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Maryland’s 2012 Economic Outlook with Anirban Basu

Wednesday, January 18th, 2012
Anirban Basu

Anirban Basu Chairman & CEO of Sage Policy Group, Inc

Maryland Gained Momentum Late Last Year

For much of last year, Maryland’s economic performance was among the worst in the nation. For instance, year-over-year job growth in the state was in negative territory or close to zero for most of the summer. But like the balance of the nation, economic performance began to materially improve toward the tail end of the year. For the 12 months ending in November 2011, employment in the Free State expanded 0.7 percent (+18,300 jobs), ranking the state 33rd along this dimension. That may not sound like anything to crow about, but just a few months prior, Maryland ranked dead last. Maryland’s subpar performance mid-year appears to have been closely linked to the nation’s debt ceiling debacle and the impact of that episode on federal agency spending, including upon procurement.

Exhibit 1. State-by-state Job Growth, 12-month Percent Change, November 2011

1st Mariner Blog - State-by-state Job Growth, November 2011

Through it all, Maryland has managed to sustain one of the nation’s lowest unemployment rates. Statewide unemployment declined to 6.9 percent in November, the lowest level since June 2011. That is the 15th lowest unemployment rate in the country.

Other data is also largely encouraging. The most recent Maryland Survey of Business Activity conducted by the Federal Reserve Bank of Richmond indicates that business activity in Maryland increased moderately in December. The general business activity index registered a reading of 7, a meaningful increase from -3 the previous month and the first positive reading since September. The expectations index, which declined 9 points to 22, indicated that while broadly positive expectations of general business conditions six months from now have moderated slightly, survey respondents continue to predict economic growth in the near term.

All of this is consistent with the notion that some of the factors that restrained growth in 2011, including federal government gridlock, sagging home prices and issues emerging from Europe, are likely to continue to shape economic performance during the first half of 2012. However, despite these and other headwinds, the state’s economy is anticipated to continue to grind ahead for now.

Anirban Basu is Chairman & CEO of Sage Policy Group, Inc., an economic and policy consulting firm in Baltimore, Maryland. Mr. Basu is one of the Mid-Atlantic region’s most recognizable economists, in part because of his consulting work on behalf of numerous clients, including prominent developers, bankers, brokerage houses, energy suppliers and law firms. On behalf of government agencies and non-profit organizations, Mr. Basu has written several high-profile economic development strategies, including co-authoring Baltimore City’s economic growth strategy. His opinions do not necessarily reflect the opinions and beliefs of 1st Mariner Bank.

 

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A Holiday Video Message from 1st Mariner Bank

Tuesday, December 20th, 2011

Happy Holidays from your 1st Mariner Bank family...

Every month we send out the 1st Mariner Bank eNewsletter that is aimed to keep you updated on 1st Mariner happenings. From information on our new and current products, to financial tips and advice from local experts, the 1st Mariner Exchange is just another way to keep you informed and equipped in your financial journey.

Not to mention, you get to help us avoid chopping down several trees in the process.

With the rush of the holiday season, the last thing we thought you’d  have time to do is read another email. We thought, today, let’s 86 our traditional monthly eNewsletter and have a little fun for the holidays. (If you’d like to sign up for our eNewsletter, click here)

Over the past week, we went around and asked some of your favorite 1st Mariners a few questions about how they spend the holidays, their holiday likes and dislikes, and some fun holiday trivia.  I mean, naming the reindeer is something everyone can do….right? Or not.

Wanna see how they did?

It’s a short, funny three-minute video holiday card that we hope you’ll enjoy as much as we do.

We’d like to sincerely thank you for affording us the privilege and opportunity to serve you. Here’s to wishing you and your family a very happy and safe holiday season!

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I’ll take “What is Check Fraud?” for 500, Alex.

Wednesday, November 9th, 2011

What is Check Fraud?
Check fraud has many ugly faces.

Check fraud does not discriminate. It doesn’t care if you’re a person or a business, wealthy or not, the customer or the Bank. Check fraud and those committing check fraud look for ways to deceive, manipulate, alter and perpetrate. Simply put, a way, any way, to illegally acquire, nay steal, funds that do not exist within an account balance or account holder’s legal ownership.

Want some stats? Of course you do.

  • According to FinanceNook, in one year, merchants take in over $13 billion dollars in bad checks. Even with more purchases being made online, this number is expected to grow annually by 18%.
  • According to the American Collectors Association, Americans write around 1.7 million bad checks each day, totaling more than $50 million in bad check losses.
  • The National Check Fraud Center has reported that check fraud and counterfeiting are the largest and fastest growing problem that the United States financial system faces today. These estimated losses produced annually are over $10 billion and are expected to continue rising.

