Full-service Banks Research Articles

Payment Bank: A Catalyst for Financial Inclusion

The study investigates how newly licensed payment banks can favourably achieve inclusion goals of the Indian banking regulator by engaging with marginalised and migrant groups within the population pie, as envisaged by the banking regulator. The role of digitisation in making basic financial services available to such excluded groups has been explored within the study. In addition, the article attempts to critically assess the competitive implications such a new financial institution will have on the existing full-service banks. The study is grounded on the concept of payment banks as a crucial cog in a differentiated banking regime. Secondary information extracted from occasional reports/working papers of Reserve Bank of India (RBI) has been used to gauge the efforts towards realising inclusion goals. Perspectives of CEOs and banking practitioners have provided valuable inputs as to how the banking fraternity views payment banks and perceives them as a competitive threat. As the payment banking business model necessitates forging alliances with full-service banks, implications of such strategic alliances warrant research. The present study is an initial attempt to fill this gap in the extant literature.

Principal-Protected Equity-Linked Note

The case puts students in the shoes of a private banker who wants to price a structured note for European high net worth clients with low levels of risk tolerance. The principal-protected equity-linked note (PP-ELN) provides investors with fixed income–like principal protection together with upside exposure to the S&P 500 Index. The students are asked how the bank should allocate the client's money to buy call options and invest in zero-coupon bonds to deliver this PP-ELN and still earn a fee. By adjusting the amount of principal protection or capping the upside potential, the students can calculate whether there is an opportunity for increased upside participation. This financial engineering case can be used to teach put-call parity, option strategies, and Black-Scholes pricing. Excerpt UVA-F-1752 Mar. 10, 2016 Principal-Protected Equity-Linked Note At the end of the year, Mario Casals was flying out of Geneva for a small European country where he was the market leader for a Swiss bank. As a private banker, he provided full-service banking and investment advice to high net worth individuals. His private banking clientele consisted mostly of fairly conservative investors. Many were members of well-established families who had inherited their wealth. Others were entrepreneurs who had taken risks in their businesses but now were more interested in preserving wealth rather than taking large risks in financial markets. The bank used structured notes to cater to its clients' low levels of risk tolerance. Casals had found principal-protected equity-linked notes (PP-ELNs) to be the instrument of choice. The simplicity of the notes was their strongest selling point. These instruments provided investors with fixed income–like principal protection together with upside exposure to a reference asset of their choosing (e.g., an equity index). PP-ELNs were appropriate for investors who desired equity exposure with controlled risk. Investors had a good sense of the minimum amount of wealth they wanted to preserve, and potential returns above this minimum amount were nice to have but not necessary. Investment strategies leaving them with less than the current wealth, however, were not tolerable. Unlike typical insurance policies, PP-ELNs did not require investors to make an upfront payment for the protection they received. Instead, the protection was paid for by giving up their dividend, not receiving interest income, and giving up a portion of the upside gains in the event that equity markets rallied. Casals had reserved the short-haul flight to review again the characteristics of these notes and their pricing features. He had brought with him a short primer on PP-ELNs to refresh the basic concepts (see Exhibit 1). How attractive would these notes be to his private banking clients? . . .

The value of “boutique” financial advisors in mergers and acquisitions

Between 1995 and 2006 about a quarter of merging firms hired boutique banks as their advisors on mergers and acquisitions (M&A). Boutique advisors, often specialized by industry, are generally smaller and more independent than full-service banks. This paper investigates firms' choice between boutique and full-service advisors and the impact of advisor choice on deal outcomes. We find that both acquirers and targets are more likely to choose boutique advisors in complex deals, suggesting that boutique advisors are chosen for their skill and expertise. After controlling for the endogenous choice of advisors, we find lower deal premiums when acquirers hire boutique advisors. In addition, boutique advisors spend more time, probably on due diligence and negotiation, to complete deals. Overall, our findings suggest that boutique advisors are chosen in more complex deals and they achieve more favorable deal outcomes.

S&T Bancorp, Inc. (Indiana, PA.)

