>5 Economic Reports That Affect The Euro

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Trading euro-based currency pairs, following events that can have a major impact on the euro, can be a daunting task for foreign exchange traders. With 17 member countries and aggregate GDP of over ¬12 trillion (as of 2010), how do you know which economic reports to follow? There are hundreds of economic reports that come out of the eurozone each year relevant to the Foreign Exchange (FX) market, but if you’re looking for trade-worthy reports, there are only a handful that you should follow. TUTORIAL: Forex Currencies
The European Union has 17 members, but few are large enough to generate economic reports that really affect the currency. Germany, France, Italy and Spain together represent over three-quarters of the eurozone’s ¬12 trillion GDP, and these countries would be a good place to start. In particular, economic reports coming out of Germany and France tend to be given more weight by FX traders than other countries.
It is also important to understand that the reports we list in this article are relatively standard across different countries. The key areas that we’ll look at are: monetary policy, prices, confidence and sentiment reports, GDP, and balance of payments.

1. Prices & Inflation
Report to Focus On: Eurozone Core CPI, German CPI, French CPI
Inflation as a key factor that affects all currencies, including the euro. In general, countries with high levels of inflation relative to other countries will normally see their currency depreciate so that the prices of goods between countries remain relatively equal. In addition, higher-than-expected inflation will result in the central bank raising interest rates to tame inflation.
The key measure of inflation in the eurozone is the Consumer Price Index (CPI). This indicator calculates the price of a basket of goods that an average household is likely to purchase. Traders typically follow the Core CPI, which is the normal CPI calculation excluding energy and food prices. Energy and food prices tend to be volatile and can be greatly influenced by temporary supply and demand imbalances, as well as external random factors such as weather, which can distort the CPI number.
It is important to note that although the CPI report does have an effect on the euro, its effect is diminished because the CPI Flash Estimate, a CPI estimate and the German Preliminary CPI are released about two weeks earlier. So, you may want to keep an eye on various inflation indicators and patterns across multiple regions, especially CPI reports from Germany and France.
2. Confidence and Sentiment
Report to Focus On: ZEW Survey
Another way to gauge economic conditions in the eurozone is to look at confidence and sentiment reports. One of the most widely followed sentiment reports is the German ZEW Survey, prepared monthly by the Center for European Economic Research. The survey asks a sampling of up to 350 financial experts where they see the economy headed over the medium-term horizon. Responses are restricted to positive, no change or negative. This simple response structure allows the ZEW indicator to clearly reflect whether experts and analysts are optimistic or pessimistic about the economy in the medium-term. The survey also queries experts for the eurozone, Japan, Great Britain and the United States.
As with most major indicators, analysts will have made forecasts on what they expect the indicator to be. With respect to the ZEW indicator, if the actual ZEW indicator comes in above forecasted, this would translate into a positive effect for the euro currency. A ZEW number above zero indicates optimism and a number below zero indicates pessimism.
3. Monetary Policy
Report to Focus On: ECB Rate Announcement & Press Conference
Every currency is affected by the monetary policies of its respective central bank. For the euro, that is the European Central Bank (ECB), and decisions regarding interest rates made by the ECB can have significant impacts on the euro. Generally, the ECB press conferences tend to be the most important news to follow, because interest rate changes are usually anticipated well in advance by the market. The structure of the press release is two-part; there is a prepared statement followed by an open press question period. It is the question period that tends to cause the most currency volatility.
The press conference is key, because it can give clues about where the ECB President expects the economy to go. If the language of the ECB President appears “hawkish”, which means he seems concerned about inflation, this could result in future rate hikes, which is good for the euro. Alternatively, if the language appears “dovish,” which means he believes inflation is tame, then future rate hikes will tend to be less likely.
4. GDP/Economic Growth
Report to Focus On: Eurozone GDP
The next factor that has a significant influence on the euro is the overall economic output of the eurozone. The economic growth and health of an economy is typically measured by the gross domestic product (GDP), which is a periodic measure of the value of the total goods and services produced in the eurozone. In general, growth in GDP is a sign that the economy is strong and healthy, which is positive for the currency.
The Eurozone GDP is a quarterly report prepared by Eurostat and released about two months after the end of the quarter. As you can tell, this makes the report rather untimely, and since analysts have several methods to gauge the strength of the economy, the GDP is usually anticipated in advance. Nevertheless, this report is still significant, and its release does tend to move the currency markets, especially if there is a surprise in the actual release relative to expectations.
5. Balance of Payments
Report to Focus On: Eurozone Trade Balance, German Current Account, French Current Account
Lastly, we’ll take a look at the balance of payments, specifically the trade balance and current account. The current account is one of the three accounts that make up the balance of payments for a country (the other two being the financial account and capital account). This report measures how a country interacts with other countries with respect to the trade balance, income payments and other payments.
The current account report is a monthly report, usually during the second week of each month. When interpreting this report, a current account surplus means there is more capital flowing into the country than there is exiting the country, which is positive for the currency. This occurs when exports exceed imports. A current account deficit means the opposite; more financial capital is leaving the country than there is coming in, which is negative for the currency. Because Germany and France are two of the largest countries in the EU, many traders will focus in on the current account report for these two nations.
The Bottom Line
There are hundreds of economic indicators that can affect the euro. Instead of simply listing reports, an in-depth look at those which are most important provides a more valuable analysis – the areas above affect the euro and the corresponding relevant reports. (Practice your trading skills in our free FX Trader!)

by Joseph Nguyen

Joseph Nguyen is an Research Analyst and contributing author at Investopedia. He graduated from the University of Alberta with a Bachelor of Commerce degree and specializes in financial analysis and research. Prior to joining Investopedia, he worked at a securities brokerage firm.

