Bank in Jacksonville makes most profitable list

(Courtesy of Jacksonville Business Journal)

BankUnited once again becomes the most profitable bank in the state of Florida, despite its profit declining from the previous quarter.

The Miami Lakes-based bank reported a profit in the first quarter in 2017 of $66.2 million, moving ahead of Raymond James Bank, which had been the most profitable bank in Florida for the previous two quarters, according to a report released this week by the Federal Deposit Insurance Corp.

Jacksonville-based EverBank came in third on the list.

BankUnited’s (NYSE: BKU) first quarter profit declined to $66.2 million from $67 million in the previous quarter, while Raymond James Bank declined to $59.3 million from $68.1 million during the same time period. Raymond James Bank is a subsidiary of Raymond James Financial Inc. (NYSE: RJF) in St. Petersburg.

The data released by the FDIC also showed that three of the five most profitable banks in Florida are based in South Florida.

Nationwide, commercial banks and savings institutions insured by the FDIC reported aggregate net income of $44 billion in the first quarter of 2017, up 12.7 percent or $5 billion from a year earlier. The nationwide increase in earnings was largely due to a 7.8 percent increase in net interest income and a 3.4 percent increase in noninterest income.

Of the 5,856 insured institutions reporting first quarter financial results, 57 percent reported year-over-year growth in quarterly earnings. The proportion of banks that were unprofitable in the first quarter fell to 4.1 percent from 5.1 percent a year earlier.

“Revenue and net income growth were strong, asset quality improved, and the number of unprofitable banks and ‘problem banks’ continued to fall,” said FDIC Chairman Martin J. Gruenberg in a statement. “Community banks reported another quarter of solid revenue and net income growth.”

Gruenberg added, “In the past two quarters, the industry has seen a slowdown in loan growth that is broad-based across major lending categories.”

The overall number of banks in the state of Florida decreased this quarter to 144 from 149 in the fourth quarter of 2016. Comparatively, back in September 2015, there were 168 banks in Florida, showing that banks in Florida are following a nationwide trend of consolidation.

Florida banks’ assets increased slightly from the previous quarter as total assets were up to $187.6 billion from $184.2 billion. Deposits also increased to $147.7 million from $143.6 million from the previous quarter.

The most profitable Florida-based banks in the first quarter were:

  • Miami Lakes-based BankUnited (NYSE: BKU), which reported a profit of $66.2 million.
  • St. Petersburg-based Raymond James Bank (NYSE: RJF), which reported a profit of $59.3 million.
  • Jacksonville-based EverBank (NYSE: EVER), which posted a profit of $42.4 million.
  • Weston-based Florida Community Bank (NYSE: FCB), which reported a profit of $39.7 million.
  • Miami-based City National Bank of Florida, which reported a profit of $24.3 million.

The least profitable Florida-based banks in the first quarter were:

  • Brandon-based Platinum bank, which reported a loss of $3.09 million. Platinum was acquired by CenterState Banks (NASDAQ: CSFL) on April 1, and the loss likely was related to closing costs for the deal.
  • Fort Walton Beach-based Beach Community Bank, which reported a loss of $1.04 million.
  • Mayo-based Lafayette State Bank, which reported a loss of $324,000.
  • Miami-based Brickell Bank, which reported a loss of $155,000.
  • Fort Walton Beach-based First City Bank of Florida, which reported a loss of $155,000.

Morgan Stanley to curb veteran adviser recruiting

(Courtesy of Reuters.com)

The corporate logo of financial firm Morgan Stanley is pictured on the company's world headquarters in New York, U.S. April 17, 2017. REUTERS/Shannon Stapleton

The corporate logo of financial firm Morgan Stanley is pictured on the company’s world headquarters in New York, U.S. April 17, 2017.

 

Morgan Stanley, the biggest U.S. brokerage by head count, told brokers Tuesday that it is standing down from the expensive recruitment wars, following similar steps taken earlier this month by competitor Bank of America (BAC.N) Merrill Lynch.

Morgan Stanley, which has more than 15,000 brokers, will “significantly reduce experienced adviser recruiting,” according to a staff memo from Morgan Stanley co-heads Shelley O’Connor and Andy Saperstein that was viewed by Reuters. The news was reported earlier on Tuesday by the Wall Street Journal.

Merrill Lynch announced that, starting in June, it will no longer offer new prospects or recruits big upfront bonus checks to join its firm, a common and costly industry practice.

For years, brokerage executives have complained about the ceaseless competition among Wall Street firms to offer ever more lucrative recruitment packages to gain top advisers and their clients and assets.

The offers included a substantial sign-on check, plus a l bonus paid out over seven to 10 years based on sales and growth targets. They were used as the primary way to expand wealth management businesses, but critics said recruitment costs often outweighed returns.

Morgan Stanley will honor any approved recruitment offers made and in the “pipeline” by June 16 for brokers who are set to join the firm on or before Sept. 1, according to the memo.

UBS AG’s (UBSG.S) Wealth Management Americas last year announced plans to curb recruiting.

Jacksonville-based OnPay Solutions recognized with Fintech award

(Compliments of Jacksonville Business Journal)

 

 

OnPay Solutions, a nationally accredited AICPA service organization headquartered in Jacksonville, has been named by CIOReview as one of the “20 Most Promising Corporate Finance Tech Solution Providers” by an industry publication.

OnPay Solutions offers turn-key accounts payable payment automation solutions that integrates with any ERP and accounting or accounts payable workflow system. OnPay’s technology also greatly reduces accounts payable costs and fraud risk and can turn a company’s payables into rebates revenue.

