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.

Macquarie expanding at Riverplace Tower

(Courtesy of Financial News and Daily Record)

Australia-based Macquarie Group is expanding onto another floor at Riverplace Tower on the Downtown Southbank.

The financial services company opened in Jacksonville in February 2016 on the fifth floor of the Southbank high-rise and had already leased the fourth story in anticipation of growth.

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When Macquarie Group opened in February 2016 in Riverplace Tower, it showed an open floor plan designed for flexibility.

Now it’s moving into about half of that floor.

Brasfield & Gorrie LLC is the contractor for the $850,000 project to demolish the interior of 8,500 square feet of space. The city is reviewing a permit application.

The project includes demolition of all interior components including partitions, finishes, ceilings and more.

Riverplace Tower is at 1301 Riverplace Blvd.

A company spokesman in New York declined comment about the expansion, the number of employees in Jacksonville or plans to hire more.

Jobs posted online recently for Macquarie in Jacksonville include positions in tax accounting, financial control, financial accounting, product control, regulatory reporting, compliance analyst and financial analyst.

The global financial-services company started with 60 employees on the fifth floor and anticipated reaching 135 employees this year.

However, the two floors can accommodate 250.

“We are anticipating success,” said Glen Skarott, deputy group financial controller, as the office opened.

Skarott, based at the company’s headquarters in Sydney, Australia, started the Jacksonville operation. He led the site search that ended in Jacksonville after the company considered 17 cities in five countries.

Skarott, Macquarie executives and city and business leaders announced in July 2015 the company had chosen Jacksonville as a global banking shared-services office.

The team provides finance, accounting, tax and regulatory support and other services to Macquarie functions in the U.S. and in some European markets.

Its U.S. headquarters is in New York and it has offices around the country. The United States is a large growth market.

In coming to Jacksonville, Macquarie agreed to create 123 jobs by the end of this year and pay an average wage of $64,356, in addition to benefits.

Skarott said 800 applications were made for the initial Jacksonville jobs.

The first 60 employees comprised 40 local hires and 20 transfers from Macquarie Group offices in London, Hong Kong, India, New York, Houston and Sydney.

Jacksonville’s office was designed to comprise five teams: product control; legal entity control; regulatory reporting; tax reporting and compliance; and financial control.

Macquarie initially leased about 17,500 square feet on the fifth floor at Riverplace Tower. That space is set up for 125 employees, but could fit in more, Skarott said previously.

He said then that if Macquarie doesn’t need all of the fourth-floor space, it could sublease it, although Skarott said the preference was to use it.

For those first 123 jobs, the City Council approved taxpayer incentives of $393,600, comprising a Qualified Target Industry grant of up to $147,600 and a training grant up to $246,000.

Macquarie also requested $1.37 million from the state, consisting of the QTI match of up to $590,400, a Quick Action Closing Fund up to $500,000 and a Quick Response Training Grant up to $282,900.

Macquarie said it expects to invest $2.2 million into improving its leased space. Adding in IT, equipment and furniture boosts that to at least $3.1 million.

Last June, the company appointed Anthony Glenn to lead the Jacksonville office starting July 5.

At the time, Macquarie employed about 70 people in Jacksonville and was recruiting about 30 more finance professionals.

It also had invested more than $3 million into the Riverplace Tower offices.

Wells Fargo to launch pilot with Facebook Messenger

(Courtesy of Jacksonville Business Journal)

Wells Fargo & Co. is launching a pilot to test an artificial intelligence-driven experience through Facebook Messenger.

The San Francisco-based bank — the third-largest bank in Central Florida — has hinted at incorporating financial services into third-party environments for a while now. Steve Ellis, head of Wells Fargo’s Innovation Group, talked about implementing banking tools in Facebook Messenger with sister paper Charlotte Business Journal earlier this year.

“It all comes back to making it easier for customers to do business with you,” Ellis said at the time.

“Our goal is to deliver information ‘in the moment’ to help customers make better informed financial decisions,” Ellis said in a statement Tuesday. “AI technology allows us to take an experience that would have required our customers to navigate through several pages on our website, and turn it into a simple conversation in a chat environment. That’s a huge time- saving convenience for busy customers who are already frequent users of Messenger.”

Wells Fargo (NYSE: WFC) says it has provided assistance to customers through Facebook since 2009. In May 2016, the bank adopted Messenger and its main channel for addressing customer questions and problems.

Facebook users have been able to send and receive money on Messenger since 2015. The social-media platform announced April 11 users can now send and receive money between groups of people on Messenger, using Android phones or desktop computers. Facebook (NASDAQ:FB) did not immediately respond to a request for comment on the Wells Fargo pilot.

Most of Wells Fargo’s customer engagements now happen over Messenger, rather than on its public news feed.

The bank announced in February Ellis would lead a new team called the artificial intelligence enterprise solutions team. Since its sales scandal emerged last September, Tim Sloan, Wells Fargo’s new CEO, has said the bank is relying on technology to rebuild trust.

