Haven Trust Bank Florida, which has struggled through recession, was taken over this afternoon by a South Florida bank in a Federal Deposit Insurance Corp. assisted deal.
The FDIC and First Southern Bank of Boca Raton entered into a loss-share transaction on $127.3 million of Ponte Vedra-based Haven Trust’s assets, according to a press release issued by the FDIC. First Southern Bank will share in the losses on the asset pools covered under the loss-share agreement. The two-branch Haven Trust will reopen as First Southern Bank Saturday.
The four-year-old Haven Trust was issued a consent order in March to to decrease problem loans and raise capital. The bank had $148.6 million in assets and $133.6 million in total deposits as of the second quarter, according to the FDIC. Haven Trust was also the biggest income loser of 15 locally based community in the second quarter, with a net loss of $13.5 million, according to SNL Financial.
Haven Trust was the 23rd largest bank in Northeast Florida with nearly $157.2 million in area deposits as of June 30, 2009, the latest data available from the FDIC’s market share report.
Haven Trust is the second bank in Northeast Florida to fail since the financial crisis began. In April, First Federal Bank of North Florida was taken over by TD Bank NA. It is also the 126th FDIC-insured bank to fail in the nation this year, and the 24th to fail in Florida.
These are the glory days of the residential real estate investor. Low prices, rock-bottom interest rates and stable rental markets have created huge buying opportunities.
"It’s awesome right now. I don’t think we’ll ever see another time like this," said Tanya Marchiol of Team Investments, which has operations in about 10 states but focuses mostly on the Phoenix market.
These investors are known to many as vultures because they swoop in and buy "distressed properties" — foreclosures and short sales — cheap. Places like Las Vegas, Phoenix and Miami are popular because home prices there have dropped as much as 70%.
But how they’re investing has changed. In the boom years, they would buy a property and flip it for a quick cash out. Today, they are holding and renting for hefty, steady incomes.
Once they analyzed their decisions based on home-price appreciation, which is very speculative. Now they consider potential rental profits, which is far more stable.
Back then, they flipped often and helped to bid up home prices into a froth. Now, the investors say, they can be a part of stabilizing neighborhoods.
"People are not in it to flip like back in the old economy," said Matt Martinez, an investor and author whose new book, "How to Make Money in Real Estate in the New Economy" comes out next February. "The new economy dictates that you have to have a long time horizon."
Marchiol, for example, does not even factor in home price appreciation for at least a year. After that, she calculates only a 3% annual increase — a return that won’t turn heads of investors who only want to buy low and sell high.
Marchiol just purchased four separate four-plexes in North Phoenix. Three years ago, each four-unit building sold for $310,000; she paid just $70,000 per building. She intends to spend about $64,000 rehabbing the properties, making her total investment $344,000.
In total, she currently owns about 17 rental units. Usually she buys the properties to keep herself, but she also works with a group of investors who are intent on holding them and renting them out. She can spot the deals and then sell to them.
For example, with her North Phoenix buildings, the investors will buy the buildings for $95,000 each. They’ll put 20% down and finance the rest, about $76,000 per building.
At today’s low interest rates, they’ll get a near 5% loan. That yields a payment of about $400 a month. Figure another 10% of the price for property management, 10% for maintenance, an 8% vacancy rate, taxes, insurance and other home ownership expenses, and you’re talking about a monthly nut of roughly $1,300.
Marchiol projects the apartments will rent for $600 a month each, for a total rent roll of $2,400. That gives the owners a profit of $1,100 per month and $13,200 per year — a nearly 70% annual return on investment.
Although conditions are very favorable, investors have to be adaptable because the market is evolving rapidly. In Phoenix it’s changed in just the past six months. Foreclosure auctions are no longer a fertile hunting ground for Marchiol.
"Amateurs have come in and run up the prices," she said. "In 2009 I bought 76 properties at foreclosure auctions, at an average of about 60 cents on the market dollar. This year, I’ve bought four."
Glenn Plantone faces a similar situation in Las Vegas. A veteran real estate broker and investor, he has switched from buying mostly foreclosures and repossessions to short sales almost exclusively. That’s because the inventory of distressed properties available in Vegas is way down, to about a two-week supply.
