Alpine Capital Bank Newsletter                                    July 2011

President's Corner

For some, the summer months signal the start of a season filled with lazy days and relaxed deadlines. At Alpine, we have taken advantage of this time to ramp-up and improve our operational procedures and marketing efforts. Since our previous newsletter, Alpine launched its newly redesigned website at The site features a modern, streamlined design consistent with our comprehensive re-branding efforts. Providing direct access to the Bank's financial statements, press releases and newsletters, the new site outlines Alpine's client-centric approach to commercial banking.


In addition to the new website, clients can expect to receive new Visa® signature debit cards in the mail to replace their existing ATM cards very soon. The new debit cards will allow clients to get cash and make purchases wherever the Star® or Plus® symbols are posted. In the near future, Alpine also plans to upgrade its online banking system to Jack Henry's NetTeller, an industry leading internet banking platform. Not only will this system improve overall integration with Alpine's core banking systems, but also, more importantly, improve our customers' overall experience.


Here at Alpine, we are always looking to improve the way we serve our clients. We invite you to contact us by email at with any comments, concerns, or recommendations you may have to help us elevate our level of customer service. Please enjoy this special issue, and try to beat the heat during these sizzling summer months!




David M. Aboodi

President and CEO


In This Issue
Meet the People
Bauer 5-Star Rating
Mean Reversion
Alpine's Summer Interns
Previous Special Events
Meet the People 

An Assistant Vice President, Betsy Lim serves as one of the Bank's Loan Officers. Her responsibilities include servicing loans, credit underwriting for prospective and existing loans, and preparing annual loan reviews. Ms. Lim joined the Bank in 2005 with international commercial banking and finance experience gained in the Philippines and Hong Kong. She received a BSc in Business Economics (magna cum laude) from the University of the Philippines and an MBA from the University of Toronto. Betsy enjoys eating Chinese food and reading historical non-fiction. On the weekends, you'll find Betsy playing the tourist, and exploring New York's museums and flea markets.


Alpine Awarded 36th Consecutive Bauer 5-Star "Superior" Rating!

Alpine Capital Bank received the prestigious 5-star "Superior" Rating from Bauer Financial, Inc. for the 36th consecutive quarter. Alpine became eligible for a Bauer ranking in September 2002--two years after opening its doors in 2000. This completes nine years of perfect 5-star ratings for the Bank. Bauer based its prestigious 5-star rating on the detailed quarterly financial reports Alpine filed with federal regulators on December 31, 2010. Being awarded Bauer's highest performance ranking serves as a testament to Alpine's history of exemplary banking services and commitment to sound business practices.


Bauer Financial's rating system represents an independent, unbiased analysis of a financial institution's safety and soundness position. Providing consumers with a convenient way to obtain status reports, Bauer Financial has been reporting on the financial condition of the nation's banking industry since 1983. Bauer Financial's motto says it all: "Because peace of mind matters". Given Alpine Capital Bank's impeccable 5-star rating history, customers who choose Alpine can rest assured that their assets are in capable hands.

Mean Reversion

By: Justin Frankel and Jeremy Berman - Wavecrest Asset Management


In the short term, markets tend to move randomly, but in the longer term, they have normally distributed returns.  There are many experts who believe they can divine the direction of markets in different ways.  Technical analysts believe they can read charts and lines to determine market direction, while fundamental analysts build models to analyze the financial condition of a company.  Momentum investors believe that the market is going to keep going in the direction that it is already moving, while market timers think they can accurately choose the inflection points of market moves.  The concept of mean reversion does not rely on the subjective measures or inputs that influence these other forms of analysis.  Mean reversion is the idea that market returns follow a somewhat normal distribution, and will generally move back to their average.  While overlooked during the volatility of the past three years, it remains an important concept for investors who want to manage risk.  The concept suggests that above average returns will more likely be followed by below average returns, and vice versa. 

We can imagine a game in which we flip a coin 100 times and keep a running count. Starting at a base of 0, we would add 1 for every time the coin lands on heads and subtract 1 for each time it lands on tails.  Assuming a fair coin, the probability of each toss is 50/50, but the path over the 100 flips will be random, and the likelihood of the count ending at 0 is very small.  However, the 0 acts almost as a magnet, sucking high or low numbers back to it.  The more times we flip the coin, the stronger the pull of the magnet.  This example is instructive of our initial point that in the short term markets move randomly, but in longer increments, markets are mean reverting.

It is important to note that it is not prices but rather returns that are mean reverting.  IBM, for example, closed the month of June near $170.  There is no stock price (say $150) that will act as the magnet in the example above.  Because of factors like stock buybacks, splits, dividends, and inflation, the actual price of a stock will not exhibit any mean reversion, but the percentage returns of IBM should, over time, revert to an average return.

There are many reasons why market returns exhibit mean reversion tendencies and move back to equilibrium:

1) Inflation - Central banks often pump liquidity into their economies to help generate growth.  Once growth has taken hold, they will start to remove that liquidity so as not to spur price inflation.  The removal of this accommodative policy may begin to slow growth, starting the process over again.

2) Price / Earnings ratio - Equities rise for different reasons, but ratio expansion (or contraction) is a common one.  If investors believe that a company will continue to grow its earnings, they will often pay a higher multiple for a stock.  When multiples rise to a certain level, some investors will start to believe that a stock is overvalued and start to sell it, thus lowering the price and the ratio.  Conversely, when ratios fall to a certain level, some investors may believe a stock is undervalued and start to buy it, thus raising the price and ratio.

