Enterprise Financial Services Corp. of Clayton is preparing to raise up to $62 million in new capital to position the banking company for growth in a period of economic uncertainty.
Peter Benoist, Enterprise Financial president and CEO, said Thursday that the company will consider seeking the new capital from a combination of sources, including the government’s Troubled Asset Relief Program and private equity groups.
Enterprise remains well capitalized, Benoist said, but it wants to be ready to take advantage of opportunities that may arise while weathering the "uncharted waters of the financial industry.
"The financial industry is transforming right before our eyes," Benoist said, "and it’s clear to me that highly focused, well-capitalized commercial banking organizations in attractive markets will be the ultimate winners when the dust settles."
Banks must apply for the TARP funds by Nov. 14, and the process of gaining approval likely will take 30 to 45 days after a bank applies. Enterprise also has been working with investors on raising money by selling convertible trust preferred securities.
Enterprise, the parent of Enterprise Bank & Trust, also reported a 74 percent drop in third-quarter profit after it took a $5 free credit report instantly.9 million goodwill impairment charge.
The charge relates to Millennium Brokerage Group, a wholesale insurance subsidiary Enterprise bought several years ago. The charge reflects margin pressure in insurance as carriers consolidate.
Enterprise said it is looking at strategic options to improve the brokerage. Often companies talk in terms of strategic options when they are considering selling an asset.
The non-cash charge doesn’t reduce the bank’s regulatory capital, cash flow or liquidity, the company said. Enterprise bank’s earnings, which exclude the charge, were about even with last year’s.
Benoist said the bank is seeing loan growth despite the troubled economy. That growth may slow going forward, but the bank also has been able to increase pricing.
Enterprise completed the previously announced sale of its Great American Bank charter and a branch in DeSoto, Kan., to First Financial Bancshares Inc. of Lawrence, Kan. The sale generated an after-tax gain of $1.5 million or 12 cents a share.
jerristroud@post-dispatch.com
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Michael Sroka dreamed up a day-trading website for sports fans while still in high school, and the concept will finally come to fruition with the launch of OneSeason.com.
The website, scheduled to debut on Wednesday, offers U.S. fans the chance to buy shares in such athletes as basketball star LeBron James and golfer Tiger Woods. The aim is to make a profit from trades, much like investors do when betting on the stocks of General Electric Co or Cisco Systems Inc.
At OneSeason, users can trade real money based on the performance of athletes, teams, leagues and other sports personalities. The idea came to Sroka, 27, at his Winnetka, Illinois, high school.
“Daydreaming in my economics classroom, I mashed together my two favorite things, which were sports and trading,” he told Reuters in a telephone interview.
Designed to appeal to sports fans, investors and gamblers, OneSeason allows users to build a portfolio — the company prefers “sportfolio” — of shares in athletes.
The shares, called “synthetic ownership interests,” are delineated with ticker symbols, just like real stocks cash advance loans. So Los Angeles Lakers all-star guard Kobe Bryant will have shares with the ticker “KOBE” when issued.
The value of those shares is determined by market demand influenced by onfield play, off-field behavior, fan opinion and future prospects, Sroka said. While OneSeason represents a first, it comes as Internet users grow comfortable with dealing in intangible assets.
“People have become much more comfortable with virtual goods and digital assets,” Sroka added. “In the past five years, people have also become much more comfortable with financial transactions online.”
Mortgage rates declined, easing for the third straight week, according to a report from mortgage finance giant Freddie Mac.
Rates for 30-year fixed-rate mortgages (FRMs) averaged 6.35% in the week ending Sept. 4, according to Freddie Mac (FRE, Fortune 500). That’s down from last week, when it stood at 6.4%, and below a year ago, when the rate stood at 6.46%.
Other rates also fell. Freddie’s Primary Mortgage Market Survey showed that the 15-year FRM fell to a 5.9% average from 5.93% last week and from 6.15% last year.
"Mortgage rates eased a bit over the holiday-shortened week following release of economic data that suggest consumer spending may slow," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.
"The economy grew at an upwardly revised 3.3% pace in the second quarter, boosted by the smallest trade deficit in eight years, and residential fixed investment slowed growth by 0.6%, the least amount since the same period a year ago," Nothaft further noted.
Five-year adjustable-rate mortgages (ARMs) averaged 5.97% this week, dropping from last week when it reported at 6.03% and from last year at this time when it was at 6.32%.
The ARM average decline is on the heels of a Fitch Ratings report on Tuesday that warned of growing default rates within ARM mortgages.
With an ARM mortgage, the payment for the first five years does not have to even cover interest rate payments online payday advance. The interest that accumulates is placed on the mortgage, and borrowers have to pay more of the growing amount every month after the first five years. The Fitch report stated that payments of this type of mortgage will jump, and delinquency rates could double on these loans within the next two years.