"The banks make better profits with short sales, so they’re not foreclosing," Plantone said. "They’ve switched staff to processing short sales and they’ve gotten faster at processing them."
He tries to purchase properties for at least 10% less than what he considers to be true market value, then he does some light rehabilitation and sells them to some of the 3,000 buyers he works with.
Since prices have fallen about 70% in some Vegas communities and rents have only declined by about 20%, it’s possible for his investors, who are cash buyers, to make money from the first month the homes are rented.
"We’re getting cash flow (net return on investment) of 12% to 14%," he said.
He doesn’t completely ignore potential profits from home price appreciation because he believes the town is bouncing around the bottom. (Homes already sell for below what it would cost to build new homes.) He does not, however, emphasize that aspect of the investment.
It’s the income from rentals that’s paramount right now.
The beauty of cash flow, of course, is that even if the prices decline another 10% or 20%, the investors should be able to live with that.
"I tell them to plan on holding for five years," he said. "With cash flow, there’s no need to worry about price drops."
The Office of Thrift Supervision and U.S. Small Business Administration are among sponsors of two upcoming information-sharing sessions for small business owners and lenders.
The sessions, scheduled for July 14, will be held at BlueCross BlueShield building at 257 West Genesee Street in downtown Buffalo.
The first is for lenders and will run from 8:45 a.m. to 12:30 p.m. Participants will learn how to enhance small business lending, risk mitigation, alternate sourcing of business financing and about government programs. The second session starts at 1:00 p.m. and is geared toward small business owners. Among the topics it will cover are accessing credit, government-sponsored programs and tax issues. Lenders will be on hand to work with small business owners.
“We want to focus on best practices that financial institutions have in terms of lending to small businesses that typically do not qualify for banks’ regular small business programs,” said Office of Thrift Supervision spokesman Francis Baffour payday loans guaranteed no fax.
Other sponsors include New York State Banking Department, Federal Reserve Bank of New York and the Office of the Comptroller of the Currency.
“What we are trying to do is encourage institutions to become SBA guaranteed lenders,” Baffour said.
For more information, visit the Office of Thrift Supervision Web site at http://www.ots.treas.gov/index.cfm?p=InteragencySmallBusinessLendingForumWorkshop.
As world leaders gather in Canada to discuss ways to strengthen the global economy, lawmakers in the United States finalized a bill Friday that would impose a $19 billion tax on financial institutions.
The tax, which is part of a sweeping overhaul of the U.S. financial system, comes after policymakers in the United Kingdom, France and Germany moved ahead with plans to impose new bank taxes this week.
Given those steps, analysts expect leaders to discuss bank taxes at the G-20 summit this weekend. In a Tuesday letter to fellow G-20 members, the leaders of France and Germany called for "an international agreement to introduce a levy or tax on financial institutions."
But plans to impose a global bank tax were scratched at the last G-20 meeting earlier this month in South Korea. Canada, Brazil and Japan opposed the idea, noting that banks in their countries did not require government aid during the financial crisis.
While the taxes vary from country to country, the reasoning behind them is basically the same: to ensure that banks are responsible for the risks they take and not taxpayers.
"The failures of the banks imposed a huge cost on the rest of society," said George Osborne, the U.K. Chancellor of the Exchequer. "I believe it is fair and it is right that in the future banks should make a more appropriate contribution, which reflects the many risks they generate."
Osborne made the remarks Tuesday in unveiling one of the most stringent budgets in decades lowest fee payday loans. The budget calls for a levy on bank liabilities that is expected to raise 2 billion British pounds annually.
In the United States, the proposed $19 billion tax would cover the cost of implementing financial reform. President Obama is expected to sign the bill in July.
The tax would apply to banks with more than $50 billion of assets and hedge funds with over $10 billion in assets. It would be assessed based on how much risk an institution takes and is expected to raise $4 billion a year over the next five years.
In addition, Congress is considering a $90 billion "financial crisis responsibility fee" as part of President Obama’s 2011 budget proposal. The so-called bailout tax would be paid largely by major financial institutions that contributed to the financial crisis, and were the biggest beneficiaries of extraordinary government actions.
While the banking industry supports some key principles of reform, bankers are concerned that certain regulations will hurt consumers, according to Edward Yingling, president of the American Bankers Association.
