Cash & Capital

In this financial special section, we'll look at the avenues available for capital, how to find it and attract it. We'll also offer tips on how to present your business proposition to a banker, and more.

  • Effects of interest rates on money market mutual funds

    The prolonged low interest rate environment has pressured returns on money market mutual funds (MMMFs), and MMMF portfolios are earning the lowest returns on investments since the funds were established more than 30 years ago (see chart below). In this environment, there has been some concern about MMMFs "breaking the buck," a situation in which the net asset value (NAV) of a MMMF falls below $1 per share. Breaking the buck can occur if some of the fund's investments experienced significant losses, or if the fund's investment income declined below operating expenses. A byproduct of the prolonged low rate environment could be increased risk taking by MMMF managers searching for higher yields. Higher risk investments tend to be more volatile and would decline in value more quickly in a scenario of sharp interest rate increases. Indeed, a scenario of rapidly increasing interest rates may be the more problematic scenario for MMMFs. There has only been one instance of a MMMF breaking the buck and liquidating; this was due to losses associated with high-risk structured note investments that were incurred when rates spiked up sharply in 1994. While this is the only MMMF that failed, there are several examples where sponsoring companies have sustained faltering MMMFs, primarily by buying or otherwise supporting troubled fund assets, sometimes expending hundreds of millions of dollars to do so. These companies viewed the perception of safety as an overarching factor as to why investors have placed, in aggregate, some $2 trillion in MMMFs. Therefore for them, the reputation risk of allowing a fund in their family to fail far outweighed the cost of support. Currently, banks and bank affiliates sponsor approximately 33 percent of all MMMF assets. Like other firms, banks and bank affiliates that sponsor MMMFs are experiencing low asset returns, diminished income from the need to reduce fees, and are subject to the general risks associated with operating a MMMF. Although banking organizations are not statutorily required to provide financial support to the funds they sponsor, they may decide to do so to minimize reputation risk that would arise in the event of liquidation or to limit liability. To alert banking organizations to potential risks and the legal framework for providing support to bank-advised funds, the FDIC and the other federal banking agencies released the "Interagency Policy on Banks/Thrifts Providing Financial Support to Funds Advised by the Banking Organization or its Affiliates" on Jan. 6. This policy statement indicates that bank management should consult with the appropriate federal agency before or immediately after (in the event of an emergency) providing support to funds; should have proper controls over such transactions; and should adopt policies governing support transactions. These policies should ensure that the bank will not:

  • Choosing a financial partner

    As a small business owner, you probably understand that the relationship with your financial institution is as important as your relationship with your customers. Personal service is equally important when managing personal finances. Over the last few years, neighborhood banks have merged, and decision-making has often become a long-distance struggle. Large corporations may be well-served by these financial institutions, but many local individuals and small- and medium-sized businesses now find themselves treated with indifference. If your bank is not providing the services you need to run your business or manage your personal funds wisely, then it's time to discover "The Island Advantage." North Island Credit Union, or "The Island," has been locally based and operated since it opened its doors in 1940. Today, with $1.3 billion in assets, The Island offers a diversity of financial services for consumers and small businesses, including savings, checking, real estate/vehicle/signature loans, Internet banking and business benefits programs. Revenues are reinvested into The Island Advantage for members: higher-than-bank interest; lower-than-bank loan rates and fees; and friendly, hometown service. Above all, The Island Advantage means personal attention for individual and business members alike. The credit union "difference" is that as a depositor, you become a member-owner of the institution. You "own the bank" and get the corresponding personal treatment that is entitled an owner.

  • Rolf Benirschke joins California Bank & Trust team

    Rolf Benirschke, one of San Diego's most visible local figures, has joined the California Bank & Trust team in a spokesman capacity and will serve as a customer ambassador and participate in media marketing and developing new business relationships. Benirschke is widely known for his 10-year career as place-kicker for the San Diego Chargers and for his role in numerous philanthropic organizations, including the San Diego Zoo, Scripps Hospital, the San Diego Blood Bank, United Way and many others. Since retiring from the Chargers, Benirschke has remained in the business, community managing several business relationships under Rolf Benirschke Enterprises. He is a much sought-after motivational speaker and continues to volunteer for numerous charitable organizations locally and nationally. It was as a customer of California Bank & Trust that Benirschke came to know and appreciate the bank and its high level of service and support and to develop a personal relationship with the bank's management team in San Diego. "When I was first approached about representing the bank, it became an intriguing opportunity and an easy decision because of my long history as a customer," Benirschke said. "I have participated on many successful teams over the years and this group reminds me of them in a number of ways. I have always been impressed by their commitment to service and the caliber of people they hire, but it was the camaraderie and genuine way the employees cared for each other that sealed the deal for me." "California Bank & Trust is deeply committed to San Diego and prides itself on building and maintaining relationships with its customers, and for me that is everything." Benirschke will work with California Bank & Trust in its media relations and help expand activity with existing customers, as well as help develop new business banking relationships. "We're delighted to add Rolf Benirschke to our team at California Bank & Trust," said Chris Skillern, executive vice president/managing director. "As a valued customer, he understands first-hand the distinctive aspects of our service and local commitment. He will be a big help in communicating our message to the business community and we are thrilled he will be working with us."

