Carte Menu. (This offer may not be combined with other promotions.) Valid through March 1, 2011.

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