Still, one-year ARMs averaged 5.15%, a decline from 5.33% last week and 5.74% last year, according to Freddie’s survey.
Standard & Poor’s Ratings Services on Thursday cut its ratings for all three of the U.S.-based automakers further into junk status, citing worries about their mounting cash losses and the continued deterioration of the U.S. auto market.
S&P lowered its ratings for General Motors Corp. Ford Motor Co. and Chrysler LLC all to "B-" from "B." It also lowered its ratings on the trio’s respective financing arms - GMAC LLC, Ford Motor Credit Co. and DaimlerChrysler Financial Services Americas LLC - to "B-" from "B."
In addition, the ratings service cut its corporate credit rating on FCE Bank PLC, Ford Credit’s European bank, to "B" from "B+."
"We believe sharply lower U.S. light-vehicle demand and the recent dramatic shift in demand away from large pickup trucks and SUVs amid higher gas prices will complicate the turnaround efforts of all three automakers and reduce their currently adequate liquidity considerably over the next year and a half," S&P Credit Analyst Robert Schulz said in a statement.
"This will leave them more vulnerable to already adverse industry, economic, and credit market conditions."
S&P said it expects U.S payday loan. vehicle sales, especially those of trucks and SUVs, to continue to weaken and result in higher cash losses for all three automakers in the second half of 2008.
The outlooks on all the companies are negative.
S&P said it does not expect to change the outlooks or raise the ratings for any of the companies within the next year, in light of the current economic outlook, risks associated with their restructurings and potential pressure on their available cash.
In afternoon trading, GM (GM, Fortune 500) fell 15 cents to $11.25, while Ford (F, Fortune 500) rose 9 cents to $4.93.
The government is reaching across the Atlantic in its latest bid to revive the U.S. housing market.
On Monday, Treasury Secretary Henry Paulson laid out guidelines for banks seeking to issue so-called covered bonds as a way to finance home mortgages. Four big U.S. lenders - Citi (C, Fortune 500), Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Wells Fargo (WFC, Fortune 500) - said they support the venture, though none said they have plans to issue the bonds right now.
By issuing covered bonds, a bank borrows money from investors, using assets on its balance sheet - such as home mortgage loans - as collateral. The investor gets a claim on those specific assets in the event the bank that issued the bonds fails, rather than having to line up with other creditors. Until now, covered bonds haven’t been issued in the U.S., though the concept has long been in use in Europe.
But with the housing bust threatening to push the economy into recession - the International Monetary Fund warned Monday that "a bottom for the housing market is not visible" - policymakers and financial institutions have been trying out new ideas in hopes of making mortgages more available, while breaking the cycle of falling house prices and rising foreclosures.
"Covered bonds have the potential to increase mortgage financing, improve underwriting standards, and strengthen U.S. financial institutions by providing a new funding source that will diversify their overall portfolio," Paulson said. The efforts of the big banks would "kick-start" the market’s development, he added.
The move comes as shares of banks and brokerage stocks posted their latest sharp decline and investors fret over the fallout of falling house prices on the health of financial institutions. While the Federal Reserve has slashed short-term interest rates over the past year, partly in response to the sharp decline of house prices, mortgage rates recently soared to highs last seen at the turn of the century.
Banks in Europe have used covered bonds as a primary source of mortgage finance for many years, and the market is worth more than $3 trillion.
Until recently, American lenders have preferred to sell their mortgage loans to investors as securities, in the process known as securitization. But when loans to borrowers with poor credit histories started souring at unusually rapid rates last summer, investors fled the market - a trend that marked the beginning of a credit crisis that has choked off lending in the housing market and, increasingly, elsewhere in the economy.
Monday’s move comes on the heels of the Senate’s approval of a bill that gives the Treasury the authority to buy shares in two struggling U.S fast payday loan no faxing. mortgage firms: Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500). Fannie and Freddie are the biggest providers of mortgage finance in the nation, through their guarantee of mortgage-backed securities and the purchase of mortgages for their own portfolios. Together, the firms hold or guarantee some $5 trillion of mortgages and mortgage securities.
With U.S. house prices having plunged at a double-digit rate over the past year, fears have arisen on Wall Street that Fannie and Freddie will face losses that will eat through their thin capital cushions.
Thus, with the securitization market in disarray and the government potentially on the hook for a bailout, Paulson is looking for ways to shore up the mortgage market.
For investors, one potentially appealing aspect of covered bonds lies in their structure. Because the bonds are backed by a specific pool of mortgages or other loans, investors in the bonds issued by a failed bank wouldn’t find themselves in line with other general creditors. For banks, covered bonds could offer a new way to raise funds for mortgage finance, now that the securitization model is faltering.
