The outlook for the U.S. banking industry : what does the experience of the 1980s and 1990s tell us?

In many respects, the 1980s appear to be the worst decade in banking since the Great Depression, while the 1990s could be rated as the best. Over 1,100 commercial banks failed or needed FDIC assistance during the 1980s, and significant parts of the thrift industry became insolvent and had to be resolved, costing taxpayers $125 billion. In contrast, the banking industry began a dramatic recovery in the first half of 1990s and has recently achieved record profitability, extremely low levels of loan losses, and the highest capital ratios since the early 1940s. As a result, the number of banks failing during the second half of the 1990s has averaged only four or five per year.> These two divergent experiences raise the question of what will happen during the next decade. One obvious forecast would be for recent favorable trends to continue, particularly since banks and the underlying economy have shown remarkable strength and resiliency in their recovery from the 1980s. The current environment is not without some concerns, however. Consumer debt has reached record levels, and a few sectors, such as agriculture, show signs of weakness. Also, bank supervisors have recently voiced concerns that bank credit standards are weakening. Moreover, the financial environment is changing rapidly with innovation, bank expansion and consolidation, and competition from new sources, thus opening the door for new problems.> Spong and Sullivan examine the outlook for the banking industry over the next few years, focusing on whether the prosperity and tranquility of the 1990s will continue, or whether the industry faces a return of the banking problems of the 1980s. They find that, because banks are in much better shape now than in the 1980s, the industry is unlikely to face the depth of problems suffered in the 1980s even if the economic environment becomes less favorable. Still, it appears that banks will be hard pressed to match their recent record performance.Banks and banking

Successful strategies in interstate bank acquisitions

Much of the recent consolidation in the banking industry has been across state lines, and this trend will accelerate due to recent federal legislation. As interstate banking expands further, the performance and success of banks that are acquired will be the key factor determining how much consolidation will occur and which organizations will be major participants. This article therefore examines a group of banks that were acquired on an interstate basis in 1986 and 1987, and tracks their performance after acquisition. It identifies strategies and characteristics that distinguish acquisitions with strong performance from those with weak performance. While strong and weak performing acquisitions were similar in many ways at the time they were acquired, strong performers expanded on an already significant presence in loan markets and avoided a deterioration in asset quality. Strong performers grew moderately overall, and improved net interest margins. Compared to weak performing acquisitions, strong performers were better at controlling expenses, and they widened this advantage after acquisition. Overall, the strong performers achieved success by applying sound banking techniques in a challenging new market, where previous experience and detailed insights into customers and competitors were limited.Interstate banking

How does ownership structure and manager wealth influence risk? : a look at ownership structure, manager wealth, and risk in commercial banks

Bank managers, stockholders, and directors must work closely together in deciding what risks their bank will assume and how to control the bank's overall risk exposure. Each decision-maker will have to understand the risk preferences of others in order to make mutually acceptable decisions and develop policies that reflect all of their concerns. To the extent that weak risk control is tied to management and ownership structure, bank examiners must also understand the basic components of a sound management and ownership structure if the examiner is to suggest corrective steps for a problem institution. ; This study looks at a sample of Tenth Federal Reserve District banks to investigate the relationship between bank risk, ownership of the bank by managers, and the degree to which managers and owners have their wealth concentrated in their bank stockholdings. Data for 270 randomly selected banks reveal that ownership and wealth diversification of bank owners and managers do influence bank risk. These effects extend not only to the overall risk of the bank, but are also reflected uniquely in asset quality measures, bank leverage, and other parts of a bank's risk exposure. ; Major findings highlight connections between bank risk, ownership structure, and manager wealth. Banks are less risky when bank managers have a higher concentration of wealth in their bank and, thus, have more to lose from taking on additional risk. Possibly seeking to avoid large loan losses that could threaten their employment, hired managers typically operate their banks with lower credit risk than banks with owner managers. Using capital as a buffer against risk, owner-manager banks tend to have higher capitalization than banks with hired managers. Stock ownership by hired managers provides incentives to operate their bank more in line with the risk preferences of owners. Finally, a hired-manager bank will be less risky when a major owner monitoring the bank has much of his or her wealth concentrated in the bank's stock. ; Thus, ownership structure and concentration of wealth in bank equity have a significant influence on bank risk. Understanding how risk preferences depend on ownership and wealth diversification can be valuable information to managers and owners as they grapple with the level and type of risk to take in their banks.Risk ; Banking structure ; Federal Reserve District, 10th

