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How to find a derivative

how to find a derivative

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A. Identify Local Banks

1. Get the list of the banks and credit unions in your area from your local Yellow Pages. Delete names that you know to be large banks, including names on the Solari US Banking Tapeworm 20 List.

2. Visit your local Chamber of Commerce and ask them for a list of all banks in your area -- ask them to identify which only operate locally and/or regionally and which are owned locally or regionally, or, if credit unions, controlled locally.

A local bank is a bank that operates within your local area and is primarily owned or controlled by people who live within or near your local area.

A regional bank is one that operates in your state and a few other states and is owned and/or controlled by people based in those states.

B. Collect Information and Recommendations

1. Do Web searches to identify websites for the bankson your list and information they disclose. For banks that issue publicly traded stock or other securities, check their website or the EDGAR system to access the annual report, proxy and other filings they file with the US Securities and Exchange Commission (SEC).

2. For information not web available, call or visit the banks and ask for information regarding their area of operation, who owns and governs them, copies of their annual report (including financial statements) and information on and prices of products and services of interest to you. Also ask what % of their deposits they loan locally as opposed to reinvesting in national or international money markets and what their correspondent banking relationships are so you know whether or not they are channeling their funds to one of the US Banking Tapeworm 20. Use this % to compare to other banks in your area.

3. If they are reluctant to provide you with their financial statements or you find it difficult to persuade them to give you a copy, delete the bank from your list.

4. Tell you friends, family and trusted professionals and business people in your community that you would like to shift to a local bank and ask them for recommendations of which local and regional banks have provided them and their networks with the best service and support.

5. For the banks that emerge as the most likely candidates, you may want to check with the rating agencies or bank rating services to see what additional information is available about the bank. Another source of information on the banks history is to do Lexis-Nexis searches for both the bank and the owners, board members and top management.

6. Based on these steps, identify the 2-3 best potential banks for you and proceed to the next steps.

C. Evaluate The Banks' Leadership

1. Owners

Do they live in your community?

What is their reputation and experience?

2. Trustees/Governance

Do they live in your community?

What is their reputation and experience in banking, investments and the types of businesses, governments and other organizations that the bank serves?

Are they people of integrity and competence?

Are they motivated and caring people?

Do they care about their business and are they proud of the principles operating

in the bank?

Do they care about their customers and their colleagues?

3. Management

Do they live in your community?

What is their reputation and experience?

Is turnover low?

What is the spirit you feel when you walk into the bank?

Are they professional and proud of the organization that they represent?

Your intuition is an important guide. Talk to a loan officer or branch manager --- Do they have freedom to make decisions and do their jobs or are they heavily bound to top/down

procedures? See how they handle your request. Ask what the procedures are for a loan or opening an account. There is a often a direct correlation between better service and the less hoops that customers have to go through, less paperwork to fill out and less fees to pay.

D. Profitability and Financial Safety and Soundness

What is the customer base of the bank?

Does this customer base represent a strong diversified base of deposits and lending business?

Review their financial statements

Has the bank been consistently profitable?

Do they show a strong base of equity, retained earnings or other financial reserves?

What and who is generating the profits of the bank and what are the potential risks associated with those profit flows?

Do the bank financials indicate a sustainable flow of business that would be sound even in difficult economic periods?

Would the bank be safe and sound in a scenario where we could not depend on FDIC deposit insurance?

What is the ratio of their loans to deposits? Do they have extra cash reserves above what is required by law? This shows a conservative "loan to deposit'' ratio.

Does the bank avoid high risk financial practices such as too much debt and large derivative portfolios?

Who are their correspondent banks and other strategic relationships?

In the course of asking for recommendations, are there ever any instances of customers being delayed in accessing the cash in their account? Delays in getting your money out are a bad sign.

E. Locations & Services

What are the main office and branch locations and what are the days and hours when they are open?

Make a quick list of the products and services you now use as well as the products and services you would value -- items such as checking and savings accounts, wire transfer services, safe deposit boxes, ATM cards, credit availability and affiliated investment services.

What are the products and services available through the bank and their affiliates?

Compare this to the list of products and services you need and value.

F. Fees, Costs & Interest

Review the fees and costs of either switching your account or simply creating a new account.

What are the interest rates and payments they provide to depositors or investors in certificates of deposits?

If they are a credit union, what is their history of distributing profits?

G. Confirm Federal Deposit Insurance

If you want to confirm that the deposits at your new bank are indeed federally insured you can contact:

United States Federal Deposit Insurance Corporation (FDIC)

550 17th Street, NW

Washington, DC 20429-9990 USA


Category: Bank

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