The Census Bureau has reported fast growth in Ph.D.'s and Master's Degree holders. Hey, if there aren't any jobs, stay in school, right? From 2002 to 2012 the population with a doctorate grew by about 1 million, or 45%, while those who held a master's climbed by 5 million, or 43%. Meanwhile, and I think this is the really good news, the number of those without a high school or GED diploma declined by 13%, falling to 25 million. Women outnumbered men in 2012 among people whose highest level of education was a bachelor's degree (21 million versus 19 million) or a master's degree (9 million compared with 7.4 million). More men had professional or doctorate degrees, however, the gap between the number of men and women with professional degrees shrank. Education pays, as people 25 and older' s average earnings were $59,415 for people with a bachelor's degree, compared with $32,493 for people with a high school diploma, but no college.

Employers are definitely looking for educated candidates out there. Minnesota Bank & Trust Mortgage is searching for Producing Sales Managers. The positions are open in its Edina and Blaine branches in Minnesota. Individuals in these positions will proactively sell mortgage loans and cross sell other banking products and services. Primary duties will include recruiting, hiring and managing a sales team. Additional duties include attracting new loans through personal sales efforts, community activities and from referrals from inside and outside of the bank. The individuals will also be responsible for managing the mortgage sales at their respective offices. Minnesota Bank & Trust Mortgage is a member company of Heartland Financial USA, Inc. which has been around over 30 years and is a $5 billion multi-bank holding company with 30 consecutive years of increased or level dividends and never a loss for the year. Heartland is one of the top 100 bank holding companies nationwide, and was recently ranked in Bank Director Magazine's Top 150 Banks in terms of performance. Confidential inquiries should go to Ed Sarquis at ESarquis@mnbankandtrust .com.

Yesterday the commentary had a job posting for Chicago-based, Hilco Real Estate Finance (, for a SVP of Sales and Business Development. Hilco is also searching for a Senior Vice President of Operations, underwriters, and processors. The parent company, Hilco Trading has been in business for nearly 30 years, has 600 employees worldwide, and is very well capitalized. Hilco Real Estate Finance is led by Mark Filler and funds non-owner occupied properties only - private money, no agency loans. Experience in renovation lending a plus. Please send resumes to jobs@hilcorealestate .com or Mark Filler at mfiller@hilcorealestate .com. And specify the job in which you are interested.

"Rob, last week you mentioned a site for doing bank research. Your readers may want to know that many paid sites obtain their information from the FDIC's free site. Although the formatting isn't as pretty as some of the subscription sites, free is a darned good price.

Speaking of banks, recently Fifth Third was hit with the 2nd lawsuit in 6 months (this time for $5mm) for its paycheck advance loans (Early Access Program). The bank charges a 10% transaction fee (borrowers pay $10 for every $100 loaned up to $1,000), emphasizing it is a fee and not interest (the suit claims unlawful interest rates are being charged).

In general, community banks are managing higher profits, but a number of fourth-quarter trends indicate they are running out of options to pad the bottom line. Average fourth-quarter net income rose 2% from the third quarter and 32% from a year earlier, based on American Banker analysis of more than 150 banks and thrifts with assets of $35 billion or less. This has mostly come from declining credit costs, but Q4 net interest income growth has been hard to come by, given soft loan demand and interest rates that remain at or near historic lows - a trend that should continue through 2013. Evidence that markets are improving across the country is not translating into a lot of new loan growth due to shrinking net interest margins. Loan demand slightly exceeded expectations, but some borrowing likely involved companies taking out loans late last year to pay accelerated dividends as the fiscal cliff loomed. Pricing continues to work against small banks as they chase a shrinking number of qualified borrowers, and margins are expected to keep shrinking as the year wears on. As a result, community banks are focusing on fee revenue and expense control, with a large portion of fee revenue coming from refinancing activity, an earnings stream that could all but disappear by mid-2013. Still, community banks are looking at other ways to generate fees, including check-cashing fees for noncustomers and higher fees for ATM use. They are also trying to expand wealth management operations and investment services. Banks are also trying to rein in costs as noninterest expenses, on average, rose 1.4% from the third quarter and 4% from a year earlier due mostly to severance expenses from staffing cuts or higher salaries for employees and executives. Mortgage lending has benefited from this low-rate environment, but we all know that heavy reliance on mortgage lending for sustainable revenue growth can become a problem at the point that rates again begin to rise, and especially if you have built a business model around refinances. But refi revenue and cost cutting only provide short-term benefits, as investors will get anxious for banks to display sustainable revenue growth. These conditions will prevent banks from thriving, but they are not on the verge of unsound capital levels.

So it is great news that the majority of banks beat or met consensus estimates in the 4th quarter of 2012, but as the banking industry continues to emerge from the financial crisis, the operating environment remains challenging as low interest rates impede sustained fundamental improvement. This low-rate environment in conjunction with competitive loan pricing, increased regulation, regional economic challenges, and excess liquidity continue to pressure revenues and profitability for the banking industry. A rising tide raises all boats, and the 4th quarter themes of strong loan growth, NIM compression, strong mortgage banking results, continued credit recovery, and capital improvement could change in 2013.