"The consequences involved are very real and will have a very negative impact on traditional banks, on consumers and on the broader economy," Yingling said in a statement.
Shareholders of Quad/Graphics Inc. and World Color Press Inc. have approved Quad's proposed acquisition of World Color Press and put the deal on track for a July 2 closing.
Shareholders of privately held Quad/Graphics of Sussex approved the transaction Thursday, while shareholders of Montreal printer World Color Press gave the deal the go-ahead Friday morning. The deal still requires the approval of the Quebec Superior Court, Commercial Division, and a deal on a final order is scheduled for June 28.
Quad/Graphics has been cleared to apply to list its class A common stock on the New York Stock Exchange under the stock symbol QUAD. Quad/Graphics anticipates the shares will begin trading July 6 or July 7, at which time the company will usher in a new era as a publicly traded company. It is expected that Joel Quadracci, Quad/Graphics chairman, president and CEO, will ring the opening bell July 7.
World Color shareholders will receive consideration of 40 percent of Quad/Graphics stock and a cash payment of up to $93.3 million. Existing Quad/Graphics shareholders will hold 60 percent of the company.
The merger, valued in media reports at $1.3 billion to $1.4 billion, not including any assumed debt, will create the second largest commercial printing operation in North America, trailing only industry leader R.R. Donnelley & Sons Co.
A diverse musical line-up featuring some familiar acts along new ones dot Buffalo Place’s annual Thursday at the Square and Buffalo Place Rocks the Harbor concerts.
The 18-show line-up was announced Thursday evening.
Among the highlights: a July 15 show featuring Umphrey’s McGee and G. Love & Special Sauce’s only summer show on July 22.
Favorites like Robert Randolph and the Family Band, Los Lobos and the Fabulous Thunderbirds are also slated to appear at Thursday at the Square shows.The Buffalo Place Rocks the Harbor concerts include a two-night stand by moe. and a rare appearance by jazz great Herbie Hancock.
The Thursday at the Square shows, which are held in Lafayette Square, are free. They begin on June 10 and run for 10 weeks through Aug. 12.
Buffalo Place Rocks the Harbor concerts are held along the Central Wharf area in the Canal Side footprint of downtown Buffalo. Those concerts have $10 advance fee and $20 at the door.
M&T Bank is the presenting sponsor.
Concerts at both venues begin at 5 p.m.
Buffalo Place has been presenting the concerts for 24 summer seasons as means to help attract visitors to downtown Buffalo. It is estimated the concerts have an estimated $4 million economic impact including more than $3 million that stays in the downtown Buffalo core.
“Besides the economic impact, the other value these shows have is by the number of people they bring to downtown,” said Anthony Colucci III, Buffalo Place Inc. president. “We hope the bars and restaurants do benefit.”
The Thursday at the Square line-up is:
• June 10: Alejandro Escovedo and the Sensitive Boys with special guest Tift Merritt
• June 17: Ingrid Michaelson
• June 24: Martin Sexton and Ryan Montbleau Band with Civil Twilight
• July 1: Ed Kowalczyk of Live
• July 8: Ozomatli with Rebelution
• July 15: Umphrey’s McGee with Tea Leaf Green
• July 22: G. Love & Special Sauce with Rogue Wave
• July 29: Robert Randolph & the Family Band
• Aug. 5: Los Lobos
A dubious distinction was reached during the first three months of 2010: More than 10% of all mortgage borrowers are now behind on their payments.
The delinquency rate hit a record of 10.06% in the first quarter, according to the Mortgage Bankers Association. The seasonally adjusted rate accounts for all mortgages on properties that have up to four units and that are at least one payment late.
The rate has been inching steadily toward this record, having ticked up almost a full point since a year go.
The report contained a sliver of good news, however. The non-seasonally adjusted delinquency rate dropped almost one point to 9.38% between the fourth quarter 2009 and first quarter 2010.
So while the seasonally adjusted number saw growth during that period, the non-seasonally adjusted number followed the traditional pattern. Rates usually peak in the fourth quarter, as holiday spending and heating bills kick in causing people to put off paying their loan. But then, when they get caught up in the first quarter, delinquencies fall again.
