Volume 43, Issue 10 - October 2008
We’ve all heard the saying “Don’t bite off more than you can chew,” but unfortunately, not everyone, including banks, always listens. For example, when a bank makes more loans than it can afford a failure of that institution is often the result. Considering the recent federal takeover of Pasadena, Calif.-based IndyMac, which was taken over by federal regulators on July 11 with total assets of $32.01 billion and total deposits of $19.06 billion as of March 31, 2008, many business owners are now wondering, “What if that happens to my bank?”
To best protect themselves in the event of a bank failure, glass company owners need to first understand what’s protected through the Federal Deposit Insurance Corp. (FDIC). For starters, corporations, partnerships and unincorporated associations, including for-profit and notfor- profit organizations, are all insured under the same ownership category.
“These accounts are insured only up to $100,000 at each separately chartered insurance institute,” says Jim Deveney, chief of the deposit insurance section with FDIC. Deveney explains though, that if a company has multiple accounts— an operating account, a payroll account, etc.—at one bank, they are not separately insured. “These accounts are all added together and insured for up to $100,000,” says Deveney. A business can, however, have multiple accounts spread out across different FDIC-insured banks (i.e., one at Wachovia, one at Bank of America, etc.) and then each account is insured individually for up to $100,000.
An exception for businesses comes when the company places funds on behalf of employee benefit accounts.
“Those are insured up to $100,000 per the participant’s interest in the plan,” says Deveney.
But what if a company has more than $100,000 in its banking account and that institute fails? The FDIC only insures that account up to $100,000; are the uninsured funds gone for good? Not exactly, according to Deveney.
“In the unlikely event of a bank failure, if the account is in your name alone, you’re entitled to a portion of the amount over insured based on what we receive from the sale of the assets,” Deveney says. So what can companies do to best protect their assets? Deveney says it’s as simple as being aware of the $100,000 limit.
“You can also check your accounts with the Electronic Deposit Insurance Estimator (EDIE),” he adds. It’s also wise to check your balance in the account on a regular basis. Funds for checks written but not cleared still sit in the account. Your checking account balance may show just a few thousand dollars, but if you have a large check that hasn’t cleared, your bank will still show that money as in your account. For a list of FDIC-insured banks, visit www.fdic.gov.
Energy Costs Keep Vitro’s Second
The company recorded a consolidated net income of $5 million USD during the quarter, compared to a net income of $10 million USD during the same period last year. The drop is attributed to two factors: higher energy and raw materials costs and higher income taxes. More specifically, the company says this year’s lower EBIT of $42 million USD compared with $57 million USD in the second quarter 2007, mainly due to higher energy and raw materials costs and transition of production of its new cosmetics glass container plant. It also faced higher income taxes of $13 million USD compared with $4 million USD during the second quarter or 2007. These factors were partially offset by a $16 million USD decrease in total financing result, mainly derived from a higher appreciation of the Mexican peso during the second quarter of this year.
Yet consolidated net sales for the quarter increased 14.5 percent year over year to $725 million USD from $634 million USD last year.
“Demand rose in most segments of our business,” says Enrique Osorio, chief financial officer. “On a comparable basis, sales for the quarter reached an all-time high of $725 million. Higher energy costs, however, impacted EBITDA.”
According to Hugo Lara, president of flat glass, “Flat glass sales rose 9 percent this quarter, also achieving a quarterly record.” Lara goes on to report that “sales in our U.S. subsidiary remained flat and have begun to show signs of recovery despite weak market conditions, as we focus on larger value-added commercial projects.” ❙❙➤ www.vitro.com
Shapes/Arch Holdings Confirms
H.I.G. Capital is the owner of Signature Aluminum, a provider of custom aluminum extrusions and alloyed aluminum billet. When combined with the company, Signature Aluminum will become the fourth largest extruder and remelter in North America.
“Signature and H.I.G. understand the challenges facing our industry and the tremendous opportunity it will create for well-positioned market leaders like us when sector fundamentals rebound,” says Frank A. Papa, chairperson and chief executive officer of Signature Aluminum. “We will rely on the company’s management team and hourly workforce and our ability to work with them to capitalize on our complementary capabilities to develop new markets and grow this business.” ❙❙➤ www.higcapital.com