A paper was released yesterday opining about Freddie & Fannie's future. It carries some weight, and we discussed it on the MBA's Secondary Marketing Committee call yesterday. Here is the press's take on it. Remember, however, that plenty of folks don't see any real change proposed or happening until next year.

Most mortgage companies that do not have agency approval want it - usually Freddie, Fannie, and then Ginnie. And even those lenders that have agency approval must be able to service loans, so wind up continuing to sell to the large investors and aggregators anyway since they either don't have the cash required to put servicing on their books or are under some type of written order that requires regulatory approval before servicing loans. So investors continue to thrive - which is why the commentary continues to carry updates.

Pinnacle Capital has added credit inquiry guidance to its FHA and VA policies.  Credit inquiry guidance, along with guidance on legal separation credit for non-purchasing spouses and student loan IBR, has been added to Pinnacle's USDA policies.  For Mammoth Jumbo products, it has been clarified that gifts of equity and prior loan modifications are unacceptable.

Carrington Mortgage is partnering with Equator Business Solutions to roll out their new RentPointe software, a single-family asset management suite that aims to maximize the performance of multiple-property portfolios.  The new technology will be integrated with Equator's EQ Investor Platform to provide more comprehensive support customers in managing acquisition, property management, and asset disposition needs.  Go to for full details.

With the introduction of its Enhanced Comparative SRP Analysis product, MountainView Servicing is now providing analysis to secondary marketing professionals on whether a lender is receiving the best execution for the servicing assets when their loans are sold with servicing released.  See the press release on to find out more.

Gosh, whatever will the market do when it doesn't have our Federal Reserve there to buy agency MBS to support the market? One answer is, "Deal with much higher rates." Here is what one trader wrote yesterday: "Economists are predicting that the Fed may begin reducing their bond purchases in the first quarter of 2014 but will be looking for consistent, strong payroll growth of likely 200k per month which will lead to an improved labor market and an unemployment rate of 7%. Per the New York Fed poll of primary dealers, the expectation is for the Fed to reduce their purchases in 2014 to ~$20 billion per month from ~$45 billion per month today."

In general rates have been going up a little, down a little, for quite some time. (Keep in mind, however, that rates could easily be exactly where they are right now at the end of 2013 and that lenders will be hurt more by loan level price changes.) Yesterday half the e-mails in my in-box were from investors changing prices - fortunately for the better. Most of the rate drop/bond price improvement, pushing rates back to November levels, was attributed to the euro area's third-largest economy, Italy, perhaps being left with a "hung parliament." In other words, Italy may require another vote after the four-way race that ended today was poised to result in a divided parliament, spurring concern of renewed turmoil in European markets. And when markets grow nervous, look for a flight to quality. "Risk off!"

The 10-year risk-free T-note in the U.S hit 1.87% and agency MBS prices were able to keep pace by improving .5-.75 in price depending on coupon. Supply was slightly below recent daily averages (roughly $2.5 billion in origination), and the government's 2-yr auction went well. With the sequester approaching and European political uncertainty coming to the forefront, traders reported that originators were buying back Fannie 3.5% hedges.

The economic calendar today has some morning data, a note auction at 1pm, but is highlighted by Fed Chairman Bernanke testifying before the Senate starting at 10AM EST. (See note a few paragraphs above about the Fed buying MBS.) At 9AM EST we have the December Case Shiller and FHFA home price indices are both expected to be unchanged with a +0.6 percent increase over the prior readings, and then an hour later January New Home Sales are seen higher to +380k and February Consumer Confidence (seen slightly higher). Bernanke gives testimony to the Senate on monetary policy, with a Q&A session as well, along with a 1PM EST $35 billion 5-yr note auction. In the early going rates are unchanged from Monday's close at 1.87% and agency MBS prices are roughly unchanged.

(Don't shoot the messenger.)

Recently, a Southern California man was put under 72-hour psychiatric observation when it was found he owned 100 guns and had (by rough estimate) 1 million rounds of ammunition stored in his home. The house also has a secret escape tunnel.
The television reporter said: "Wow! He has about a million machine gun bullets!" and the headline referred to it as a "massive weapons cache".
By California standards someone owning even 100,000 rounds would be called "mentally unstable".
If he lived elsewhere, such as Arizona, he'd be called "an avid gun collector."
In Oklahoma, he'd be called "a novice gun collector".

In Colorado he'd be called under-inventoried and needs further education since he needs at least that much stored in two separate "Remote mountain" locations plus that amount at home.

In Utah, he'd be called "moderately well prepared", but they'd probably reserve judgment until they made sure that he had a corresponding quantity of stored food

In Montana, he'd be called "the neighborhood 'Go-To' guy".
In Idaho, he'd be called "a likely gubernatorial candidate".
In Wyoming, he'd be called "an eligible bachelor".
In Texas, he'd be called "a Hunting Buddy."