Who's minding the store? motivating and monitoring hired managers at small, closely held firms: the case of commercial banks

We test whether the gains from hiring an outside manager exceed the principal-agent costs of owner-manager separation at 266 small, closely held U.S. commercial banks. Our results suggest that hiring an outside manager can improve a bank's profit efficiency, but that these gains depend on aligning the hired managers with owners via managerial shareholdings. We find that over-utilizing this control mechanism results in entrenchment, while under-utilization is costly in terms of foregone profits. This study provides a relatively unfettered test of mitigating principal-agent costs, because these small banks cannot rely on market forces or blocks of outside investors to monitor managers.Small business ; Banks and banking - Costs ; Bank management

What makes a bank efficient? : a look at financial characteristics and management and ownership structure

Increased competition, new technology, and bank consolidation are reinforcing the need for banks to operate efficiently. Moreover, recent research on banking efficiency shows that there is much room for reducing expenses and making better use of bank resources. This article compares the financial characteristics, as well as the management and ownership structure, of a sample of efficient and inefficient banks from the Tenth Federal Reserve District. The comparison reveals a number of factors that contribute to bank efficiency. ; Efficient banks control all aspects of costs, yet deliver bank services that are often more resource intensive than the services provided by less efficient banks. Stockholders at efficient banks are actively involved, play a major policymaking role, or make other contributions through the board of directors. A bank is more likely to be efficient if its manager either has a strong financial stake in the bank, or is closely monitored by stockholders and given appropriate incentives. The data further suggest that efficient banks are not achieving their efficiency by expending fewer resources on credit analysis and other forms of risk control. In sum, efficient bank operations can be obtained under a variety of circumstances, but two essential keys to success are properly motivated managers and active participation by bank owners.Banking structure ; Bank management

Growth hormone action predicts age-related white adipose tissue dysfunction and senescent cell burden in mice

The aging process is associated with the development of several chronic diseases. White adipose tissue (WAT) may play a central role in age-related disease onset and progression due to declines in adipogenesis with advancing age. Recent reports indicate that the accumulation of senescent progenitor cells may be involved in age-related WAT dysfunction. Growth hormone (GH) action has profound effects on adiposity and metabolism and is known to influence lifespan. In the present study we tested the hypothesis that GH activity would predict age-related WAT dysfunction and accumulation of senescent cells. We found that long-lived GH-deficient and -resistant mice have reduced age-related lipid redistribution. Primary preadipocytes from GH-resistant mice also were found to have greater differentiation capacity at 20 months of age when compared to controls. GH activity was also found to be positively associated with senescent cell accumulation in WAT. Our results demonstrate an association between GH activity, age-related WAT dysfunction, and WAT senescent cell accumulation in mice. Further studies are needed to determine if GH is directly inducing cellular senescence in WAT or if GH actions on other target organs or alternative downstream alterations in insulin-like growth factor-1, insulin or glucose levels are responsible

Fusion of Small Peroxisomal Vesicles in Vitro Reconstructs an Early Step in the in Vivo Multistep Peroxisome Assembly Pathway of Yarrowia lipolytica

We have identified and purified six subforms of peroxisomes, designated P1 to P6, from the yeast, Yarrowia lipolytica. An analysis of trafficking of peroxisomal proteins in vivo suggests the existence of a multistep peroxisome assembly pathway in Y. lipolytica. This pathway operates by conversion of peroxisomal subforms in the direction P1, P2→P3→P4→P5→P6 and involves the import of various peroxisomal proteins into distinct vesicular intermediates. We have also reconstituted in vitro the fusion of the earliest intermediates in the pathway, small peroxisomal vesicles P1 and P2. Their fusion leads to the formation of a larger and more dense peroxisomal vesicle, P3. Fusion of P1 and P2 in vitro requires cytosol and ATP hydrolysis and is inhibited by antibodies to two membrane-associated ATPases of the AAA family, Pex1p and Pex6p. We provide evidence that the fusion in vitro of P1 and P2 peroxisomes reconstructs an actual early step in the peroxisome assembly pathway operating in vivo in Y. lipolytica

Heterozygous Loss-of-Function SEC61A1 Mutations Cause Autosomal-Dominant Tubulo-Interstitial and Glomerulocystic Kidney Disease with Anemia