  • Resources for local financing

    Small Business Investment Companies

  • SBA releases new Web-based lender interface

    WASHINGTON -- The U.S. Small Business Administration announced that a new Web-based loan application solution developed by the agency is now available to participating lenders, creating an electronic gateway that will save lenders substantial time and resources when submitting a loan to the SBA.

  • SBA offers host of financial assistance for small business

    Borrowing money is one of the most common sources of funding for a small business, but obtaining a loan isn't always easy. Before you approach your banker for a loan, it is a good idea to understand as much as you can about the factors the bank will evaluate when they consider making you a loan. This discussion outlines some of the key factors a bank uses to analyze a potential borrower.

  • Deposits of more than $100,000? Bank on Landmark National Bank

    Landmark National Bank is pleased to announce an innovative new service with significant advantages for depositors with more than $100,000.

  • Trends in community banking

    This report, the second in a series comprising the FDIC's Future of Banking Study, notes that while community bank charters have been halved in the consolidation wave, they still comprise the vast majority of banks in the United States and provide vital services to the small business and agricultural sectors.

  • Executives and analysts lose fear of forecasting. Must be good times.

    NEW YORK (AP) -- All it took was one good year for the fears of forecasting to subside.

  • First-quarter earning reports look good

    The U.S. economy continues to rebound. The latest employment statistics paint a picture of a robust recovery in jobs. Payroll employment rose 288,000 in April and has risen by 867,000 over the first four months of the year.

  • What's going on? It's in the annual report

    It's that time of year when we receive annual reports from companies we hold stock in. How many of you just toss these aside and without giving them a second look?

  • Liquidity tough to pin down when time comes to cash in

    Fred began his entrepreneurial adventure 12 years ago, buying products sitting on shelves and pushing them through to buyers at huge discounts from the original retail prices. Fred was a liquidator. It was fitting that he should be asking me about "liquidity" at this point.

  • A new LLC option

    Limited liability companies have become one of the most desirable forms of doing business. An LLC is a hybrid between a partnership and a corporation in that it combines the "pass-through" treatment of a partnership with the limited liability accorded to corporate shareholders.

  • Local VC investment on the rise

    Dollars funded from venture capitalists to local companies soared to $342 million in the first quarter of 2004, the highest total in nearly three years, according to the Ernst & Young/VentureOne Venture Capital Report released Monday.

  • Maintaining the gift tax exclusion when gifting partnership interests

    Recent court rulings regarding family limited partnerships, including limited liability companies, have enabled the Internal Revenue Service to disallow the annual gift tax exclusion when the donor retains too much control over a gifted closely held interest. If you have limited partnership interests you are gifting, then you may have to take action.

Profiles

  • Tracking economic indicators makes USD professor much sought-after resource

    Dr. Alan Gin's Index of Leading Economic Indicators, a monthly report on the local economy that has made Gin the most recognized economist in San Diego, is missing.

  • Tribal diversity

    What do a boxing entertainment business, a historic downtown San Diego hotel and a major redevelopment project in National City all have in common?

  • Bliesner helps level the playing field

    As director of San Diego's City-County Reinvestment Task Force, it's Jim Bliesner job to enforce a near 30-year-old requirement that banks do business in low- and moderate-income neighborhoods they might otherwise avoid.

National News

Archived Reports

Cash & Capital - 2007

This special section takes an in depth look at investment options and trends, as well as the venture capital market for emerging companies.

Cash & Capital - 2006

This special report discusses various avenues for finding sources of capital for your business needs and creative ways to improve cash flow. Plus, learn what to do with that cash once you have it.

Cash & Capital - 2005

In this special report, we explore various avenues for finding sources of capital and creative ways to improve cash flow. We also discuss ways to determine how much cash is needed to accomplish business goals and what to do with it once it's acquired.