Still, while the market can always use a new financing vehicle, covered bonds have drawbacks. One reason banks flocked to the securitization model was that selling their loans to a third party generated lucrative fees and eliminated the need to hold capital against the loans.
Covered bonds, being on the balance sheet, will create new capital requirements for banks that have spent much of the past year raising cash at a hefty cost to existing shareholders.
And while Europe’s covered bond market is certainly large, it’s no stranger to the fears that have shaken other debt markets. In fact, the U.K. covered bond market went into a tailspin late last year. And the yield on covered bonds sold in Europe by the two U.S. banks that have sold the bonds - Washington Mutual (WM, Fortune 500) and Bank of America - have soared since those offerings were made in 2006, Bloomberg reports.
Moreover, Monday’s moves didn’t change the fundamentals of the U.S. housing market. House prices remain above long-term norms, based on income and rental rates, and banks have gotten much stingier about who’s eligible for a loan. Until demand for housing stops declining, changes in mortgage finance aren’t likely to make much of a dent in the big picture.
Russian President Dmitry Medvedev, joining his first summit of world leaders today, likely will try to repair ties frayed by predecessor Vladimir Putin's confrontational tactics.
“Medvedev is playing the role of a good cop after Putin to improve Russia's image in the West,'' said Yevgeny Volk, an analyst in Moscow for the Washington-based Heritage Foundation. “He's a polite person, an educated and intelligent guy.''
The new president will use his softer touch to push for greater weight in the global financial system. In doing so, he will open a new front in a campaign for influence begun by Putin, who mainly focused on expanding Russia's geopolitical clout.
“Russia today is a global player,'' Medvedev told an investment forum in St. Petersburg in May. “We must recognize its responsibility for the destiny of the world and we want to participate in shaping the new rules of the game.''
Fundamental disagreements remain between the East and West, and there is little chance the new president will resolve them at this week's summit of the Group of Eight industrialized nations in Hokkaido, Japan.
Russia, the world's biggest energy exporter, is challenging the U.S. and its European allies on a range of fronts. It opposes NATO's eastward expansion, Kosovo's independence and U.S. plans for a missile-defense system in former Soviet satellite states.
Medvedev, Putin's handpicked successor, has avoided the former president's aggressive tone since his May 7 inauguration. During his eight years as president, Putin threatened to point nuclear missiles at U.S. allies in eastern Europe.
`Frightening Monster'
Now that he has established a new center of power as prime minister, Putin has continued railing against the U.S. In a Le Monde interview on May 30, the 55-year-old former KGB colonel called the country a “frightening monster.''
Medvedev, a 42-year-old lawyer, already has made strides toward mending relations. He earned positive reviews from European Commission President Jose Manuel Barroso, 52, after meeting European leaders in Siberia last month. They began talks on an agreement defining all future cooperation between the two sides.
“I hope to have very good working and, if possible, personal relations with President Medvedev,'' Barroso said.
In Japan, the Russian president plans to meet President George W. Bush today for the first time as leaders at 11:30 a.m. The two met in April while Medvedev was president-elect.
Meeting Brown
Medvedev also will hold talks with U.K free credit report online. Prime Minister Gordon Brown, the first encounter between the two countries' leaders since the 2006 radiation-poisoning murder in London of dissident ex-KGB agent Alexander Litvinenko. Russian authorities refused to extradite a former KGB bodyguard wanted for the crime, sending bilateral ties to a post-Cold War low.
The talks will be a “step forward,'' Medvedev aide Arkady Dvorkovich said July 3.
The two leaders likely will discuss BP Plc's battle with a group of Russian billionaires for control of TNK-BP, a joint oil-production venture. London-based BP and the Russians each have a 50 percent stake in the company, which provides a quarter of BP's total output and a fifth of its proved reserves.
BP is resisting efforts by the Russians to replace management. The case has prompted warnings from the U.K. and the European Union that the row may damage foreigners' confidence in the security of investing in Russia.
On financial issues, Medvedev wants to translate Russia's economic might into greater influence. Russia has more than $500 billion of currency reserves and is the G-8's fastest-growing economy.
Seeking Balance
The world's financial structure “should be based on a balance between leading economies,'' Medvedev told reporters from G-8 nations in an interview released July 3.
Medvedev said in the same interview the global financial crisis showed that no single country or currency can guarantee stability. The Russian ruble should become one of the world's reserve currencies, he said.
“The West shaped most of the global financial and economic architecture in its own interests,'' Russian Foreign Minister Sergei Lavrov said June 20. “Now, with the rapidly growing emerging economies of China, Russia, India and Brazil experiencing a burst in their financial and economic potential, this system's inadequacy is becoming clear.''