Read more: http://www.investopedia.com/articles/fx/11/5-reports-fx-traders-use.asp#ixzz1OlDCxwkP

 

>5 Reports That Affect The U.S. Dollar

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Currency traders are always seeking information that will provide insight into whether the value of the dollar is set to rise or fall. Just as there are a variety of indicators that stock traders use to track the health of the companies in which they invest, there are a variety of economic reports that provide insight into the future direction of the value of the dollar. (For more indicators, read The Fundamentals Of Forex Fundamentals.)
TUTORIAL: Economic Indicators
The ReportsFundamental analysis involves the use of data to discern information about an investment. Because economies are dynamic, the value of the insight provided by a particular data point at any given time can vary in importance. For example, when the U.S. economy is expanding, inflation fears may result in an increase focus on data points that indicate the presence of inflation. When the economy is contracting, reports that show a decrease in consumer activity may weigh more heavily on the direction of the dollar. For this reason, a broad range of economic reports are useful when conducting research on the dollar. Some notable macroeconomic indicators are highlighted below. Keep in mind that the actual statistics are often less important than their direction (rising or falling) and their success or failure in meeting pre-release expectations. Upside surprises can bring good news, while downside surprises can cause the currency to tumble. (To learn more about what drives the U.S. dollar, check out 3 Factors That Drive The U.S. Dollar.)

Trade BalanceThe trade balance report, which is jointly produced by the Bureau of Economic Analysis (BEA) and the U.S. Census Bureau, provides insight into import and export activity. The indicator within the Trade Balance Report that is most well known is the nominal trade deficit, which represents the current dollar value of U.S. exports minus the current dollar value of U.S. imports. When imports exceed exports, the nation is said to have a trade deficit. When the reverse is true, the nation is said to have a trade surplus.
A trade deficit is bad news for the dollar, as it means foreign goods are in demand. Those goods are ultimately purchased with foreign currency which creates a higher demand for foreign currency. A trade surplus, on the other hand, means that foreign consumers are buying more American goods. This results in demand for the dollar. The trade balance report is released approximately six-weeks after the end of the month it references (on or about the 15th of the month) at 8:30 A.M. Eastern Standard Time and covers the two prior months. (For more information on imports and exports, see What Is The Balance Of Payments?)
Nonfarm PayrollThe Nonfarm Payroll Employment Report, producedby the U.S. Department of Labor Bureau of Labor Statistics tracks the number of jobs added or lost each month. If the economy is adding jobs at a healthy pace, interest rates may move higher. Higher interest rates are attractive to foreign investors, increasing interest in and demand for the U.S. dollar. The opposite is also true, with job losses having the potential to push interest rates lower and weaken demand for the dollar. The Nonfarm Payroll Report is released on the following Friday after the conclusion of the reference month at 8:30 A.M. Eastern Standard Time. (To learn more about the Nonfarm Report, see Trading The Non-Farm Payroll Report)
Gross Domestic ProductGross domestic product (GDP) tracks the monetary value of all the finished goods and services produced within a country’s borders in a specific time period. It is used as a measure of the nation’s health. Similar to the nonfarm payroll number, if GDP is rising, interest rates tend to rise. Higher interest rates attract foreign investors and the dollar tends to rise. If GDP is falling, the dollar tends to fall. The Bureau of Economic Analysis releases GDP data at 8:30 AM Eastern Standard Time on the last day of each quarter. (For more information, read The Importance Of Inflation And GDP.)

Retail SalesRetail sales is an aggregated measure of the sales of retail goods over a stated time period. Strong sales suggest a strong economy, while weak sales suggest a weak economy. Here again, strength in sales equates to strength in the dollar.
The Retail Sales Report is compiled and released by the Census Bureau and the Department of Commerce on a monthly basis. The report covers the previous month, and is released about on or about the 13th of the month at 8:30 AM Eastern Standard Time.
Industrial ProductionIndustrial production figures are based on the monthly raw volume of goods produced by industrial firms such as factories, mines and electric utilities in the United States. Also included in the industrial production figures are the businesses of newspaper, periodical and book publishing, traditionally labeled as manufacturing. The industrial production data usually reflect similar changes in overall economic activity, so strong industrial production figures are a bullish sign for the dollar and weak data is a bearish sign. The Federal Reserve Board releases industrial production figures on or around the 16th of each month at 9:15 AM Eastern Standard Time. The data covers the previous month. (To learn more about the retail sales report, industrial production data and other indicators, see Using Coincident And Lagging Indicators.)
Beyond the IndicatorsA whole host of additional indicators, including but not limited to reports on inflation, home sales and foreign purchases of U.S. Treasury securities also affect the direction of the dollar, but there are other factors at work too.
Government plays a significant role in the strength of the dollar, as foreign investors are watching for signs of stability and prosperity. Steady, consistent policies, a stable geopolitical outlook and tax cuts for consumers are all positive developments for the dollar. On the other hand, terrorist attacks, wars, increased government spending and unpopular presidents are all bad news for the country and bad news for the dollar.
Overseas developments also come in the play, as factors such as a strengthening euro or a decrease in foreign reserves (dollars held by foreign countries) are bad for the dollar while instability in foreign nations is good for the dollar. With such a large number of diverse factors playing a role in the value of the dollar, investors have plenty of data to consider when investing in currency. (For more on the dollar, see The U.S. Dollar’s Unofficial Status as World Currency.)

by Lisa Smith

Read more: http://www.investopedia.com/articles/forex/11/five-reports-that-move-usd.asp#ixzz1OlCikvo2

 

>5 Reports That Affect The British Pound

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The pound sterling (GBP) is one of the more popular currencies traded in the foreign exchange (forex) market. As the home currency of the United Kingdom, the pound sterling has a rich history and is the oldest actively traded currency on the forex market. Its popularity also stems from the fact that London is one of the largest forex hubs in the world.
TUTORIAL: Forex Currencies
Due to its popularity and familiarity among traders, many people that begin to trade forex often choose the GBP as one of the currencies they trade. For traders that trade on fundamentals (economic reports and news events), knowing which reports to follow that affect the GBP the most can save them a lot of time and provide guidance on specific areas on which to focus their efforts. With that said, this article will pinpoint some economic reports that should be useful to newer traders as a starting point for further research.