Trust No One

To protect yourself or your business against check fraud, it is suggested by many experts to start with this basic axiom, “Trust No One”. Anyone can commit fraud. You, me, your doctor, your friend, your neighbor or even your favorite Uncle can commit fraud and there are many ways to do it. Check fraud prevention is not a simple task. There are many things to be done that, when executed together, will help to protect yourself from check fraud. While I may offer you some tips to help you fight check fraud, I do not want to lead you to believe or suggest that you can ever be 100% fraud-proof.

Forms (yes, form(S) as in plural, as in numerous) of Check Fraud

  • Forgery - Forgery usually takes place when an employee issues a check without proper authorization. Often times, criminals will steal a check, endorse it and present it for payment at a bank or a retail location using bogus identification.
  • Counterfeiting and Alteration – Counterfeiting or altering a check by using readily available desktop publishing equipment consisting of a PC, scanner or high-grade laser printer or simply duplicating a check with advanced color photocopiers.
  • Paperhanging – People who purposely write checks on closed accounts (their own or others) or who re-order checks on closed accounts (their own or others).

Great, so how do you prevent check fraud from happening to you?

Remember, trust NO ONE! (sorry to be so blunt)

  • Secure all reserve supplies of checks, deposit slips and other banking documents in a locked facility. Limit the number of people with access to your checks and keep blank checks locked up at all times. If your checks fall into possession of unscrupulous employees, you could be liable for substantial losses. Never leave checks or bank records unattended.
  • Make sure that your checks include security features that will help combat counterfeiting and alteration.
  • Assign accounts payable functions to more than one person and make each one responsible for different payment areas. This division of responsibility makes it more difficult for employees to tamper with checks and payments.
  • Limit the number of official signers. The fewer check signers you have, the lower your chances are of being defrauded.
  • Require more than one signature on large dollar check amounts. In this way, any losses you may incur will be low denominations only.
  • Check with your business banker to see if they provide products such as Positive Pay to help prevent check fraud. Basically, a business owner writes checks and if there are any discrepancies between the checks written and the checks clearing the account, the business owner has the option to either pay or return the items.
  • Separate the check writing and account reconcilement functions. Try not to have the same person who balanced the bank statement issue checks. This provides greater safeguards against an employee writing fraudulent checks and covering it up. The reconciler would be able to prevent the crime unless of course the employees are in collusion.

So what have we learned here?

Check fraud is everywhere and coming to a dishonest individual near you.

There are many different ways that check fraud is perpetrated as well as many different ways to prevent or safeguard it from happening. This blog merely scratches the surface of, check fraud underground world. Educating yourself further on this ever growing problem is an ongoing process and is strongly suggested for even the smallest of business owners (as well as individuals).

Remember, when it comes to your well earned money, “Trust No One,” and never think for a second that it can’t happen to you. As a matter of fact, it’s happening to someone right now – is it you?

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What do you think about monthly debit card fees?

Monday, October 31st, 2011

There has been a lot of recent press on the charging of monthly debit card fees by large banks, with charges ranging from $3 to $5 per month. We don’t charge a fee and, in fact, offer a number of checking accounts that are fee-free. So we’d love to hear your thoughts on these debit card fees.

For some perspective on why this is happening, here is a link to an interview with a local business professor from The Baltimore Sun.

 

 

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How to Decide: Home Equity Loan or Line of Credit?

Wednesday, September 14th, 2011
Home Equity Loan or Line of Credit?

Let your house work for you.

So, you’ve decided to add an addition, pay tuition expense, or have a cushion for life’s unexpected expenses. As your home is one of your greatest assets, many people decide to borrow against the equity in their home by obtaining a Home Equity Loan or a Home Equity Line of Credit. The tough decision is deciding which product will best suit your situation.

When working through the decision of whether to obtain a Home Equity Loan or a Home Equity Line of Credit, there are 4 categories to consider: Access to Funds, Interest Rates, Monthly Payments, and Potential Tax Savings*. By understanding each feature you’ll be well positioned to decide between a Home Equity Loan or a Home Equity Line of Credit.

Access to Funds

Home Equity Lines of Credit are great when you need to access the funds in various increments or need a revolving credit line to pay expense as they occur. With a credit line, you are free to make advances just like you are with a credit card, up to your credit limit within the terms of the agreement.

With a Home Equity Loan, the full loan amount is disbursed in one lump sum, much like a car loan. This is great when you need a set amount and don’t need reoccurring access to the loan.