3) Competition - When companies make above average profits in a particular region or a particular product, their competitors notice.  Unless one company has some form of strategic competitive advantage (it's a government owned entity or it owns all of a particular natural resource for example), other companies will flock to that region or product to capture some of that excess profit, thus lessening the spoils for the rest of the competitors.

4) Supply and demand - In commodity markets, simple supply and demand issues drive mean reversion.  When oil prices rise, gas prices typically also rise, and consumers start to drive less.  This reduces the demand and price for oil.  This can also be seen in oversubscribed initial public offerings, like the recent IPO of LinkedIn, in which the lack of shares available to the public at the initial offering created a buying frenzy that caused the stock to more than double in price on its first day of trading.

5) Globalization / Capital flows - Foreign direct investment and global capital flows are causes of mean reversion as well.  Manufacturing moved to China as they could produce quality goods for a cheap price.  As the Yuan continues to strengthen and the Chinese people demand a higher standard of living, more regional competition is occurring, and manufacturing demand is reverting to other nations like Vietnam, where the quality to price ratio is better.

A strategy that is grounded in the concept of mean reversion is likely to exhibit less volatility over longer periods of time. Momentum strategies perform well until the momentum shifts, and technically and fundamentally based strategies are ultimately only as good as the data that goes in to their models. As we move through the changing economic landscape, it is important to understand why markets move the way they do, and have a plan in place to capture market gyrations. Understanding mean reversion can help you create a portfolio that can weather all investment climates to both increase return, and reduce risk.

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.

Prep For Prep

Alpine welcomes two wonderful summer interns to the ranks!

It's that time of year again--the time when enthusiastic summer interns join the ranks at Alpine Capital Bank. Annually since 2000, Alpine has partnered with Prep for Prep, a NYC non-profit known for developing young leaders, to hire summer interns. Prep for Prep identifies young leaders in Middle School and provides them with an accelerated educational program, which helps these special students to enroll in the most competitive regional and national high schools. To date, more than 4,000 young leaders can thank Prep for Prep for academic and career advancement opportunities. As part of Prep for Prep's Professional Advancement Program, interested high school juniors and seniors may elect to participate in paid summer internships. This summer, Alpine happily welcomes Amber Quinones and David Ruiz to the Alpine team.

Amber Quiñones

Amber Quiñones graduated in 2011 from Phillips Academy Andover in Massachusetts, and will matriculate at Stanford University in the fall. Having many diverse interests, Amber plans to major in Management Science & Engineering and Economics, with a minor in Latin American Studies. After completing her internship this summer, Amber will travel to Scotland to tour with her competitive modern dance troupe. We're happy to have you here, Amber!

David Ruiz

David Ruiz will attend Columbia Preparatory School for his final and senior year of high school this Fall. With a strong interest in both history and science courses, David plans to apply to some of the nation's most prestigious undergraduate business schools. In his spare time, David enjoys drawing and weight lifting. Given his interest in health, he previously participated in a product invention competition, and invented a hypothetical low sugar protein bar named Supplimax. Thanks for joining the Alpine team this summer, David!



Previous Alpine Events 


Vance Serchuk, "The Past and Future of the Middle East" 


On May 5, 2011, Alpine invited guest speaker Vance Serchuk, Senior Foreign Policy Advisor to Connecticut Senator Joe Lieberman, to give a special presentation on "The Past and Future of the Middle East". Given his work with the Senate Homeland Security and Governmental Affairs Committee, Mr. Serchuk gave a first-hand account of his international travel and diplomacy experiences in the Middle East. Mr. Serchuk's writings have been published in the New York Times, Washington Post, Wall Street Journal, and other publications.


Mr. Serchuk travels extensively and frequently in the Middle East, South Asia, and East Asia-visiting more than thirty countries in the past year. Recently returned from war-torn Libya, Mr. Serchuk conveyed his cautious optimism for democratic reform in countries like Libya, Tunisia, and Egypt. Mr. Serchuk also commented on the demise of Osama Bin Laden as an important symbolic victory for the U.S., and the need for an overall ideological victory over violent Islamic extremists to eventually put an end to the war on terror.

Antiquorum USA, "Investing in Time" 


On June 7, 2011, Alpine Capital Bank co-hosted a cocktail reception with Antiquorum USA. This exclusive event allowed bank clients to preview the timepieces offered in Antiquorum's June 8th auction "Important Modern & Vintage Timepieces." During the reception, Antiquorum Director & Watch Expert Charles Tearle gave a special seminar explaining the important factors to consider when investing in a luxury timepiece. Charles, who has been in the watch business for over 21 years, began his career in London at Somlo Antiques and went on to become the watch expert at Bonhams Auctioneers in North America. Three years ago, he joined Antiquorum as a Director, Watch Expert and Auctioneer. Charles often appears as a watch expert on "The Antiques Roadshow," and writes a quarterly column for Elite Traveler Magazine.


The Antiquorum joint cocktail stands as one in a series of special events scheduled for Alpine friends and clients. Alpine strives to connect its patrons with apt topics and engaging speakers at its quarterly events. As high net worth individuals become more interested in collecting portable wealth, timepieces represent a meaningful, and potentially fruitful, way to invest in the luxury goods market.    



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