AbstractCommercial Banking (MIC: SIC: 6022 NAIC: 522110)S&T Bancorp is a bank holding company. Co. has two wholly owned subsidiaries, S&T Bank and 9th Street Holdings Inc. Co. also owns a one‐half interest in Commonwealth Trust Credit Life Insurance Co. S&T Bank is a full service bank providing services to its customers through a branch network located in Pennsylvania. S&T Bank's services include accepting time and demand deposit accounts, originating commercial and consumer loans, providing letters of credit, offering discount brokerage services, personal financial planning, credit card services and insurance products. As of Dec 31 2007, Co. had total assets of $3.42 billion and total deposits of $2.62 billion.

Sterling Bancshares, Inc. (TX)

AbstractCommercial Banking (MIC: SIC: 6022 NAIC: 522110)Sterling Bancshares is a bank holding company that provides commercial and retail banking to small‐ to mid‐sized businesses and consumers, mainly in the Houston, Dallas and San Antonio metropolitan areas through its full service banking centers. Co.'s commercial and consumer banking services include demand, savings and time deposits; commercial, real estate and consumer loans; merchant credit card services; letters of credit; and cash and asset management services. Co. also facilitates sales of brokerage, mutual fund, alternative financing and insurance products through third party vendors. As of Dec 31 2007, Co. had total assets of $4.54 billion and total deposits of $3.67 billion.

Capital City Bank Group, Inc.>

AbstractCommercial Banking (MIC: SIC: 6022 NAIC: 522110)Capital City Bank Group is a financial holding company. Through its bank subsidiaries, Co. provides traditional deposit and credit services, asset management, trust, mortgage banking, merchant services, bank cards, data processing, and securities brokerage services through 70 full service banking locations in Florida, Georgia, and Alabama. Co. also has a two mortgage lending offices located in Florida and one additional Georgia community. Co.'s principal banking services include business banking, commercial real estate lending, residential real estate lending, and retail credit. As of Dec 31 2007, Co. had total assets of $2.62 billion and total deposits of $2.14 billion.

Capital City Bank Group, Inc.

AbstractCommercial Banking (MIC: SIC: 6022 NAIC: 522110)Capital City Bank Group is a financial holding company. Through its bank subsidiaries, Co. provides traditional deposit and credit services, asset management, trust, mortgage banking, merchant services, bank cards, data processing, and securities brokerage services through 70 full service banking locations in Florida, Georgia, and Alabama. Co. also has a two mortgage lending offices located in Florida and one additional Georgia community. Co.'s principal banking services include business banking, commercial real estate lending, residential real estate lending, and retail credit. As of Dec 31 2007, Co. had total assets of $2.62 billion and total deposits of $2.14 billion.

Sterling Bancshares, Inc. (TX)

AbstractCommercial Banking (MIC: SIC: 6022 NAIC: 522110)Sterling Bancshares is a bank holding company that provides commercial and retail banking to small‐ to mid‐sized businesses and consumers, mainly in the Houston, Dallas and San Antonio metropolitan areas through its full service banking centers. Co.'s commercial and consumer banking services include demand, savings and time deposits; commercial, real estate and consumer loans; merchant credit card services; letters of credit; and cash and asset management services. Co. also facilitates sales of brokerage, mutual fund, alternative financing and insurance products through third party vendors. As of Dec 31 2007, Co. had total assets of $4.54 billion and total deposits of $3.67 billion.

S&T Bancorp, Inc. (Indiana, PA.)

AbstractCommercial Banking (MIC: SIC: 6022 NAIC: 522110)S&T Bancorp is a bank holding company. Co. has two wholly owned subsidiaries, S&T Bank and 9th Street Holdings Inc. Co. also owns a one‐half interest in Commonwealth Trust Credit Life Insurance Co. S&T Bank is a full service bank providing services to its customers through a branch network located in Pennsylvania. S&T Bank's services include accepting time and demand deposit accounts, originating commercial and consumer loans, providing letters of credit, offering discount brokerage services, personal financial planning, credit card services and insurance products. As of Dec 31 2007, Co. had total assets of $3.42 billion and total deposits of $2.62 billion.