Interest Rates

For the most part, interest rates tied to Home Equity Lines of Credit tend to be variable, tied to the Wall Street Journal Prime Rate. With a variable rate loan, you get to take advantage of current market rates as they shift throughout time.

Home Equity Loans tend to be fixed rate loans, where the interest rate established at settlement will be the rate you assume for the duration of the loan.

Monthly Payments

Home Equity Lines of Credit are typically interest only for a portion of the term. This means you have the option to pay interest only each month or make additional principle payments as you see fit.

Home Equity Loans generally bill for principle and interest each month. You’ll never have to guess what your payment will be as it will be fixed for the duration of your term.

Tax Deductibility

I would advise you to discuss this with your tax advisor but given your individual circumstance, the interest paid towards either a Home Equity Loan or Home Equity Line of Credit may be tax deductible at the end of the year. As this applies to both Home Equity Loans and Home Equity Lines of Credit evenly, this shouldn’t be a deciding point in your choice between either product.

In short, if you’re looking for flexibility, a Home Equity Line of Credit might be the best product to suit your needs. If you prefer stability, you may want to narrow your search to a Home Equity Loan.

Click here for more information on our Home Equity Loans and Home Equity Lines of Credit.

*Please consult your tax advisor.

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Is the Cost of Living and Inflation Higher in Washington-Baltimore Area?

Monday, July 18th, 2011

The Difference between Inflation and Cost of Living

Inflation is defined as an increase or change in the general price level. Generally, inflation is viewed negatively since (all things being equal) an increase in prices reduces purchasing power. The cost of living can be understood as the general price level itself. In other words, a place that is terribly inexpensive to live in can be associated with high inflation, though if that high inflation persists, that place will not remain inexpensive. Conversely, an area that is expensive can be associated with low inflation.

• Maryland is an Expensive Proposition

Data indicates that Maryland and the Washington-Baltimore area are associated with both a high cost of living and higher rates of inflation than national averages. For instance, 43 states were associated with a lower cost of living than Maryland during the final quarter of 2010 according to the Council for Community and Economic Research (Exhibit 1). Maryland’s overall cost of living is roughly 25 percent higher than the national average, housing is 69 percent more expensive and utility costs are 17 percent higher. Transportation and grocery costs are also higher in Maryland by 8 and 10 percent, respectively.

Exhibit 1. State Cost of Living Rankings, Fourth Quarter 2010
State Cost of Living 2010

The recent housing downturn, which has been disproportionately felt on the coasts, has both reduced inflation and diminished the difference in cost of living with the balance of the nation more recently. Consumer prices excluding food and energy expanded 1.9 percent in 2009 in the Washington-Baltimore region and just 1.4 percent in 2010. According to the Federal Reserve Bank of Richmond, the average value of homes in Maryland has declined 21.4 percent since 2007. This has reduced the overall pace of inflation.

However, inflation ran at more than a 2 percent pace during the first three months of 2011 locally, in part a reflection of growing pricing power among area businesses. Between May 2010 and May 2011, core prices in the Washington-Baltimore area climbed 2.3 percent compared with 1.5 percent nationally.

Exhibit 2. Core CPI Growth by Select Metropolitan Area, 2000 v. 2010

Bureau of Labor Statistic

Bureau of Labor Statistic

Implications

Despite the recent and ongoing housing downturn, Maryland remains an expensive proposition. Like other Americans, Marylanders have had to deal with a host of rising costs, including food and energy prices.

Indeed, Moody’s Analytics cites high business costs as being one of Maryland’s biggest obstacles to recovery. Operating costs are higher in Maryland because businesses consume pricey energy and transportation. Moreover, the overall higher cost of living necessitates higher wages, which creates further operating cost disadvantages.

This may help explain Maryland’s lackluster job creation in recent months, which has significantly underperformed the nation. One of the questions for state and local policymakers is whether or not there are possible shifts in policy that would help reduce business operating costs without generating substantial harm to quality of life.

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1st Mariner Bank – Keeping up with The Joneses

Monday, June 13th, 2011

I recently attended the Net.Finance conference in Chicago . It is, by far, one of the best conferences for those of us focused on the digital channels of financial services. Over the two and half days, there were three topics that dominated the event: Mobile, Personal Financial Management (PFM) tools, and Social Media. I’m going to specifically talk about the first two topics.

The first day of the conference focused on Mobile Banking services for  customers. Jeff Dennes, SVP Chief Digital Officer of Huntington National Bank (and formerly with USAA), gave the Keynote address. His presentation was full of interesting observations including:

  • There are over 285 million mobile subscribers in the US, a 91% penetration rate.
  • 13.2 million people accessed their bank accounts through mobile sites, up 70% from a year ago.
  • The expansion of the 4G network over the next 2 years will increase bandwidth equal to a cable modem at home.
  • Mobility is driving convergence. The gap between the traditional web and related services is closing, with the increase in smart phones and the movement of the Gen Y’s into the workforce.

