Regency Centers closing merger with Equity One this week

(Courtesy of Financial News and Daily Record)

Shareholders of Regency Centers Corp. on Friday approved the company’s $4.6 billion merger with Equity One Inc., clearing the way to close the deal this week.

Regency will be the surviving company of the merger between the two companies that specialize in developing and operating shopping centers anchored by supermarkets. The company will remain headquartered in Jacksonville with Regency’s senior management continuing to run it.

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The merger is expected to be completed Wednesday.

Meanwhile, in light of the merger, S&P Dow Jones Indices is adding Regency to the Standard & Poor’s 500 index this week.

Inclusion in the bellwether stock index will increase the company’s visibility on Wall Street.

Regency is swapping places with pharmaceutical company Endo International, which will take Regency’s spot in the S&P MidCap 400.

“Post acquisition, Regency Centers is expected to have a market capitalization more representative of the large cap market space. Endo International is ranked near the bottom of the S&P 500 and has a market capitalization more representative of the mid-cap market space,” S&P Dow Jones said in a news release.

Regency will become part of the S&P 500 at the opening of trading Thursday.

‘Opposite day’ at CSX, Bloomberg columnist says

A Bloomberg News columnist had an interesting take on the ongoing effort of Hunter Harrison to become CEO of Jacksonville-based CSX Corp.

“It’s opposite day at CSX Corp., where an activist investor is fighting for — rather than against — a jumbo-sized executive pay package,” Brooke Sutherland wrote in her Bloomberg column last week.

Harrison, former CEO of Canadian Pacific Railway Ltd., is working with hedge fund Mantle Ridge to try to get the CSX job.

Current CEO Michael Ward announced last week he will retire May 31.

According to CSX, Harrison is demanding a compensation package that exceeds $300 million over four years. Mantle Ridge disputed that in a letter to CSX’s board but still described a package that exceeds $200 million.

“Even if you strip away all the extras and focus on the base salary, the $2.2 million a year that CSX says Mantle Ridge is seeking for Harrison is almost double what Ward received in 2015. It’s also more money than other CEOs of public U.S. railroads get, according to data compiled by Bloomberg,” Sutherland wrote.

“So essentially the argument is that CSX needs to be more aggressive about improving its profitability, but to do that it needs to balloon its CEO compensation expense,” she wrote.

All this comes as CSX says it will reduce costs by cutting 1,000 management jobs, with most coming from Jacksonville.

CSX is planning a special meeting to allow shareholders to vote on whether they want the company to pay Harrison. You have to wonder how many CSX managers are stockholders and how many votes they have.

Advanced Disposal earnings rise

After completing its initial public offering in October, Advanced Disposal Services Inc. last week reported fourth-quarter adjusted earnings of $17.2 million, up from $5.5 million the previous year.

For all of 2016, the Ponte Vedra-based waste management services company reported adjusted earnings doubled to $33.5 million. Revenue of $1.405 billion was slightly higher than 2015 revenue of $1.396 billion.

The company is projecting 2017 revenue of $1.45 billion to $1.475 billion.

“Advanced Disposal has undergone transformational changes during 2016,” CEO Richard Burke said in a news release.

“I am pleased we were able to improve our capital structure and begin the next chapter of our company’s history as a public company, while at the same time producing strong results for both fourth quarter and the full year 2016,” he said.

Creative Learning proxy fight ends

A proxy fight launched by the former CEO of St. Augustine-based Creative Learning Corp. has apparently failed.

Brian Pappas was terminated in October 2015 as CEO of the company, which offers educational and enrichment programs for children through franchisees.

Pappas, who still controls 19.5 percent of the stock, was seeking to remove the four current board members of Creative Learning and replace them with three of his own.

However, Creative Learning said in a Securities and Exchange Commission filing that Pappas did not deliver enough consent forms from other stockholders by a Feb. 7 deadline.

So, there will be no changes to the board, the company said.

“With the disruption of the proxy contest behind us, we are happy now to be able to concentrate all our energy upon several important initiatives to increase franchise sales, grow franchisee success and enhancing our wonderful brand and educational methods,” Chairman Chuck Grant said in a news release.

Duos Technologies plans reverse split

Duos Technologies Group Inc. shareholders last week approved a plan to lift the company’s stock price with a reverse split.

The measure allows Duos to enact the reverse split at a ratio of at least 1-for-5, meaning stockholders would get one share for every five they currently own. The ratio could go as high as 1-for-500, at the discretion of the board of directors.

Jacksonville-based Duos, which provides intelligent analytical technology solutions, is traded in the OTCQB market and is hoping a higher stock price will help it get a Nasdaq listing.