Five Core AreasBefore we begin, it is important to understand that all currencies across different countries are generally affected by the same underlying economic factors. Specifically, five factors that tend to affect all currencies the greatest include monetary policy, price inflation, confidence and sentiment, economic growth (GDP) and the balance of payments. Using these five general factors as a template, you can then determine which reports are most important to form a comprehensive view of the direction of a currency. Having said that, let’s take a look at these factors as they relate the pound sterling and their corresponding economic reports. (Learn economics principles such as the relationship of supply and demand, elasticity, utility, and more in our Economics Basics Tutorial.)
Prices and InflationReport to Focus on: CPI, PPI
The first important factor, price and inflation, plays a crucial role in the value of the GBP. In general, countries with high levels of inflation relative to other countries see their currency value depreciate more compared to those other currencies. In addition, inflation also usually causes the central bank to take action, such as adjusting interest rates to control these unwanted effects.
To gauge levels of inflation in the U.K., traders will typically follow the Consumer Price Index (CPI), compiled and released by the Office for National Statistics. The CPI calculates the change in prices of goods and services purchased by consumers in a given period. This report is important because it is the measure that the Bank of England (BOE) uses for its inflation target. Any changes in the CPI that deviate from the BOE’s inflation target could imply future monetary policy action that could significantly affect the GBP. (Learn more about the CPI in The Consumer Price Index: A Friend To Investors.)
In addition, although consumer prices tend to affect the majority of changes in the level of inflation, other measures such as the Producer’s Price Index (PPI) are also useful. The PPI is considered by many a leading indicator of inflation because it shows inflationary changes at the raw material level that could eventually work its way up to the consumer level as reflected in the CPI. The PPI report is also released earlier than the CPI, so both should be viewed together for a more complete picture.
Monetary PolicyReport to Focus on: Bank Rate, BOE Inflation Report
Monetary policy enacted by the Bank of England (BOE) is also an important factor to consider. One of the core mandates of the BOE is to promote monetary stability defined by the bank as “low inflation and confidence in the currency.” Whenever the BOE feels that inflation is getting to a level that threatens the stability of the pound, the bank will use monetary policy tools at its disposable to control inflation. It is the timing of these monetary policies, such as interest rates changes that traders want to predict.
To keep track of monetary policy, traders will follow the changes in the bank rate, which is the interest rate banks charge other banks on balances held at the BOE. The rate decisions are determined by the Monetary Policy Committee (MPC) on a monthly basis and can be found at the Bank of England website. Of note is that if the MPC simply maintains the previous bank rate, there will generally be no accompanying discussion. However, if there is a change in the rate, the MPC will release a statement which is more interesting and can give clues about future action.
Confidence and SentimentReport to Focus on: Gfk Consumer Confidence, Nationwide Consumer Confidence
Surveys that gauge market sentiment are another important tool for fundamental traders. Confidence and Sentiment reports for the U.K. are important because traders want to know whether the majority of people are optimistic about the economy or pessimistic. The changes and the size of the change can be keys to detecting shifting trends in the underlying economy, and consequently changes in the GBP.
To track sentiment in the U.K., many traders will follow the Gfk Consumer Confidence and the Nationwide Consumer Confidence Index (NCCI) reports. Both reports are surveys based on five questions that relate to the general economic environment, employment and expectations for the future. The main difference between the reports is the time periods used. For the NCCI, the survey reflects the respondent’s feelings towards their current situation and their expectations for the next six months. On the other hand, the Gfk reflects the respondent’s feelings towards events that happened in the previous 12 months, and their expectations for the next 12 months. Both can be used to gauge sentiment towards the direction of the U.K. economy.
GDP/Economic GrowthReport to Focus on: Manufacturing PMI, Services PMI, Retail Sales, GDP
The overall level of economic activity in the U.K. is another key factor that can impact currency values. The primary measure of economic activity in the U.K., as in many other countries, is the gross domestic product (GDP). There are three different GDP reports traders should be aware of – Preliminary GDP, Revised GDP and Final GDP. The Preliminary GDP estimate is released the earliest and tends to have the biggest impact because it gives traders a first look into the economic health of the U.K. The Prelim GDP is also the least accurate and tends to be revised in the follow-up Revised GDP and Final GDP reports.
In addition, because the GDP is a quarterly report, many traders will supplement that report with more frequent indicators of economic activity such as retail sales, manufacturing PMI and services PMI. As consumers are generally considered by many as the drivers of economic activity, retail sales is usually given a larger weighting of importance.
Balance of PaymentsReport to Focus On: Trade Balance, Current Account
Lastly, the balance of payments (BoP) for a country is an accounting record of its interaction with the rest of the world. The BoP is made up of three accounts, but generally only the current account is of interest to forex traders. The current account shows how much a country is exporting and importing, and the flow of income payments and transfer payments. In general, a current account surplus is positive for the currency as it shows more capital is flowing into the currency than leaving, and a deficit is negative for the opposite reasons.
Also, it should be noted that the trade balance report is released monthly, while the current account is released quarterly. If you are just looking for imports/exports data, then the trade balance would be the report to use.
The Bottom LineThere are numerous economic indicators that can affect the pound. Knowing which data reports to use is the first step. Being able to interpret and combine reports to generate a trading direction is the hard part. However, if you are starting out and want to base your pound-based trades on fundamental reports, these five key areas are a good place for you to start.

by Joseph Nguyen

Joseph Nguyen is an Research Analyst and contributing author at Investopedia. He graduated from the University of Alberta with a Bachelor of Commerce degree and specializes in financial analysis and research. Prior to joining Investopedia, he worked at a securities brokerage firm.