Jennifer Wilson, SVP Internet Channel Director, BBVA Compass shared her experience with the introduction of ZashPay, a Person to Person payments service from Fiserv. From an adoption perspective, they found that building a web page with a simple enrollment process was key. When they looked at the user base, they found a surprising number of small business customers who were using as an alternative to more expensive ACH services. Given these pilot results, they may develop a mobile invoicing service for their business customers.

We rolled out our Mobile Money offering in August, 2010 and have seen a significant adoption rate. Mobile continues to be a hot topic among financial services providers and may prove to be the most signficant game changer in the next couple of years.

On the second day of the conference, I was fortunate enough to be part of a panel discussion on Personal Financial Management (PFM) along with Patrick Smith of Wells Fargo, Eric Connors of Yodlee, and Edward Chang of Strands. We had a lively discussion about the benefits of PFM for our customers, the challenges of getting people to use it, and the pros and con’s of aggregation services. While the benefits are pretty clear (better financial management) the biggest challenge, as noted by Patrick, is inertia. Managing your finances is certainly important, but not critical. Setting up goals and budgets falls somewhere around cleaning out the gutters on the “to do” list. The key, perhaps, is to help educate the consumers about the benefits to make it move up that list.

One of the classic differences between 1st Mariner and Wells is the approach to aggregation. Wells provides tools that help manage those accounts that are with Wells while we offer a service (Mariner360) to add all your accounts, even from other institutions. Perhaps this highlights the major difference between big and small banks. We see this as a service that is the right thing for the customer, while they look at it from an internal perspective of what is right for the organization. We (of course) think ours is the better approach.

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Credit Scores: GPAs for Adults

Tuesday, May 10th, 2011

Improving Credit Score

Your credit score impacts every major (and some minor) purchase that you’ll make during your lifetime. In regards to making a purchase that requires financing, (i.e. a house or car) your credit score can dictate the applied interest rate and in some occurrences, can prevent you from being eligible to receive financing at all. How about the impact on your career? Nowadays, many employers run credit checks before hiring.

Do you want to own a car, buy a house, have a career and be an all-around self sufficient individual? Mmm. Not much thought required there, huh? Of course you do!

So what is the best way to tackle this overly-exciting subject matter?

We asked our very own Wade Barnes, Vice President of Consumer Lending, to run through the ins and outs of a credit score with a word that we think will be all too familiar to you – the dreaded GPA.

“Professor” Barnes, meet the world.

The world, meet “Professor” Barnes.

700 – or above- is the score (or grade) that will get you on the honor roll of society. Like GPAs, credit scores are simply a numerical ranking of your credit performance.  The best way to think of a credit score is like a grade in school.  There are many parts to this grade like tests, quizzes, homework, participation, and attendance.  The teacher then weighs each factor in accordance with its importance and determines a final grade or score.  Credit scores are no different and look to the following factors.

Not everything is treated equal – the return of “weighted averages.”

35% of your overall credit score is determined by your Payment History, which is the single most impactful factor of your credit score.  Be sure to make your payments on time every month.  If you’re having issues paying your bills talk to your lender.  Many lenders will work with you to help establish favorable terms for both you and the lender.

Next on the list is outstanding debt, holding a 30% weight.  It is important that you don’t carry high balances on your credit cards.  Carrying balances of less than 35% of your available credit limit is ideal.  Balances using 70% of your credit limit or greater are having a negative impact your score.

Weighing in at 15% is the length of time the accounts have been established.  It is helpful to have accounts with a long history reporting to the credit bureaus established.  For revolving accounts that have been managed well, consider keeping these accounts open so they continue to build history.

At 10% each, inquires and credit diversity are the least impactful but are nonetheless important to consider.  Be sure you aren’t authorizing lenders to pull your credit report needlessly – keep this in mind when you’re checking out at your favorite retail store where they offer a discount for opening a store credit card.  With regards to diversity, be sure your debt instruments are spread amongst various loan products.  An individual who has a car loan, credit cards, and a mortgage will rate better than an individual who simply has multiple credit cards.

Is the test going to be graded on a curve?

Yep. Just like finals, these factors are scored on a curve type system where your performance is compared directly to other individuals.  Scores range from 350 – 850 where anything over 700 is good and anything under 600 needs improvement.