The Value of 'Boutique' Financial Advisors in Mergers and Acquisitions

Over the period of 1995-2006, about 19% of acquirers and 25% of targets hire boutique banks as their M&A advisors. The expertise of boutique advisors in M&A advisory services may identify them as niche players in the industry. This paper is the first to investigate how merging firms choose between boutique and full service advisors and how this choice affects deal outcomes in M&A transactions. Firms are more likely to choose boutique advisors when facing a deal with greater complexity. After controlling for the endogenous choice of advisors by merging firms, we find that the deal premium paid in mergers is lower if boutique advisors are used on the acquirer side, indicating that acquirers’ shareholders benefit from the expertise of boutique advisors. On the other hand, we do not find that boutique advisors charge higher advisors fees, suggesting that boutique players are pressured by fierce competition from full service banks for market share.

S & T Bancorp, Inc. (Indiana, PA.)

AbstractCommercial Banking (MIC: 8.1 SIC: 6022 NAIC: 522110)S&T Bancorp is a bank holding company with total assets of $3.42 billion and total deposits of $2.62 billion as of Dec 31 2007. Co. has two wholly owned subsidiaries, S&T Bank and 9th Street Holdings Inc., and it owns a 50.0% interest in Commonwealth Trust Credit Life Insurance Co. S&T Bank is a full service bank with its main office located in Indiana, PA, providing services that include accepting time and demand deposit accounts, and originating commercial and consumer loans to its customers through a branch network of 46 offices located in Allegheny, Armstrong, Blair, Butler, Cambria, Clarion, Clearfield, Indiana, Jefferson and Westmoreland counties of Pennsylvania as of Dec 31 2007.

Sterling Bancshares, Inc. (TX)

AbstractCommercial Banking (MIC: 8.1 SIC: 6022 NAIC: 522110)Sterling Bancshares is a bank holding company that provides commercial and retail banking to small‐to mid‐sized businesses and consumers, mainy in the Houston, Dallas and San Antonio metropolitan areas through its full service banking centers. Co.'s commercial and consumer banking services include demand, savings and time deposits; commercial, real estate and consumer loans; merchant credit card services; letters of credit; and cash and asset management services. Co. also facilitates sales of brokerage, mutual fund, alternative financing and insurance products through third party vendors. As of Dec 31 2007, Co. had total assets of $4.54 billion and total deposits of $3.67 billion.

Capital City Bank Group, Inc.

AbstractCommercial Banking (MIC: 8.1 SIC: 6022 NAIC: 522110)Capital City Bank Group is a financial holding company. Through its bank subsidiaries, Co. provides traditional deposit and credit services, asset management, trust, mortgage banking, merchant services, bank cards, data processing, and securities brokerage services through 70 full service banking locations in Florida, Georgia, and Alabama. Co. also has a two mortgage lending offices located in Florida and one additional Georgia community. Co.'s principal banking services include business banking, commercial real estate lending, residential real estate lending, and retail credit. As of Dec 31 2007, Co. had total assets of $2.62 billion and total deposits of $2.14 billion.

S & T Bancorp, Inc. (Indiana, Pa.)

AbstractCommercial Banking (MIC: 8.1 SIC: 6022 NAIC: 522110)S&T Bancorp is a bank holding company with total assets of $3.34 billion and total deposits of $2.57 billion as of Dec 31 2006. Co. has two wholly owned subsidiaries, S&T Bank and 9th Street Holdings Inc., and it owns a 50.0% interest in Commonwealth Trust Credit Life Insurance Co. S&T Bank is a full service bank with its main office located in Indiana, PA, providing services that include accepting time and demand deposit accounts, and originating commercial and consumer loans to its customers through a branch network of 49 offices located in Allegheny, Armstrong, Blair, Butler, Cambria, Clarion, Clearfield, Indiana, Jefferson and Westmoreland counties of Pennsylvania as of Dec 31 2006.

First Charter Corp.