Read more: http://www.investopedia.com/articles/forex/11/five-reports-affect-the-pound.asp#ixzz1OlCDJiwx

 

>Raihlah Keutamaan di Sepuluh Hari Terakhir Ramadhan!

>Keutamaan Lailatul Qadar

Lailatul Qadar adalah suatu malam yang penuh dengan keutamaan dan barokah. Allah Subhanallahu wa Ta’ala Yang Maha Pemberi barakah telah menjelaskan hal itu dalam surat Al Qadr (artinya):

“Dan tahukah kamu apa malam lailatul qadar itu?. Yaitu suatu malam yang lebih baik dari seribu bulan. Pada malam itu turunlah para malaikat dan ruh (malaikat Jibril) dengan izin Rabbnya untuk mengatur segala urusan. Malam itu penuh dengan kesejahteraan sampai terbit fajar.” (Al-Qadr: 2-5)

Sehingga malam itu pun dipenuhi barakah yang berlimpah ruah, sebuah ibadah yang dilakukan pada malam itu dengan ikhlas dan sesuai dengan petunjuk Nabi Muhammad Shalallahu ‘alaihi wa Sallam lebih baik daripada ibadah yang dilakukan selama seribu bulan selain Ramadhan. Tentu keutamaan yang amat besar ini akan membuat hati yang jernih dan akal yang sehat terdorong dan berharap untuk dapat meraihnya.
Kapan terjadinya lailatul qadar?

Malam lailatul qadar terjadi pada bulan Ramadhan, sekali dalam setahun. Rasulullah Shalallahu ‘alaihi wa Sallam bersabda:
الْتَمِسُوهَا فِى الْعَشْرِ الأَوَاخِرِ – يَعْنِى لَيْلَةَ الْقَدْرِ – فَإِنْ ضَعُفَ أَحَدُكُمْ أَوْ عَجَزَ فَلاَ يُغْلَبَنَّ عَلَى السَّبْعِ الْبَوَاقِى

“Carilah lailatul qadar pada sepuluh malam terakhir bulan Ramadhan, jika ada diantara kalian lemah, maka jangan sampai luput dari tujuh malam yang tersisa (terakhir).” (HR. Al-Bukhari dan Muslim)

Dalam riwayat Al-Imam Muslim yang lain, Rasulullah Shalallahu ‘alaihi wa Sallam bersabda:
… فَاطْلُبُوهَا فِى الْوِتْرِ مِنْهَا

…. maka carilah pada malam yang ganjil dari sepuluh malam terakhir bulan Ramadhan.”

Al-Hafizh Ibnu Hajar rahimahullah berkata dalam Fathul Bari: “Pendapat yang paling kuat tentang terjadinya lailatul qadar adalah pada malam ganjil dari sepuluh malam terakhir bulan Ramadhan dan terjadinya tidak menetap pada malam tertentu dalam setiap tahunnya.”

Adapun memastikan suatu malam dari bulan Ramadhan bahwa ia adalah malam lailatul qadar (di tahun tersebut), maka membutuhkan dalil (yang shahih dan jelas) dalam penentuannya. Namun malam-malam ganjil pada sepuluh terakhir itu hendaknya lebih dijaga dibanding selainnya, dan malam keduapuluh tujuh hendaknya lebih dijaga lagi daripada malam-malam ganjil selainnya yang dimungkinkan bertepatan dengan lailatul qadar. (Lihat Fatawa Al-Lajnah Ad-Da`imah li Al-Buhuts wa Al-Ifta`)

Apa yang seharusnya dilakukan di malam tersebut?

Pertama: Bersungguh-sungguh pada sepuluh malam terakhir melebihi kesungguhan pada malam-malam selainnya, dalam hal shalat, membaca Al-Qur’an, berdo’a, dan ibadah-ibadah yang lainnya. ‘Aisyah s menceritakan:
كَانَ رَسُولُ اللهِ -صلى الله عليه وسلم- إِذَا دَخَلَ الْعَشْرُ أَحْيَا اللَّيْلَ وَأَيْقَظَ أَهْلَهُ وَجَدَّ وَشَدَّ الْمِئْزَرَ

“Dahulu Rasulullah Shalallahu ‘alaihi wa Sallam jika memasuki sepuluh malam terakhir, beliau menghidupkan malamnya, dan membangunkan keluarganya, serta mengencangkan tali pinggangnya.” (HR. Al-Bukhari dan Muslim)

Dalam riwayat Al-Imam Ahmad dan Muslim: “Dahulu beliau Shalallahu ‘alaihi wa Sallam bersungguh-sungguh pada sepuluh malam terakhir yang tidak sama kesungguhannya dengan malam-malam selainnya.”