Be Aware

Perhaps the most important tip is to be aware of what’s on your credit report.  With over 290 million reports, mistakes are bound to happen.  You are entitled to receive a free copy of your credit report from each of the reporting bureaus every year.  To obtain your credit report, visit www.annualcreditreport.com , an official site sanctioned by the bureaus to allow you free access to your report.  Put this on your calendar and make it an annual practice.

As always, feel free to reach out with any questions you have about your credit score or any other credit question.

 

 

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Operation: Unclutter 2011 – and keep your identity while you are at it.

Monday, April 18th, 2011

With today being April 18th, a.k.a 2011′s tax deadline, we thought it would be a good idea to celebrate Earth Day (April 22nd ) by teaming up with the folks at Shred-It to help our community “shred” those unwanted, clutter-enabling, not essential to your existence documents that you may have acquired over the years. Tax returns from last decade, useless; old credit card offers, it’s probably time for them to go; expired passports, bank cards, passports, visas, and identification cards; shred, shred shred! It’s an easy way to get rid of those unnecessary documents by recycling the shredded material, which is good for both you and the environment.

The US Federal Trade Commission received 250,854 complaints about identity theft during 2010.  In many cases, identity theft victims are unaware they are a target until they see the havoc wreaked on their credit report. While much of the fraud takes place online, most of the identity theft takes place in offline areas. While the tech-savvy thieves continue to unite, your trash can should NOT be the scene of the crime. Entering your information into a phony website or swiping your card at a skimmed gas pump (skimmer: small electronic devices that gather and store all credit or ATM card data) can happen even to the most cautious of consumers; however, conveniently leaving your social security number in an public unsecure container (i.e., your trash can) is like serving your identity up on a silver platter.

In other words, when you throw something in the trash, it immediately becomes available to anyone who’s willing to overlook the enticing smells of last night’s dinner.

What to shred and what NOT to shred?

Now that you know WHY you should shred documents, the question now becomes, what to shred and what NOT to shred. At a high level, you should generally shred anything that has a signature, account number, social security number, or medical or legal information. Check out this link for a full list of documents that can be tossed (a.k.a shredded) and those that you might want to hang onto a little longer.

The Scene of the Solution: 1st Mariner Bank’s Cockeysville and Dundalk Branches

The Shred-It Team will be set up from 9 a.m. to 1:00 p.m on Saturday, April 23rd at both our Cockeysville and Dundalk branches. This event is open to both 1st Mariner Bank customers and non-customers; however, there is a limit of five boxes per person.. We strongly encourage everyone and anyone to participate in this FREE, earth-friendly opportunity to de-clutter your lives and help Maryland AND your file cabinets to become as spacious, eco-friendly and green as they possibly can be.

 

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Crikey! Looka there – it’s the elusive Free Checking Account

Wednesday, March 16th, 2011

Shhh…looka there…it appears to be a rare Free checking account from what looks to be the 1st Mariner family. Just as I suspected, that there beaut is the Absolutely Free Checking Account from 1st Mariner Bank.

Crikey!*

Sadly, this breed used to roam across our nation, but began dying off in city after city. You see, according to Bankrate, in 2009 76% of banks had a substantial population of free checking, but in 2010 that number dropped to 65%. The factors that are causing this species to become extinct are hitting institutions of all sizes; large banks, small community banks and credit unions.

As with most species of the banking tribe, there are costs associated with keeping checking accounts at the top of the food chain. If these costs aren’t recovered and maintained, the rest of the food chain, a.k.a customers, will feel the repercussions. Hello fees.

Despite these rough times, the Absolutely Free Checking account from the 1st Mariner family has been able to maintain stability and remains one of the last truly “Free” species of its kind.

It has been said to have been spotted in and around the Baltimore, Maryland area on numerous occasions. In order to track down this elusive beast, we had to travel down into the wilds of Canton – sure nuff – there she be…

If we can just get close enough, we might be able to catch a glimpse of its grouse* features…

Cripes*…look at that…

•No minimum balance

•No per-check charge

•No monthly fee

•Free use of 1st Mariner & MoneyPass™ ATMs

•Free Visa® Check Card

•Free Online Banking

•Free Bill Pay

•Free use of Mariner360

Stunning….what a beaut!

If you want to see this rare beast up close and personal like, you don’t have to journey far. Just make your way into a 1st Mariner branch and one of our helpful tour guides can hand you the leash. Or even better, click here to capture your own Absolutely Free Checking account today.

For more information about the scarcity of free checking accounts, click here.

In case you aren’t up to date on your Aussie lingo - click here 

Aussie Lingo Legend

*Crikey: Expression of surprise
*Cripes: see Crikey
*Grouce: Great, terrifc, very good

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