The stock was trading at just 3 cents a share when the company filed its proxy statement for the reverse split.

Convergys drops on earnings miss

Convergys Corp. dropped to a 52-week low Thursday after reporting revenue and earnings below expectations.

The outsourced customer service company’s adjusted fourth-quarter earnings of 47 cents a share were 6 cents lower than the previous year and a penny below the average analyst’s forecast, according to Yahoo Finance.

Revenue rose 1 percent to $758 million, but that was lower than the average forecast of $766 million.

Convergys forecast 2017 earnings per share will range anywhere from 3 percent lower than 2016 to 3 percent higher.

The company said in a news release it expects “seasonal sequential” drops in revenue in the first quarter and lower earnings in the second quarter, with results beginning to improve in the third quarter this year.

“Future actions to streamline the business and align costs to match anticipated revenue will likely require discrete actions in the first quarter of 2017, the costs of which are not included in this guidance,” it said.

Cincinnati-based Convergys has 1,350 employees in its Jacksonville office, where the workforce has fluctuated over the years along with contract wins and losses.

Its stock fell to a 52-week low of $22.22 Thursday before closing at $22.63, down $2.42 on the day.

Medtronic grows third-quarter revenue

Medtronic plc said revenue in its Jacksonville division — which produces surgical instruments for ear, nose and throat doctors — rose in the “low single digits” in its third quarter ended Jan. 27. However, it did not provide numbers.

The global medical device company said revenue in its entire specialty therapies group, which includes the ENT division, rose 4 percent to $370 million.

Total third-quarter revenue rose 5 percent to $7.28 billion and adjusted earnings grew by 6 cents a share to $1.12. That was a penny higher than the average analyst’s forecast, according to Zacks Investment Research.

Medtronic’s stock rose $1.68 to $80.56 Tuesday after the earnings report.

Renasant eyes local mortgage market

Renasant Corp. is a Mississippi-based banking company that appears to be the latest financial institution to have its sights on the Jacksonville market.

Renasant doesn’t have a bank branch in Jacksonville but it is looking to expand mortgage banking efforts in Northeast Florida.

During the company’s year-end conference call, Executive Vice President James Gray said Renasant is looking for mortgage growth in North Florida this year after an overall slowdown in mortgage activity at the end of 2016.

“We utilized this slowdown during the fourth quarter as an opportunity to amplify our recruiting efforts, which are already in effect, and we were able to bring on a producing manager, not just a nonproducing manager but actual producing manager in Jacksonville,” Gray said, according to a transcript of the call in a Renasant SEC filing.

“He is onboard and actively recruiting down in the Jacksonville/Gainesville and possibly over into the Orlando area. We anticipate dramatically increasing our production in the northern Florida market,” he said.

Renasant entered the Florida market in 2015 by acquiring HeritageBank of the South, which had bank branches in Ocala and Gainesville. A year before that deal, HeritageBank had acquired Ocala-based Alarion Bank, which had a mortgage office in Jacksonville.

Renasant, headquartered in Elvis Presley’s hometown of Tupelo, had assets of $8.7 billion at the end of 2016. The bank reported earnings rose 34 percent last year to $90.9 million, or $2.17 a share.

Jeff Brandes Files Bill to Curb Insurance Fraud

(courtesy of Sunshine State News)

Sen. Jeff Brandes, R-St. Petersburg, is going after insurance fraud in the Sunshine State.

On Friday, Brandes filed legislation to tackle insurance fraud by requiring insurance companies to develop anti-fraud plans and submit them to the Division of Investigative and Forensic Services.

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Brandes’ legislation would also require companies to provide anti-fraud training and would require companies to provide anti-fraud statistics.

“Insurance fraud in Florida is evolving, and policyholders are forced to pay for it through higher premiums every year,” said Brandes. “This is a hidden tax on every Floridian who drives a car, owns a home, rents an apartment, or pays for health insurance.

“If left unchecked, the cost of fraud will grow and consumers will continue to pay the price,” Brandes explained.

Brandes teamed up with Chief Financial Officer Jeff Atwater on the legislation, which is likely to be one of his last collaborative efforts as Florida CFO.   “We’ve made significant strides in our fight against insurance fraud,” said Atwater. “With this bill we hope to further improve our processes and hone our techniques so that we can continue to stay a step ahead of the criminals who seek to defraud Floridians.”

Trump to Order Review of Dodd-Frank, Halt Obama Fiduciary Rule

(courtesy of Bloomberg)

President Donald Trump will order a sweeping review of the Dodd-Frank Act rules enacted in response to the 2008 financial crisis, a White House official said, signing an executive action Friday designed to significantly scale back the regulatory system put in place in 2010.