"The question is whether the drop represents anything more than a normal seasonal decline or a more fundamental improvement," said Jay Brinkmann, MBA’s chief economist. "The normal seasonal drop is coming right at the point where we believe delinquencies could potentially be declining and the problem for the statistical models is determining which is which."
The foreclosure inventory rate, which represents the percentage of mortgaged homes repossessed by lenders, was fairly flat quarter-over-quarter, inching up to 4.63% from 4.58%. But it jumped a lot from 12 months earlier, when the rate stood at 3.85%.
Nearly all varieties of loans suffered increased delinquencies compared with 12 months earlier. Prime fixed-rate loans hit 6.17%; prime adjustable-rate mortgages (ARMs) tipped 13.52%. Subprime fixed-rates jumped to 25.69%; and subprime ARMs are a whopping 29.09%.
The one bright spot was that delinquencies for FHA loans, the mortgages guaranteed by the Federal Housing Authority, dropped slightly to 13.15%.
The improvement is likely due to tighter FHA underwriting standards, which it adjusted after loans issued in 2007 and 2008 started souring. That should be a relief for taxpayers, who will be on the hook for any losses the FHA suffers.
Most of the overall rate increases are attributable to the seriously delinquent loans, Brinkmann said. Those loans, which are 90 days or more late, are going all the way through to foreclosure, but are not being foreclosed, keeping people in the system longer.
In the pre-housing-bust world, many borrowers would have already lost their homes and their delinquencies would no longer be counted in the survey.
Shift in problem-loan types
Lenders have slowed repossessions for various reasons: They may not have enough staff yet to handle the volume; the foreclosure prevention initiatives, such as the Home Affordable Modification Program, is postponing many foreclosures; and the banks themselves are trying to prevent defaults by approving more short sales.
There has been a fundamental change in the nature of the loans causing the most default problems, according to Brinkmann. And, he added, unemployment is the culprit. "Delinquencies are much more driven by the recession than by any one loan type now," he said.
Subprime ARMs accounted for nearly 30% of all delinquencies a year ago, but just under 15% now. Meanwhile, prime fixed-rate loans delinquencies have grown so much that they represent the single biggest bucket of delinquent mortgages: 37% up from 29% a year ago.
Some of the prime loan defaults stem from an increase in people deliberately "walking away" from mortgages. These are homeowners who can pay their loans but choose not to because their homes have dropped so much in value.
According to a recent report, as much as 31% of all defaults in March were strategic.
Brinkmann opined that many of these "strategic defaulters" may be underestimating the impact of walking away. It may take them much longer to repair their credit histories than they realize as lenders assess more than their credit ratings to determine whether to finance future home purchases.
Underwriting involves more than just checking credit scores, and if a lender sees a strategic default on their records, homebuyers may not qualify for loans.
"They may be able to repair their credit scores," he said, "but their ability to buy a home in the future may be negatively impacted for years to come."
Stocks ended mixed after a choppy session Wednesday, as differing profit reports from Apple and Yahoo weighed on the tech sector and investors remained wary following strong quarterly reports from Morgan Stanley and Wells Fargo.
The Dow Jones industrial average (INDU) added 8 points, or less than 0.1%, to end at 11,124.92. The S&P 500 index (SPX) fell 1 point, or 0.1%, to settle at 1,205.93, and the Nasdaq composite (COMP) rose 4 points, or 0.2%, to close at 2,504.61.
"As we get beyond earnings, attention is going to turn right back to the housing and job markets," said Dave Hinnenkamp, chief executive of KDV Wealth Management. "The downturn has left a really big scar, and investors who got burned will be cautious for some time."
Stocks finished Tuesday’s session in positive territory, thanks to better-than-expected earnings from Goldman Sachs and several consumer companies.
"Investors were holding their breath for this earnings season, and it looks like it’s going to be decent," Hinnenkamp said. "This makes people comfortable saying we’re in a recovery process, but it’s going to be a slow one."
Tech earnings: Late Tuesday, iPod and Mac maker Apple (AAPL, Fortune 500) posted a record quarter that blew past Wall Street’s estimates. Apple shares ended more than 6.1% higher.
Yahoo (YHOO, Fortune 500) also delivered earnings that beat expectations, but its sales came in below estimates. Shares closed down 4.9%.
