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Merchants Bancshares Inc. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: March 15, 2011 01:25PM
Merchants Bancshares Inc. (MBVT) filed Annual Report for the period ended 2010-12-31.
Highlight of Business Operations:
Merchants Bank was organized in 1849 and assumed a national bank charter in 1865, becoming The Merchants National Bank of Burlington, Vermont. On September 6, 1974, The Merchants National Bank of Burlington converted its national charter to a Vermont state commercial bank charter, adopting the name The Merchants Bank. The name was shortened to Merchants Bank in 1995. As used herein the term Merchants shall mean Merchants Bancshares, Inc. and its subsidiaries unless otherwise noted or the context otherwise requires. As of December 31, 2010, Merchants operated the sole remaining statewide commercial banking operation in Vermont, with deposits totaling $1.09 billion, gross loans of $911 million, and total assets of $1.49 billion.
Merchants Trust Company, formerly a Vermont corporation chartered in 1870, was merged into the Bank effective September 30, 2009. This merger had no effect on the consolidated balance sheet or statement of operations of Merchants as the Trust Company was a wholly owned subsidiary of the Bank prior to the merger. Merchants Trust division offers investment management, financial planning and trustee services. Its investment program is a globally diversified asset allocation strategy with attention to managing risk while addressing client return objectives. Merchants Trust division utilizes diversified mutual fund managers who have been selected based on careful, in-depth research and due diligence. Its planning services cover a wide range of issues including retirement, estate planning, and asset protection solutions. As of December 31, 2010, this division had fiduciary responsibility for assets having a market value in excess of $460 million, of which more than $410 million constituted managed assets.
Among other things, the Dodd-Frank Act provides for new capital standards that eliminate the treatment of trust preferred securities as Tier 1 capital. Existing trust preferred securities are grandfathered for banking entities with less than $15 billion of assets, such as Merchants. The Dodd-Frank Act permanently raises deposit insurance levels to $250,000, retroactive to January 1, 2008, and provides unlimited deposit insurance coverage for transaction accounts through December 31, 2012, which will become mandatory for all insured depository institutions. Pursuant to modifications under the Dodd-Frank Act, deposit insurance assessments will be calculated based on an insured depository institutions assets rather than its insured deposits and the minimum reserve ratio of the FDICs Deposit Insurance Fund will be raised to 1.35%. The payment of interest on business demand deposit accounts is permitted by the Dodd-Frank Act. The Dodd-Frank Act authorizes the Federal Reserve Board (FRB) to regulate interchange fees for debit card transactions for Banks with assets in excess of $10 billion, and establishes new minimum mortgage underwriting standards for residential mortgages. The Dodd-Frank Act empowers the newly established Financial Stability Oversight Council to designate certain activities as posing a risk to the U.S. financial system and to recommend new or heightened standards and safeguards for financial institutions engaging in such activities.
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