News of the Competition

MADISON, Wis. (4/9/08)

• Federal Home Loan Bank (FHLB) of Chicago announced the termination of its merger discussions Monday with the FHLB of Dallas, after they were unable to reach an agreement. The Chicago bank also announced the resignation of Mike Thomas, president/CEO, to be effective Friday. The failure to reach agreement came after extensive analysis and due diligence regarding the feasibility of combining the banks' business operations. The FHLB of Chicago will now focus on operating as an independent entity and continuing to transition to a more traditional home loan bank business model and financial structure, said P. David Kuhl, chairman of its board of directors. The board has formed a search committee to recruit a new president/CEO within the next month and a half (PRNewswire April 7) ...
• Discover Financial Services signed an agreement Monday to purchase Citigroup's Diners Club International for $165 million with a goal of increasing transaction volume and worldwide acceptance of its own cards, analysts said. As part of the deal, Discover will acquire the Diner's Club International Network, including its brand, trademark, and employees, and over 40 license agreements with Diners Club card issuers. However, the deal will not include Diner's club licensees in North America and worldwide. When the transaction closes in an expected 90 days, Citigroup will remain a long-term issuer on the network. Discover will not issue cards or offer consumer credit in international markets, the company said. (Forbes.com April 7) ...
• Cease-and-desist orders have been issued for Peoples Community Bancorp by the Office of Thrift Supervision (OTS). The orders place the West Chester, Ohio-based bank under strict oversight and keep a tight reign on its ability to make loans and issue lines of credit. Difficulties with real estate loans and a failed merger in February with Integra Bank Corp. of Evansville, Ind., created problems for Peoples. The bank said in a news release that the orders require it to: file updated business plans and compare projected and actual operating results quarterly; receive OTS permission before declaring dividends or payments on outstanding securities, adding or replacing a director, hiring a CEO or making any "golden parachute" payments; not make new loans or lines of credit for land acquisition or development, speculative residential construction, commercial or multi-family construction, or acquisition of commercial property; and hire an independent consultant to review its loan portfolio and establish a plan for reducing bad loans (Business Courier of Cincinnati April 4) ...
• In efforts to serve smaller middle-market businesses, Bank of America Corp. will expand its asset-based lending capabilities. The move is a result of BofA's acquisition of LaSalle Business Credit--a former LaSalle Bank business unit. Bank of America Business Capital will focus on asset-based financing from $5 million to $25 million by forming a national division to serve that market segment. BofA Capital provides companies with cash management, interest rate and foreign exchange rate risk management, senior secured loans, and capital markets products (Baltimore Business Journal April 8) ...
• Washington Mutual revealed Tuesday that it had it had raised $7 billion in capital. The money was raised through an investment consortium led by TPG, a private equity firm. WaMu, the largest U.S. savings and loan, also said it would cut its quarterly dividend. The company said it intends to stop buying mortgages from brokers and plans to close all of it freestanding loan offices. WaMu also revealed Tuesday that it would lose $1.1 billion in the first quarter and take a $3.5 billion provision for loan losses. The company needs to raise capital because its stock has dropped with home prices, and it is struggling with increased mortgage delinquencies and defaults among homeowners, analysts said (The New York Times April 8) ...

courtesy of cuna.org