Kedua: Menegakkan shalat tarawih dengan penuh keimanan dan hanya mengharapkan pahala dari Allah. Nabi Muhammad Shalallahu ‘alaihi wa Sallam bersabda:
مَنْ قَامَ لَيْلَةَ الْقَدْرِ إِيمَانًا وَاحْتِسَابًا غُفِرَ لَهُ مَا تَقَدَّمَ مِنْ ذَنْبِهِ

“Barangsiapa yang menegakkan shalat pada malam lailatul qadar dengan penuh keimanan dan hanya mengharapkan pahala dari Allah, maka pasti akan diampuni dosa-dosanya yang telah lalu.” (HR. Al-Jama’ah, kecuali Ibnu Majah).

Ketiga: Membaca do’a sebagaimana yang diajarkan Nabi Shalallahu ‘alaihi wa Sallam kepada ‘Aisyah radliyallahu ‘anha. ‘Aisyah radliyallahu ‘anha berkata: “Wahai Rasulullah, bagaimana pendapatmu jika aku menjumpai suatu malam bahwa itu adalah malam lailatul qadar, apa yang harus aku baca pada malam itu? Rasulullah Shalallahu ‘alaihi wa Sallam menjawab: “Ucapkanlah (berdo’alah):
اللَّهُمَّ إِنَّكَ عَفُوٌ كَرِيمٌ تُحِبُّ الْعَفوَ فَاعْفُ عَنِّي .

“Ya Allah! Sesungguhnya Engkau Maha Pemaaf Maha Mulia lagi suka memaafkan, maka maafkanlah aku.” (HR. At-Tirmidzi)

Sumber : http://www.assalafy.org/mahad/?p=535

 

>A Bank, at Your Service (2)

>

Business owners may worry that one drawback of signing up with a de novo bank is that it’s built to flip. And in some cities, there are already well-known serial bank entrepreneurs. Of course, any business you work with can be sold at any time. But according to the FDIC, only 5% of de novo banks are acquired in their first five years of business.

Meanwhile, more de novos are chartered every week. Consider the extraordinary case of Square 1 Bank, based in Durham, N.C., which was formally established last August. Initially, a group led by CEO Richard Casey set out to raise $105 million, the amount specified in its charter and an unusually large sum for a de novo bank. In fact, the offering was oversubscribed at $200 million.

Like other de novos, Square 1 was set on course by a merger. Casey had been an executive at Imperial Bank, where he initiated a program for lending to venture capital-backed companies. Imperial was then taken over by Detroit-based Comerica Bank. Casey left after a year, waiting out his noncompete clause, and then joined with former colleagues to launch Square 1. “It was a case of getting the old band back together,” he says.

Today, Square 1 focuses on what it perceives as an underserved niche: companies that are backed by venture capital. The fledgling bank set up offices in technology parks in cities such as Austin, Seattle, North Carolina’s Research Triangle, and Palo Alto, Calif. The plan is to provide a full range of banking services to this narrow band of clients. Casey and his team have knowledge of and ties to that community that run deep, he says.

Like other start-up bankers, he brings decades of experience to a bank that is brand new.
Looking for Account Ability

As with any start-up you work with, a de novo bank requires careful vetting

How do I find a de novo bank near me?
One way is to search the FDIC’s Institution Directory. You can search for banks by state or Zip code and date of charter. You can also call state banking authorities or the federal Comptroller of the Currency, whose office formally issues bank charters.

How can I do due diligence on a de novo?
All banks must be insured by the FDIC to get a charter. By using the “bank find” feature on the FDIC’s website, you can verify the insurance status of a bank. You can also call the FDIC hot line at 877-ASK-FDIC (877-275-3342).

How can I make sure the bank is right for me?
A lot of this will boil down to personal chemistry. You should also find out what the bank’s assets are and how many customers it has. The typical de novo bank with $15 million in assets will have a loan maximum stated in its charter. If the cap is, say, $2 million, and you need that much or more, look elsewhere.

Dan Ackman can be reached at d.ackman@comcast.net.

 

>A Bank, at Your Service (1)

>

By: Dan Ackman

Business owners have always had a love-hate relationship with their bankers–and these relationships have only become more strained as local banks have been gobbled up by large corporations in recent years. Sure, Citigroup and Bank of America offer their clients ubiquitous branches and online banking and even prestige–and there’s nothing wrong with that. But try getting a line of credit extended quickly, let alone getting one of the bank’s higher-ups on the phone. It rarely happens. And yet there’s hope. As the total number of banks shrinks rapidly, a new breed of entrepreneur-friendly bank is emerging to fill the void.

The boomlet of start-up activity comes after 20 long years of consolidation in the banking world. At the end of 2004, there were 7,630 banks in the United States, according to the Federal Deposit Insurance Corp. That’s roughly half as many as there were at the end of 1984, the year the population of banks peaked.

But as the overall number of banks has dwindled, start-up activity has begun to tick upward. In 2004, 127 start-up, or “de novo,” banks were established. Another 147 banks received charters in the first 10 months of this year–up from the 94 start-ups in the same period two years ago. The typical de novo raises approximately $15 million in assets at the time of its launch.

Consolidation is fueling this trend, creating gaps in the market and displacing experienced bank executives who are in a position to raise money and to obtain a charter. Local business owners are also often involved in bank start-ups, as investors or as proponents–nurturing the trend perhaps because they sense the need for a bank renaissance the most.
“Welcome, Lon Getlin!”

Thurston First Bank is a prototypical de novo. Last year, Michael Edwards, who has worked in banking since 1963, raised $11.4 million from 375 investors–a mix of professionals and civic-minded business owners–to launch the Olympia, Wash., bank.