"The tech sector leads out of the recession," Hinnenkamp said. "After that we’ll be looking for the industrial and material sectors to rise — and once we move forward, attention will turn to the energy sector."
Financial earnings: Earlier Wednesday, Morgan Stanley (MS, Fortune 500) said it swung to a $1.8 billion profit in the first quarter Wednesday before the bell, as strong trading revenue boosted the Wall Street firm’s latest results. Shares of Morgan ended 4.2% higher.
Wells Fargo (WFC, Fortune 500) reported a $2.5 billion profit before the bell, beating Wall Street expectations. The company said that credit conditions have "turned the corner" from the weakness of the financial crisis. Still, Wells shares fell almost 2% by the end of trading.
Overall, the finance sector ended 10.8% higher Wednesday.
"We’re not unreasonably priced at these levels, considering earnings," Hinnenkamp said, "but it’s not a deep-value market, either."
Other corporate results: In addition to banks, investors digested quarterly results from several Dow components:
– AT&T (T, Fortune 500) beat estimates on a boost from strong sales of Apple’s iPhone;
– Boeing (BA, Fortune 500)’s profit and revenue dropped amid fewer airplane deliveries;
– McDonalds (MCD, Fortune 500)’ earnings rose above predictions as sales rose across all its markets, especially Europe and Asia;
– United Technologies (UTX, Fortune 500) also beat estimates.
Also, Chrysler announced that it earned its first operating profit since exiting bankruptcy on June 10, 2009. The profit follows nearly $4 billion of losses logged by the automaker during that time.
The results continued after the markets closed, with Starbucks (SBUX, Fortune 500) and other major names reporting results after the bell. The coffee chain handily beat profit and sales estimates, and the company lifted 2010 guidance. Shares were up 2% in after-hours trade.
In other company news, General Motors announced Wednesday morning that it had made a final payment of $5.8 billion late Tuesday to the U.S. and Canadian governments, paying off the last of its $6.7 billion in loans.
Outlook: "Psychological issues will continue to drive the markets," said KDV’s Hinnenkamp.
He expects a slow but continued higher trend, with the S&P around 1,200 in the coming weeks, and the Dow around 11,250.
"The economy is improving, but slowly," Hinnenkamp said. "Thus recovery wont come as quickly hoped for, and a sustained bounceback can come only once housing and jobs kick in."
But even negative news outside of the real estate and employment sectors could put a damper on the uptick, Hinnenkamp added.
"Any piece of bad news, people worry there’s an Armageddon," he said. "But there’s always good and bad news out there — it depends where you choose to focus."
World markets: European shares, including the FTSE 100 in Britain, France’s CAC 40 and Germany’s DAX, ended lower.
Asian markets ended the session mixed. Japan’s Nikkei rallied 1.7% and the Shanghai Composite surged 1.8%. The Hang Seng in Hong Kong lost 0.5%.
Other markets: The dollar edged higher against the euro but remained weak versus the Japanese yen and the U.K. pound.
The price of oil fell 17 cents to settle at $83.68 a barrel. Wednesday marked the first day of the June contract.
COMEX gold for June delivery prices rose $9.60 to settle at $1,148.20 an ounce.
Treasury prices were higher, with the yield on the benchmark 10-year note at 3.78%. Bond prices and yields move in opposite directions.
The non-partisan Congressional Budget Office estimates that the Democrats’ revised health care bill will cost $940 billion over the next 10 years, a House Democratic source told CNN Thursday.
CNN has not seen the numbers directly yet nor has the CBO released them publicly. But, according to the source, the bill would cut the deficit by $130 billion during the first decade. And it would reduce the deficit by another $1.2 trillion in the following decade, the source said.
The measure extends health insurance coverage to 32 million Americans, helping to guarantee that 95% of Americans will be covered, the source said. It also reduces Medicare expenditures by 1.4% annually while extending Medicare’s solvency by at least 9 years, the source added.
The source also told CNN the $940 billion price tag is fully paid for. But what’s not clear yet — and what may be revealed later Thursday — is just how Democrats plan to pay for the bill instant payday loan.
One of the reasons House Democrats objected to the Senate-passed version of health reform is the nature of some of the revenue raisers in that bill, in particular an excise tax on insurers that would apply to high-cost insurance plans.