Autosomal-dominant tubulo-interstitial kidney disease (ADTKD) encompasses a group of disorders characterized by renal tubular and interstitial abnormalities, leading to slow progressive loss of kidney function requiring dialysis and kidney transplantation. Mutations in UMOD, MUC1, and REN are responsible for many, but not all, cases of ADTKD. We report on two families with ADTKD and congenital anemia accompanied by either intrauterine growth retardation or neutropenia. Ultrasound and kidney biopsy revealed small dysplastic kidneys with cysts and tubular atrophy with secondary glomerular sclerosis, respectively. Exclusion of known ADTKD genes coupled with linkage analysis, whole-exome sequencing, and targeted re-sequencing identified heterozygous missense variants in SEC61A1—c.553A>G (p.Thr185Ala) and c.200T>G (p.Val67Gly)—both affecting functionally important and conserved residues in SEC61. Both transiently expressed SEC6A1A variants are delocalized to the Golgi, a finding confirmed in a renal biopsy from an affected individual. Suppression or CRISPR-mediated deletions of sec61al2 in zebrafish embryos induced convolution defects of the pronephric tubules but not the pronephric ducts, consistent with the tubular atrophy observed in the affected individuals. Human mRNA encoding either of the two pathogenic alleles failed to rescue this phenotype as opposed to a complete rescue by human wild-type mRNA. Taken together, these findings provide a mechanism by which mutations in SEC61A1 lead to an autosomal-dominant syndromic form of progressive chronic kidney disease. We highlight protein translocation defects across the endoplasmic reticulum membrane, the principal role of the SEC61 complex, as a contributory pathogenic mechanism for ADTKD

Male Mating Tactics in Captive Rhesus Macaques (Macaca mulatta): The Influence of Dominance, Markets, and Relationship Quality

Male mating success in a multimale–multifemale group can depend on several variables: body condition, dominance, coalitions, “friendship,” or an exchange of services for mating access. Exchange patterns may also be determined by market effects or social relationships. We studied the mating tactics of males in a captive, multimale–multifemale group of rhesus macaques and the resulting patterns of mating and paternity to determine the influence of dominance rank, mating markets, and relationship quality on their mating tactics. Male rank was positively related to the total number of copulations and the number of mating partners, but did not explain male mating distribution completely. Moreover, male fertilization success was not related to male rank. Males did not exchange grooming for mating access on the same day and neither the supply nor the rank (as a proxy for quality) of receptive females affected the amount of male grooming, suggesting that market effects did not explain male mating access. However, there was a positive correlation between long-term grooming patterns of both males and females and mating access, indicating that social relationships were important for male mating access. Paternity data revealed that these social relationships were also important for male reproductive success. We conclude that both male rank and male–female “friendship” determined male mating access in these rhesus macaques, but that “friendship” was more important in determining paternity, emphasizing the importance of intersex social bonds in male mating success in multimale primate societies

Setting research priorities to improve global newborn health and prevent stillbirths by 2025.

BACKGROUND: In 2013, an estimated 2.8 million newborns died and 2.7 million were stillborn. A much greater number suffer from long term impairment associated with preterm birth, intrauterine growth restriction, congenital anomalies, and perinatal or infectious causes. With the approaching deadline for the achievement of the Millennium Development Goals (MDGs) in 2015, there was a need to set the new research priorities on newborns and stillbirth with a focus not only on survival but also on health, growth and development. We therefore carried out a systematic exercise to set newborn health research priorities for 2013-2025. METHODS: We used adapted Child Health and Nutrition Research Initiative (CHNRI) methods for this prioritization exercise. We identified and approached the 200 most productive researchers and 400 program experts, and 132 of them submitted research questions online. These were collated into a set of 205 research questions, sent for scoring to the 600 identified experts, and were assessed and scored by 91 experts. RESULTS: Nine out of top ten identified priorities were in the domain of research on improving delivery of known interventions, with simplified neonatal resuscitation program and clinical algorithms and improved skills of community health workers leading the list. The top 10 priorities in the domain of development were led by ideas on improved Kangaroo Mother Care at community level, how to improve the accuracy of diagnosis by community health workers, and perinatal audits. The 10 leading priorities for discovery research focused on stable surfactant with novel modes of administration for preterm babies, ability to diagnose fetal distress and novel tocolytic agents to delay or stop preterm labour. CONCLUSION: These findings will assist both donors and researchers in supporting and conducting research to close the knowledge gaps for reducing neonatal mortality, morbidity and long term impairment. WHO, SNL and other partners will work to generate interest among key national stakeholders, governments, NGOs, and research institutes in these priorities, while encouraging research funders to support them. We will track research funding, relevant requests for proposals and trial registers to monitor if the priorities identified by this exercise are being addressed