Like all de novo banks with limited assets, Thurston First serves a small number of clients–just 125 at this point. Unlike most, it caters exclusively to a business clientele and avoids all forms of consumer banking, operating without an advertising campaign or even a public branch. Companies that bank with Thurston First are typically too big for a standard community bank, says Edwards, but are too small to be well cared for by one of the major national institutions. Among Thurston First’s specialties: land, commercial real estate, equipment financing, and asset acquisition loans. It offers personal banking services to its customers only after it has established a track record with them as business clients.

Thurston First further differentiates itself by offering great perks, including a mobile branch that will pick up deposits at a customer’s office. The bank also deploys remote deposit technology. A customer can have deposit checks read by a special scanner on his desk. Funds are disbursed to the correct account without the customer or even the paper check leaving his office.

Such up-to-date technology is one of the hallmarks of the newest crop of de novos. In the past, only bigger banks could afford to offer online banking and the like, but now so many systems can be outsourced that newer, smaller banks can match or even beat the systems offered by their regional or national rivals.

Beyond systems or services, however, a personal relationship with the head of the bank is the key to the de novo’s sales pitch. Thurston First’s Edwards, for example, encourages customers to call him on his cell phone.

This is not uncommon in the de novo world. Lon Getlin, who runs a pharmaceutical supply business in West Linn, Oreg., used to split his business between Bank of America and Wells Fargo. He switched to the Bank of Oswego in Lake Oswego, Oreg., after he met Dan Heine, co-founder and CEO of the bank. Heine promised Getlin favorable terms on a line of credit, but he also agreed to review his business plan and provide details on financing options above and beyond what the typical bank would offer. And when Getlin comes to the bank to meet with Heine, he is greeted at the door by a sign that welcomes him by name. “I was totally impressed by a whole bunch of things that they said they would do and in fact did,” says Getlin.
“Getting the Band Back Together”

Certainly part of the reason for the boomlet in de novo banks is that the market for raising capital is as favorable as it has been for some time, says Edward Carpenter, chairman of Carpenter & Co., an Irvine, Calif., investment bank that advises banks on financing and acquisitions.

With banks reporting strong profits, Carpenter says, investors are eagerly pouring capital into the industry. Net income for all banks in 2004 was $104.7 billion–up 43% from three years earlier, according to FDIC data–with small banks outperforming the industry average. Shares of banks with assets of less than $500 million have increased by 181% over three years, Carpenter says. Such growth fuels heady prices when small bank shares are traded and when banks are sold. Banks involved in mergers are selling for nearly 25 times earnings.

 

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The Wall Street Journal

A staple of office waiting rooms everywhere, the Journal does not offer corporate discounts for bulk orders to new subscribers. Check for special offers on the comparison-shopping sites as well as newspaper specialists subscription-offers.com and discountednewspapers.com. And check the paper’s website, too. At the time of writing, an offer for new subscribers made dealing directly with the publisher the cheapest option out there by far (56 weeks for $99); only one third-party distributor was able to beat the regular yearly subscription price of $215. (Note: This special offer was available online only; operators at the Journal’s 800 number did not mention or even acknowledge this option.)
The Clean-Up Crew

Any cleaning service you hire should be bonded and insured–if cleaners mess up your stuff, or themselves, you don’t want to get stuck with the bill. Prices for that will be higher than for under-the-table help, but worth it. Remember, cleaning people often work when the office is empty; you need to be able to trust them. Make sure the company does background checks on workers, and check multiple references.
Old-school long-distance service

Negotiate directly with carriers or go through resellers, or CLECs (competitive local exchange carriers), which tend to price more aggressively and be more focused on the needs of smaller businesses than the large telecoms. There are many sites that let you solicit bids and compare rates, including PhoneSaver.com and BuyerZone. As you compare services, look for one that will bill the shortest time increments possible for long-distance–one- to six-second intervals, rather than 30-second ones. The smaller increments can translate into savings of 10 percent or so.
International calling

It’s not a substitute for a traditional phone system, but Skype, which lets you make calls directly from your computer, is a useful supplement if international calls are a big part of your phone bill. The quality usually can’t match a good phone connection, but the prices can’t be beat. Calls to other Skype users (through your computer) are free wherever you’re calling from, and calls to landlines and cell phones in the U.S., much of Europe, China, and Japan cost about two cents per minute.
Broadband: Why You Need a Broker

Unless you have a strong preference for a particular provider, you’ll generally get better rates through a broker–brokers do the comparison shopping for you, and because they buy in bulk, tend to have greater negotiating leverage. Typically, there is no charge to the consumer in working with a broker; instead, the providers pay the brokers a fee. Look for resellers that have been in business at least a few years, and make sure they show you quotes from several providers. Broadband is an extremely competitive market, so avoid getting locked into a long-term contract. Most companies require a two-year minimum commitment–don’t sign up for a longer term. You can solicit quotes from multiple vendors and resellers at comparison-shopping sites.
Office Design

Most professional designers charge between $75 and $200 an hour. But hiring one can actually wind up saving you money. Designers often see possibilities that you do not. A designer might suggest ways to use inexpensive materials and built-ins–using melamine boards in place of desks, for example–that can help reduce the amount of office furniture you need to buy. And when you do buy, designers get discounts of as much as 50 percent. The trick is to keep your designer on a short leash by defining the task at hand as narrowly as possible. To find a designer, go to asid.org, the website of the American Society of Interior Designers, and click on the “Find a Designer” link.
Before You Buy

Thanks to the Web, comparison shopping is a cinch. Sites such as Bizrate.com, PriceGrabber.com, Shopping.com, and NexTag.com may turn up the deal you’re looking for on any number of items. The following sites may be helpful for specialized searches.
Broadband service Broadband.com
Broadbandbroker.com
Buyerzone.com
EverythingT1.com