Supporters of the excise tax say it offers a good shot at reducing health care spending over time, since insurers and employers would seek to avoid the tax by opting for lower cost coverage.
Opponents, including unions, say the tax would be passed on to workers, and lower cost coverage would be less comprehensive.
– CNN’s Dana Bash and Brianna Keilar and CNNMoney’s Jeanne Sahadi contributed to this report.
Americans may still be frustrated with the nation’s top banks, but the technology that large lenders are dangling in front of consumers may keep some from leaving.
Bank of America (BAC, Fortune 500) customers, for example, can now deposit checks at an ATM without having to fill out a deposit slip, as a result of the company’s recent conversion of nearly 14,000 cash machines into "envelope-free" ATMs.
Meanwhile, JPMorgan Chase (JPM, Fortune 500) has made waves with a nearly identical service that lets people deposit cash directly into an ATM.
Wells Fargo (WFC, Fortune 500) unleashed its own flurry of tech-driven initiatives over the last year, including a new mobile service that allows customers to transfer as much as $1,000 to another Wells Fargo account holder from their BlackBerry or iPhone.
"Our promise is to be available anywhere and everywhere our customers expect us to be," said Arah Erickson, head of Wells Fargo’s retail mobile banking division.
Big banks have long relied upon cutting-edge technology as a way to retain existing customers or win over new ones. These days however, "gee-whiz" banking products like an iPhone application or smart-ATM have taken on even greater significance.
Offering greater convenience may help soothe consumers who have become outraged over bailouts and big bonuses. But embracing new technology also makes good business sense for banks looking to cut expenses.
A customer that uses a teller to make a deposit, for example, costs the bank $1.34 on average, according to research firm TowerGroup. That same deposit made at an envelope-free ATM costs just 59 cents.
"That saves a lot of money," Bank of America CEO Brian Moynihan said during a conference in New York last month, discussing the bank’s recent success in getting more customers to conduct transactions at its recently-updated network of ATMs.
Many of the nation’s top banks have been scouring for ways to cut costs as well as find new revenue streams as a result of the crisis and as the federal government has steadily unveiled a variety of new restrictions, including limits on their credit card operations.
Interestingly though, most banks have been reluctant to expand the ATM much beyond its role as a cash-dispensing and deposit-accepting machine, resisting such available technologies as using the ATM to sell concert tickets or help a customer pay a parking ticket.
"We want it to be as fast as possible for the customer," said JPMorgan Chase spokesman Tom Kelly guaranteed fast personal loans.
Many experts instead suggest that perhaps the biggest push will come in mobile banking. Nearly half of all iPhone users, for example, already do much of their day-to-day banking by phone, according to a study published last fall by Javelin Strategy & Research.
That number however, is expected to balloon in the coming years with 99 million U.S. adults conducting some sort of bank transaction from their mobile phone by 2014.
Top lenders like Wells Fargo and Citigroup (C, Fortune 500) already offer cell phone users a means by which to pay their bills by phone, check their balance or locate the nearest ATM.
It is widely believed that these and other banks will soon allow customers to make a deposit by taking a picture of a check with their smartphone, a burgeoning industry practice called "remote deposit capture."
Financial firm USAA was among the first to offer such a service when it launched its mobile check deposit product "Deposit@Mobile" to its predominantly military customer base last summer.
Some consumers have been reluctant to embrace such new technologies partly over concerns of having their account information compromised. But whether you have an account with a big lender or not, mobile banking and smart ATMs will at some point become the industry standard.
In fact, some ambitious community banks and credit unions, which have historically not had the economies of scale to implement such cutting-edge technologies, are now capable of offering products to rival the big guys.
San Antonio, Texas-based Randolph-Brooks Federal Credit Union, for example, which is a little more than one one-thousandth the size of Bank of America, has already announced plans to offer a mobile deposit product to its customers, noted Red Gillen, senior analyst at the consultancy Celent.
Customers at Mercantile Bank of Michigan, which operates just seven branches, can just as easily transfer funds as Wells Fargo customers with its MercMobile service.
Gillen said many of the latest technologies, particularly online services like an iPhone or BlackBerry application, don’t require a budget-busting investment by smaller banks.
"It really serves to level the playing field," he said.
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