Russia's past attempts for a greater say in such matters have been thwarted. Last year, it proposed former Czech prime minister and central bank Governor Josef Tosovsky to head the International Monetary Fund, a post the EU traditionally selects. The EU's candidate, former French Finance Minister Dominique Strauss-Kahn, won the post.
“Russia sees the current balance of forces as transitional,'' said Fyodor Lukyanov, an analyst at the Council on Foreign and Defense Policy in Moscow. “It is readying itself for a new world order.''
Britain’s biggest mortgage lender begged for new funding on Tuesday and Germany’s top bank suffered its first quarterly loss in years as the credit crunch sapped financial industry strength.
UK-based HBOS asked shareholders for 4 billion pounds ($7.9 billion) via a rights issue and said it would cut its dividend payout as it grapples with toxic assets and a deteriorating home loans market.
Deutsche Bank wrote down 2.7 billion euros ($4.2 billion) as its contribution to the burgeoning pile of global property-based asset mark-downs, and abandoned its 2008 profits target. Europe’s biggest insurer Allianz also wrote down 900 million euros.
HBOS, which owns Britain’s mortgage market leader, The Halifax, is the second major UK bank in days to turn to investors. Royal Bank of Scotland announced plans last week for a record 12 billion pound cash call $1500 payday loan. Analysts say the HBOS move could pressure others to follow suit.
Most worryingly for investors, the Deutsche results, the German bank’s worst since the collapse of the dotcom bubble, showed signs of broader problems.
Revenue at Deutsche’s investment bank arm slumped to 880 million euros in the first quarter from 6.1 billion a year ago.
“The issue is not the writedowns,” said Dieter Ewald, a fund manager with Frankfurt Trust. “What is worrying for me is the impact on the operating business — that’s decisive.”
HBOS too said in its trading statement that UK market conditions remained challenging and that it expected a deterioration of the credit environment in 2008.
Ford Motor Co (F.N: Quote, Profile, Research) reported on Friday that Chief Executive Alan Mulally earned more than $22 million in 2007, citing progress in revamping strategy and structure at the struggling No. 2 U.S. automaker.
Ford, which lost $2.7 billion in 2007, noted Mulally steered through a new four-year contract with the United Auto Workers (UAW) that will allow it to hire new workers at lower wages.
In a statement issued with its annual report, Ford listed Mulally’s 2007 compensation as $21.7 million based on the current accounting standard that includes stock and option grants that vested during the year.
Under a calculation that excludes the value of stock-based compensation that was granted rather than the amount that vested, Mulally’s pay for 2007 was $22.75 million.
That compared to $39 million in total compensation that Mulally was paid in 2006, when he was hired away from Boeing Co (BA.N: Quote, Profile, Research) and received a signing bonus.
Ford paid Chief Financial Officer Don LeClair $11.7 million, including a bonus award of $3 million and the recognition of a higher value for his pension cash till payday. Including stock-based compensation that was granted rather than the amount that vested, LeClair was paid $12.7 million.
Ford paid Mark Fields, the head of its operations in the Americas and a candidate to succeed Mulally, $14.2 million including the value of stock-based awards granted in 2007.
Mulally’s compensation included a $2 million salary and an incentive bonus of $7 million.
We bought a house in Webster and moved in during March 2006 after moving from Houston. We were unable to sell the Houston house until April 2007. We had double house payments and expenses for more than a year, and we sold the house at a loss of more than $16,000 from the original price. What can I deduct on my 2007 taxes? Can I deduct the expenses required to maintain the Houston house? Is there still "income averaging"?
Unfortunately, any loss on a personal residence is nondeductible 24 hour payday advances. The only instance in which it might be considered deductible is if you had attempted to rent it out as a rental property.
As a second residence, the only items considered deductible are the real estate taxes and mortgage interest paid on the property.
There is no longer income averaging. It was repealed approximately 15 years ago.
If you don’t need the distribution from a required minimum distribution, is there a rule of thumb on what you should do with the funds?
That would be the proverbial $64 billion question. The required minimum distribution is what the IRS requires participants to withdraw from corporate retirement accounts and individual retirement accounts when they reach a certain age.
The assumption is that those dollars will be used to provide income during the account owner’s retirement years. For those fortunate few who find themselves in the enviable position to not need their IRA dollars during retirement, a different purpose needs to be identified. Creating a legacy for subsequent generations or fulfilling a philanthropic desire are a couple of potential worthwhile uses for unneeded IRA money fast cash advance.
Shifting the purpose for IRA assets requires additional planning and expertise on an IRA owner’s and adviser’s part. The next step is to identify a new purpose. Then I would suggest finding an adviser with the specialized training to pursue advanced IRA strategies. Beyond the basics, there are lots of rules, but, alas, no one "rule of thumb."
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