Business equipment leasing Buyerzone.com

Commercial real estate Equityoffice.com
Cushwake.com (click on “Property Listings”)
Grubb-ellis.com (click on “Properties”)

Computers/software Shopper-zdnet.com
Shopper.cnet.com

Credit cards Creditcards.com
Creditcardguide.com
Myrateplan.com

Newspaper subscriptions Subscription-offers.com
Discountednewspapers.com

Phone plans and systems Phonesaver.com
Buyerzone.com

 

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The best rate on credit cards

Start by checking out what your bank offers, then do some comparison shopping. As with personal credit cards, there are numerous no-annual-fee cards out there, so avoid paying such charges unless you truly require the particular services or reward-program benefits of a certain card. At sites like CreditCardGuide.com, CreditCards.com, and MyRatePlan.com (go to the credit card section), you can compare cards and apply online.
Fun and Games

Nothing succeeds in conjuring that giddy dot-com mood quite like little plastic soccer players. A new Striker foosball table retails for $699. But you almost always can find better deals at online specialty stores, many of which also include free shipping–which is no small matter, since delivery of a foosball table can cost a couple hundred bucks.

Here’s a sampling of some of the best deals on office amusements:
Foosball Table Striker foosball table
$499, shipping included, at justfoosballtables.com

Air Hockey Carrom Premium Hydralumina With Scoring, six-foot model
$540, shipping included, at christophersgames.com

Ping-Pong Table Prince Competitor table tennis table
$359, shipping included, at dickssportinggoods.com
Pool Table Charleston eight-foot table
$1,787, crating and air freight included, at pooltables-direct.com

Pinball/Arcade Simpsons game
$4,800, with shipping, christophersgames.com
1979 Space Invaders cocktail table arcade game
$700 (plus $350 shipping), recently listed on eBay
Turn Your Office Into an Art Gallery

Why buy pricey art for your office walls when you can rent? A number of major art museums have rental programs–and many will even help you choose the best pieces for your space. The Artists Gallery at San Francisco’s Museum of Modern Art charges about $350 to rent a $5,000 painting for three months; a $1,000 painting rents for $170. Like most museum rental programs, SFMOMA’s program focuses on local talent and has thousands of work in all media; photography tends to be the least expensive option. Other museums with rental programs include Los Angeles County Museum of Art, Portland Museum of Art, the Seattle Art Museum, and the Racine Art Museum in Racine, Wisconsin. Local galleries may also rent to businesses.
The Office of Your Dreams

Right now, the cheapest downtown Class A rents in major markets can be found in Atlanta, Dallas, Denver, and Seattle–places where $20 per square foot can land you palatial digs that would cost three times as much in New York City. Wherever you live, make sure you keep up with local business news. When companies close, downsize, or move out of town, they’re often left with time on their existing leases. “Subleasing is where a smaller business can really pick up a bargain,” says Andrew Abramson, a senior vice president with Grubb & Ellis in Washington, D.C. Abramson points out that in addition to lower rent, expensive improvements that were made by the previous tenant–such as phone systems and furniture–are often thrown into the deal as an incentive. Meantime, if you forgo a view and instead take lower-floor or obstructed-view space, you can save anywhere from 10 to 30 percent on rent. (Go to grubb-ellis.com/research to check pricing in markets throughout North America.)
Location, Location, Location

How much do real estate prices fluctuate nationwide? To find out, we searched for Class A office space in three major markets–Denver, Atlanta, and San Francisco. In each city, we found a plush office of about 6,000 square feet (enough for about 20 people) in a fancy, downtown building with all the amenities-health club, concierge services, covered parking, etc. The annual lease rates, of course, were all over the map.
San Francisco $37 per square foot
Denver $25 per square foot
Atlanta $29 per square foot

 

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Website Hosting and Design

Some broadband providers offer free hosting with their service. If yours doesn’t, consider one of these low-cost options, all of which include easy-to-use design and e-commerce tools and templates to get your site up and running quickly.
Yahoo Hosting and domain registration: $12 per month and up
E-commerce: $40 to $300 per month, depending on sales volume

Homestead Hosting and domain registration: $20 to $50 per month (plus $20 setup fee)
E-commerce: $7 to $60 per month

Microsoft Office Live Hosting and domain registration: Basic service is free; added features cost $30 a month
Web Traffic Analysis

Google Analytics is a free and useful Web analytics tool–if you can get it. Right now there’s a waiting list that doesn’t seem to be budging. Fortunately, Google is far from your only affordable option. Check out ClickTracks’ Analyzer, a basic hosted service that charges $49 per month (or buy the software for $495); Web analytics program SmarterStats 3.0, free for use on a single website (available at download.com); StatCounter, free for up to 250,000 page views; and Site Meter, which starts at $9.95 per month. Numerous free trial versions of other programs are available, too–which can at least hold you over if you decide to wait for your Google spot to open up.
Industrial Space

Even in the information age, manufactured goods can’t telecommute. That’s why industrial space–factories, warehouses, distribution centers–always costs more the closer it is to large population and transportation centers. Prices decline the farther out you move, but then transportation costs go up–so what appears to be a bargain often is not. The right balance is easiest to strike in less pricey “second-tier” cities such as Columbus, Indianapolis, and Louisville, as well as on the fringes of primary markets–places such as eastern Pennsylvania, lower New York state, and northern Los Angeles County.
Aeron Chairs