AbstractCommercial Banking (MIC: 8.1 SIC: 6021 NAIC:522110)First Charter is a bank holding company. Co.'s principal asset is the stock of its banking subsidiary, First Charter Bank (the Bank). As of Dec 31 2006, the Bank and Co.'s Gwinnett Bank subsidiary, both full service banks, collectively operated 59 financial centers and four insurance offices, as well as 139 ATMs in North Carolina and Georgia and operated loan origination offices in Asheville, NC and Reston, VA. Co.'s primary market area is located within North Carolina and is centered primarily around the Charlotte Metro region, including Mecklenburg County and its surrounding counties. As of Dec 31 2006, Co. had total assets of $4.86 billion and total deposits of $3.25 billion.

Capital City Bank Group, Inc.

AbstractCommercial Banking (MIC: 8.1 SIC: 6022 NAIC: 522110)Capital City Bank Group is a financial holding company. Through its bank subsidiaries, Co. provides traditional deposit and credit services, asset management, trust, mortgage banking, merchant services, bank cards, data processing, and securities brokerage services through 69 full service banking locations and four mortgage lending offices in Florida, Georgia, and Alabama. Co. also provides data processing services to financial institutions, government agencies and commercial clients located throughout North Florida and South Georgia. As of Dec 31 2006, Co. had total assets of $2.60 billion and total deposits of $2.08 billion.

S&T Bancorp, Inc. (Indiana, PA.)

AbstractCommercial Banking (MIC: 8.1 SIC: 6022 NAIC: 522110)S&T Bancorp is a bank holding company with total assets of $3.34 billion and total deposits of $2.57 billion as of Dec 31 2006. Co. has two wholly owned subsidiaries, S&T Bank and 9th Street Holdings Inc., and it owns a 50.0% interest in Commonwealth Trust Credit Life Insurance Co. S&T Bank is a full service bank with its main office located in Indiana, PA, providing services that include accepting time and demand deposit accounts, and originating commercial and consumer loans to its customers through a branch network of 49 offices located in Allegheny, Armstrong, Blair, Butler, Cambria, Clarion, Clearfield, Indiana, Jefferson and Westmoreland counties of Pennsylvania as of Dec 31 2006.

First Charter Corp.

AbstractCommercial Banking (MIC: 8.1 SIC: 6021 NAIC:522110)First Charter is a bank holding company. Co.'s principal asset is the stock of its banking subsidiary, First Charter Bank (the Bank). As of Dec 31 2006, the Bank and Co.'s Gwinnett Bank subsidiary, both full service banks, collectively operated 59 financial centers and four insurance offices, as well as 139 ATMs in North Carolina and Georgia and operated loan origination offices in Asheville, NC and Reston, VA. Co.'s primary market area is located within North Carolina and is centered primarily around the Charlotte Metro region, including Mecklenburg County and its surrounding counties. As of Dec 31 2006, Co. had total assets of $4.86 billion and total deposits of $3.25 billion.

Capital City Bank Group, Inc.

AbstractCommercial Banking (MIC: 8.1 SIC: 6022 NAIC: 522110)Capital City Bank Group is a financial holding company. Through its bank subsidiaries, Co. provides traditional deposit and credit services, asset management, trust, mortgage banking, merchant services, bank cards, data processing, and securities brokerage services through 69 full service banking locations and four mortgage lending offices in Florida, Georgia, and Alabama. Co. also provides data processing services to financial institutions, government agencies and commercial clients located throughout North Florida and South Georgia. As of Dec 31 2006, Co. had total assets of $2.60 billion and total deposits of $2.08 billion.

First Charter Corp.

AbstractCommercial Banking (MIC: 8.1 SIC: 6021 NAIC: 522110)First Charter is a bank holding company. Co.'s principal asset is the stock of its banking subsidiary, First Charter Bank (the Bank). As of Dec 31 2006, the Bank and Co.'s Gwinnett Bank subsidiary, both full service banks, collectively operated 59 financial centers and four insurance offices, as well as 139 ATMs in North Carolina and Georgia and operated loan origination offices in Asheville, NC and Reston, VA. Co.'s primary market area is located within North Carolina and is centered primarily around the Charlotte Metro region, including Mecklenburg County and its surrounding counties. As of Dec 31 2006, Co. had total assets of $4.86 billion and total deposits of $3.25 billion.