Data & Research December 17, 2010

Suspended 401(k) Matches Returning

Of the 14.8% of employers suspending their 401(k) match in recent years, 39.3% have restored them, and another 37.8% are planning to do so in the next six months.
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That was the conclusion of a new study by the Profit Sharing/401k Council of America (PSCA) that indicated that more than 70% of companies didn’t touch their match, and 10% actually increased it.

“Companies continue to make their 401(k) plans a top priority,” said David Wray, PSCA President, in a release about the results. “Those that have suspended their matches are in the process of restoring them, and companies are aggressively restructuring their investment lineups.”

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Employees also are continuing to contribute to their plans, with many increasing their contributions. While nearly 40% of companies reported no change to the number of employees making contributions, 31.6% indicated an increase. However, 78.1% of companies that suspended matching contributions (which remain suspended) reported a decrease in participation.

Also, the survey found that 94% of companies have a committee responsible for reviewing fund performance. More than half of plans changed their investment lineup in the last year as they replaced poor performing funds and increasingly scrutinized plan fees (72.2% of companies versus 55.4% in 2009).

The survey was conducted in October 2010 and reflects the responses from 531 401(k) and profit-sharing plan sponsors.

More information can be found at the PSCA’s Web site.

Deals & People December 17, 2010

M&I Snapped Up in $4.1B Stock Swap Deal

BMO Financial Group announced Friday that it will acquire Marshall & Ilsley Corporation (M&I) in a stock-for-stock transaction.
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A news release about the $4.1 billion deal said each outstanding share of M&I will be exchanged for 0.1257 shares of Bank of Montreal. Based on the closing share price of Bank of Montreal on the TSX of C$62.05 on Thursday,  the transaction values each share of M&I at US$7.75.The closing share price of M&I on the NYSE on December 16 was US$5.79.

Upon closing, Mark Furlong, who is currently Chairman, President, and CEO of M&I, will become CEO of the combined U.S. Personal and Commercial banking business, based in Chicago. He will report to Bill Downe, President and Chief Executive Officer of the Toronto-based BMO Financial Group and will join BMO’s Management Committee.  Also, on closing, Ellen Costello will be CEO of Harris Financial Corp. and U.S. Country Head for BMO with governance oversight for all U.S. operations, also reporting to Downe and also a member of BMO’s Management Committee.

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Under the terms of the merger agreement, M&I will merge with a BMO subsidiary, and existing M&I shareholders will become entitled to receive common shares of Bank of Montreal.  M&I is based in Milwaukee and has $110 billion in assets.

As part of the agreement, BMO will buy M&I’s TARP preferred shares at par plus accrued interest – with full repayment to the U.S. Treasury immediately prior to closing.  M&I’s existing warrants held by the U.S. Treasury will also be purchased by BMO.

The transaction, which has been approved by the BMO and M&I  Boards of Directors, is expected to close prior to July 31, 2011.

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