Go to authorized Herman Miller dealers first and think of the advertised price as a starting point. Even if you’re buying just 10 or 20 chairs, you can bargain. “Every contract is individually negotiated,” says Herman Miller spokesman Bruce Buursma. Dealers often have used chairs coming back from leases, which can cost 20 percent less than new ones. Consider lower-cost models too–Herman Miller’s basic Celle chair, for example, offers Aeron-like features for about $499, compared with $699 for a basic Aeron. If you’re not making progress with the brick-and-mortar dealers, go online. Here’s what a recent price comparison turned up (all prices include shipping):
New Aeron Chair $699 at officedesigns.com, ultimatebackstore.com, sit4less.com, homeofficesolutions.com (volume pricing available)

“Like New” Aeron Chair (floor models or returns) $519 at luxurychair.com, $560 at trendychair.com, $539 at sit4less.com’s clearance section

Aeron Look-alikes Sit4Less “E” Chair, $399 at sit4less.com
Ergonomic eChair, $319 at luxurychair.com
Mesh eChair, $269 at designerseating.com
A serious coffeemaker–and serious coffee

If you consider a super automatic espresso machine to be a super productivity booster, check out the “outlet” section of wholelattelove.com, which sells manufacturer-refurbished machines at deep discounts–a Jura-Capresso Impresa S9 (list price, $2,400) goes for $1,399, shipping included. As for beans, get the gourmet stuff from old-school coffee roaster D’Amico Foods, which ships nationwide from its store in Brooklyn–at great prices ($6 a pound for the house blend espresso).

 

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A company car–plus a tax break

Under the Energy Policy Act of 2005, individuals and businesses that buy or lease a new hybrid gas-electric car or truck, or an alternative-fuel or fuel-cell vehicle, are eligible for an income-tax credit of up to $3,400, depending on the fuel economy and the weight of the vehicle. (This credit is in addition to the regular depreciation or lease expense you’re allowed to deduct for any vehicle.) If you buy more than one vehicle, you get a tax credit for each. This tax credit applies to vehicles “placed in service” beginning January 1, 2006. Once a manufacturer has sold 60,000 eligible vehicles, the tax credit for its cars will be reduced, and eventually eliminated. So get on it now.
When buying a printer, check out the “print yield”

A cheap inkjet may be easy on the wallet today, but it’ll end up costing you more later. That’s because with printers, it’s all about consumables–paper, toner, etc. For example, with a $300 laser printer and compatible cartridge, it costs $30 to print 1,000 pages (black ink only); with an $80 inkjet printer from the same manufacturer, the same print run costs $100. After a little more than 3,000 pages, the more expensive printer has paid for itself. Check out the “print yield” specs for the toner cartridges the printer requires, and divide the price by that number–that’s your cost per page. Let that number, not the cost of the printer, guide you to the real bargains.
Retail Space

Mall tenants may enjoy foot traffic, but that traffic comes with a steep price tag–incidental costs can run from $18 to $55 per square foot per year. Wherever you set up shop, scrutinize your lease for so-called pass-throughs–charges on top of the basic rent for things like common-area maintenance–and make sure you’re paying a share that’s proportionate to the actual square footage you’re occupying. Another way to save: Minimize your square footage in an expensive retail area by leasing storage space in a cheaper space off the premises.
Stress-Free Employees

Treating your staff to monthly massages may seem like a needless indulgence, but it can save you in the long run. Research shows that employees are more productive on quantitative tasks after massages and report feeling less stress. There is also, not surprisingly, less absenteeism on days that massages are scheduled. And because office massage specialists provide education about ergonomics and repetitive-stress injuries, you may reduce the costs of such injuries. A 15-minute seated massage–about the time of a coffee break–is all it takes to realize the benefits. On-site massage rates vary by location–expect hourly rates of about $75 and up in larger cities (a massage therapist will typically fit in three 15-minute massages per hour). Go to amtamassage.org and use the locator service to find a qualified provider in your area.
Corporate jet: a good option for small groups

It’s a bit of a stretch to call a company jet a bargain, but look at the upside. There’s no penalty for booking last minute, so it’s attractive if you make spur-of-the-moment trips. And since jet operators charge by the hour, not per person, a private flight can be a good option for flying small groups (midsize jets can accommodate about eight). Full or fractional ownership requires laying out millions up front, but Sentient and Blue Star Jets’ SkyCard program offer membership plans that give you planes on demand for less than the cost of fractional or outright ownership. With both companies, you make an initial deposit (minimum $100,000 for Sentient, $50,000 for Blue Star) and funds are deducted as you use flight time (hourly fees start at about $2,000).
Deals on PCs

Comparison shopping is a no-brainer. But with PCs, you’ll be surprised at how large the price variations are for identical products. A recent search on comparison-shopping site NexTag, for example, turned up about 20 different vendors offering new Toshiba Portege R200 laptops for prices ranging from $1,162 to $2,159. Another useful tool is NexTag’s “Price Drops” section, which tracks the market in a range of tech categories and reveals, for example, that in April, the best price for an IBM Thinkpad T43P abruptly dropped 25 percent.
Travel Tips

Travel is typically a company’s second or third largest controllable expense, and one way to control it is to implement a managed-travel program. Most of the online booking services have launched programs for small companies. Expedia Corporate Travel ($149 a year) and Orbitz for Business (fees vary according to use) drive down travel expenses by 10 percent or more by lowering transaction fees (an average of $5 per ticket, compared with about $30 for traditional agencies) and negotiating discounted rates with airlines, hotels, and rental car companies. Obviously, the larger the company, the larger the discount a travel service can negotiate. But in some markets, just being able to offer an airline or hotel a 10 percent incremental increase in your company’s business can be a potent bargaining tool. American Express’ small-business travel program (starts at $500 a year; $100 for small-business cardholders) offers discounts on airfares of up to 15 percent on domestic flights and 35 percent on international trips. AmEx also promises to beat any fare you find online.