 “OnPay Solutions is shortlisted as one of the 20 Most Promising Corporate Finance Tech Solution Providers 2017 by CIOReview magazine based on its expertise in providing innovative software solutions and the ability to delight customers and facilitating return on investments through strategic relationships, services and programs,” said Jeevan George, managing editor of CIOReview.

“By moving from costly paper check to automated electronic payment methods such as ACH, or single-issue virtual credit card for vendor payments, costs are reduced, time is saved, risk is minimized and efficiencies are maximized,” said president and CEO of OnPay Solutions Neal Anderson.

ePayments issued via OnPay Solutions’ systems provide greater security by directly linking a company’s accounting system to their bank for payments. OnPay is grateful for the honor, but they know there is work to be done.

“To us this award means we are being recognized for creating positive and streamlined change for organizations that can really make an impact,” COO of OnPay Solutions, Juliet Negrete-Anderson said. “Moving forward we must continue to talk to businesses about how they can better there business processes, reduce their costs, and reduce their fraud risks.”

Fidelity National Financial sells a subsidiary for $560M cash

(Courtesy of Jacksonville Business Journal)

Jacksonville-headquartered Fidelity National Financial announced Monday it had signed an agreement to sell one of its subsidiaries for $560 million in cash to a New York-based private equity firm.

Fidelity purchased One Digital Health and Benefits about four years ago. The Atlanta-based company then purchased two Jacksonville-headquartered companies: Compass Consulting Group and Prospective Risk Management in June 2015. The company maintains an office in Jacksonville at 4348 Southpoint Blvd.

The company that has agreed t purchase One Digital is New Mountain Capital LLC.

Fidelity said it would use the proceeds from the sale to pay off debt. After all option payments to shareholders and minority equity investors are paid, the company expects the sale to result in $330 million in cash.

“We are excited to monetize One Digital at an attractive price for our shareholders and recognize a cash monetization of approximately $330 million,” said Fidelity’s Chairman William P. Foley II. “We have seen tremendous growth in One Digital in our roughly 4 year ownership and are proud of the success One Digital and FNFV have enjoyed together. We believe that One Digital will continue to flourish under its new ownership.”

How on-demand insurance will shake up the industry

(Courtesy of Jacksonville Business Journal)

On April 6th, The Wall Street Journal reported that a fintech startup called Trov (“fintech” refers to any technology innovation in the financial services industry) had raised $45 million to bring on-demand services to the property and casualty insurance market.

Trov is an interesting case of how digital technology is disrupting traditional insurance markets. Unlike traditional homeowners’ or renters’ insurance, which provides blanket coverage, Trov enables customers to insure individual items “with the swipe of a credit card” and without talking to anyone.

At this time, Trov insures only consumer electronics and photography equipment, but they intend “to cover jewelry, sporting goods and other property that can be priced reliably.”

What are the implications to the insurance industry?

The CEO, Scott Walchek, sees his company unbundling coverage for single items the way Apple unbundled music albums with iTunes. If that is indeed the case, it would precipitate a disastrous decline in the insurance industry’s total revenue.

For comparison, total revenue of the U.S. music industry was $11.8 billion in 2003 when iTunes was introduced. Ten years later in 2012, total revenue had declined to $7.1 billion, down 39 percent. Trov may thrive, but traditional insurers will not.

While acquiring disruptive startups is an essential part of an overall innovation strategy for any established firm that can afford it, it’s not enough. It’s impossible to acquire all the latest greatest technologies. Companies must drive organic innovation and growth as well. Even Google with tens of billions of dollars of cash on hand for acquisitions is driving innovation internally, too.

What can insurers (and all of us) learn from this?

There are a number of significant hurdles that traditional insurers must clear to succeed at innovation, such as:

  • Acquiring new skills and capabilities in such things as digital technology and dynamic pricing
  • Regulatory hurdles
  • Understanding customer needs

One hurdle that is unnecessarily hindering innovation, however, is the misbelief that customers cannot tell us what they want. This misbelief keeps innovation a mysterious hit or miss event when, in fact, it can be executed as a predictable business process.

Customers can tell us what they want as long as we ask them what they want to accomplish rather than asking them for solution specifications. A skilled interviewer asking the right questions can easily identify that there is a segment of insurance customers who want to insure only a few items rather than pay more for blanket coverage.

The essential questions that every business leader must ask customers to determine are:

  • Why are you buying our product/service? What does it do for you?
  • What objectives does it enable you to accomplish?
  • What problems does it help you to prevent or resolve?
  • What metrics do you use to measure success?

Because customers can provide the answers to these questions, companies can uncover important unsatisfied needs, unmet needs that are opportunities for innovation. This is how leading companies are driving innovation and growth.

Despite claims to the contrary, consumers’ needs for insurance have not changed much over the decades. People still want to protect themselves from financial loss that could occur from the theft or damage of personal property.

What has and will continue to change, however, are the solutions that insurance companies develop to help customers accomplish their objectives. Solutions continually get better and better at satisfying consumers’ needs.

The only way for traditional insurers (and all of us) to thrive in this environment of tumultuous change is to relentlessly focus on helping target customers get their tasks done better than the competition.

Customers don’t care if the solution is a product, service, or technology; they just want to get their tasks done. As Theodore Levitt pointed out many years ago, every business must define its purpose according to the customer needs it satisfies, not the solutions it sells.