Trump also will halt another of former President Barack Obama’s regulations, hated by the financial industry, that requires advisers on retirement accounts to work in the best interests of their clients. Trump’s order will give the new administration time to review the change, known as the fiduciary rule.

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Taken together, the actions are designed to lay down the Trump administration’s approach to financial markets, with an emphasis on removing regulatory burdens and opening up investor options, said the White House official, who briefed reporters on condition of anonymity.

The orders are the most aggressive steps yet by Trump to loosen regulations in the financial services industry and come after he has sought to stock his administration with veterans of the industry in key positions. His plans are sure to face fierce criticism by Democrats who charge that Trump is intent on undoing changes designed to protect everything from average investors to the global banking system.

He also could face a backlash from some of his own supporters, whose distrust of big institutions and the financial industry helped fuel the populist anger that propelled Trump to the White House.

‘Big Number’

Trump is scheduled to issue the directives at a signing ceremony around noon following a meeting of more than a dozen top corporate executives led by Blackstone Group LP Chief Executive Officer Steve Schwarzman.

On Monday, Trump promised to do “a big number” on the Dodd-Frank Act during a meeting with small business owners. He said the law had damaged the country’s “entrepreneurial spirit” and limited access to needed credit.

“Regulation has actually been horrible for big business, but it’s been worse for small business,” the president said. “Dodd-Frank is a disaster.”

Trump’s Treasury secretary nominee Steven Mnuchin will meet with members of the Financial Stability Oversight Council and report back on what changes the administration should take to alter Dodd-Frank, the official said. Particular attention will be paid to the Volcker Rule limits on banks making speculative bets with their own funds, an restriction promoted by former Federal Reserve Chairman Paul Volcker.

Immediate Impact

The official wouldn’t say how long the Treasury Department would have to complete its review, but did say that the administration would be looking for ways to make an immediate impact, including through administrative changes and personnel decisions.

Trump’s directive also stalls the so-called fiduciary rule — set to take effect in April — that the Obama administration said would protect millions of retirees from being steered into inappropriate high-cost or high-risk investments that generate bigger profits for brokers.

The review will include examining making personnel changes at financial regulators as a way of accomplishing the administration’s objectives, the official said. They declined to answer a question on whether Trump would try to fire Richard Cordray, the director of the Consumer Financial Protection Bureau. The official did say the administration believed that some of the rules created under Dodd-Frank may have been unconstitutional, including the creation of new agencies, an apparent reference to the bureau.

Asked Monday about whether Trump would retain Cordray in his position, White House press secretary Sean Spicer declined to answer. Mnuchin said during his congressional testimony that he believed the CFPB as a whole should be preserved but that Congress should take more direct control of its budget.

The Trump administration doesn’t believe Dodd-Frank measures, including the Volcker Rule, addressed real issues in the financial system, the official said. The president’s team also believes the Labor Department fiduciary rule was unnecessarily restricting investor choice without providing necessary consumer protection, the official said.

Republican lawmakers and some financial firms say the fiduciary rule is deeply flawed, arguing that it will restrict options for consumers and result in some savers being denied advice on their retirements. Trump will call for the Labor Department to stop and review the regulation in its entirety.

While the review will be undertaken independently by the Labor Department, the White House aide signaled that the president was expecting significant change.

Broader Overhaul

Delaying implementation of the Labor Department rule is the first step Republicans and the finance industry are eyeing as part of a broader overhaul of the measure. GOP Lawmakers have argued that the Securities and Exchange Commission, not the Labor Department, should oversee and regulate any changes related to financial firms.

Banks, asset managers and insurers have been fighting the fiduciary rule ever since the Labor Department approved it last year, saying the regulation could raise the costs of providing advice and make it harder to serve lower-income clients. Business groups including the U.S. Chamber of Commerce and American Council of Life Insurers have sued to try to block it.

Still, representatives of some financial services companies said they planned to change practices to meet the regulation’s standard even if it is halted.

“We plan to go forward with the majority of the work we’ve done,” Bill Morrissey, managing director of business development at LPL Financial Holdings Inc., said in an interview before Trump’s order was disclosed. “What investors want is more transparency and lower fees.”

Morgan Stanley, one of the biggest U.S. brokerages, said on Jan. 26 it plans to move ahead with changes designed to comply with the rule, despite uncertainty over whether the regulation will be implemented. Insurers including American International Group Inc. and Principal Financial Group Inc. stressed after Trump’s victory that they would continue to forge ahead as though the rules would be carried out.

“My expectation is that a lot of firms are going to continue installing a best-interest standard, regardless,” said Brian Graff, chief executive officer of the American Retirement Association, a group that represents pension administrators and plan advisers.