Most of the large banks in the U.S. are experimenting with artificial intelligence. Charlotte, N.C.-based Bank of America’s virtual assistant, called Erica, is expected to launch this summer.

Vale megadeal puts Morgan Stanley, Bradesco at the top of Brazil M&A

(Courtesy of Reuters.com)

Morgan Stanley (MS.N) and Banco Bradesco BBI SA topped Brazil’s mergers and acquisitions rankings in the first quarter, buoyed by advisory roles in the $21 billion corporate reorganization of Vale SA (VALE5.SA), the world’s No.1 iron ore producer.

New York-based Morgan Stanley and Bradesco BBI, the investment-banking arm of Brazil’s No. 3 listed lender Banco Bradesco SA (BBDC4.SA), surpassed rivals in last quarter’s rankings by almost 10 times in terms of announced M&A volumes, Thomson Reuters deals intelligence data showed on Tuesday.

Both banks advised two of Vale’s main shareholders on the deal. Under the terms of the reorganization, Vale will become a company with no defined controlling shareholder within three years, a landmark step to help stifle state interference in the company.

The deal represents a milestone in a country long hobbled by corporate governance scandals and reorganizations that hurt minority investors. It comes as Brazil’s government is selling dozens of power and sanitation utilities, as well as assets of state-controlled oil company Petróleo Brasileiro SA (PETR4.SA).

Companies announced $27.121 billion worth of Brazil-related mergers from January to March, up six-fold from a year earlier, the data showed. Excluding Vale, the value of M&A deals reached $6.195 billion, less than half the amount seen in the same period four years ago, before the recession struck.

The number of deals in the first quarter fell 35 percent to 108 from a year earlier, the data showed.

Stricter legal and regulatory scrutiny has continued to put the brakes on M&A announcements this year, compounding the impact of the recession and political turmoil that has kept keeping buyers and sellers at odds over valuations.

According to Alessandro Zema and Eduardo Miras, co-heads of Brazil investment banking for Morgan Stanley, M&A deals should accelerate this year, even if increased debt and equity capital markets activity posed some competition for the segment.

Declining borrowing costs and a stable currency could spur Brazil’s recovery and the pace of takeovers through year-end, they said. More consolidation efforts could take place, as companies try to cut debt, improve their capital and tax structures, and become more efficient.

“It’s very hard for a strategic player or a financial sponsor to ignore Brazil because of the cycle,” Zema said. “The country’s economy offers relevant opportunities for global players in almost every segment of activity.”

According to Alessandro Farkuh, Bradesco BBI’s head of M&A, more strategic players will seek to enter Brazil as President Michel Temer’s administration passes pension, labor market and tax reforms aimed at restoring confidence in the economy.

“Activity will grow in a more robust manner once the macroeconomic uncertainties dissipate and players feel the outlook has turned much more predictable,” Farkuh said.

A challenge for buyers and sellers alike remains a lengthening M&A execution cycle. Still, growing interest from multinational companies and buyout firms in potential targets “is leading to a more adequate pricing of assets,” Bradesco BBI’s Farkuh said.

Even as the list of delayed deals kept growing last quarter, advisory work remains intense, forcing banks to shuffle staff from areas with lighter workloads to handle more M&A and debt restructuring transactions.

Morgan Stanley topped value rankings after working on four transactions worth $21.663 billion, followed by Bradesco BBI’s seven deals valued at $21.424 billion. Morgan Stanley last topped Brazil’s first-quarter M&A league tables in 2000.

Itaú Unibanco Holding SA’s (ITUB4.SA) investment bank led the number of deal rankings after working on 10 transactions.

RANKING FINANCIAL ADVISORY VALUE OF NUMBER RANKING

FIRST-Q FIRM DEALS (Jan. OF DEALS FIRST-Q

UARTER 1-March 31) (Jan. UARTER

2017 1-March 2016

31)

1 Morgan Stanley & $21.663 bln 4 14

Co

2 Banco Bradesco BBI $21.424 bln 7 6

SA

3 Banco BTG Pactual $1.875 bln 4 1

SA

4 Citigroup Inc $1.656 bln 1 n.a.

5 Goldman Sachs $1.656 bln 2 n.a.

Group Inc

6 Itaú BBA SA $919.4 mln 10 2

7 Credit Suisse $706.4 mln 1 14

Group AG

8 JPMorgan Chase & $608.4 mln 2 14

Co

9 Bank of America $517.9 mln 2 4

Merrill Lynch

10 PriceWaterhouseCoo $296.4 mln 2 14

pers

SUBTOTAL WITH $26.123 bln 39 –

FINANCIAL ADVISER

INDUSTRY TOTAL $27.121 bln 108 –

 

Here’s where Chase is opening new branches in Florida

(Courtesy of Jacksonsville Business Journal)

Chase will open 16 new branch offices in Florida this year, including in the Jacksonville area.

Chase, the U.S. consumer and commercial banking business of JPMorgan Chase & Co. (NYSE: JPM), also is entering the Gainesville and Ocala markets as part of its Florida expansion.

Other new branches are planned for Fort Myers, Tampa and Orlando.

While the number of branches industrywide, and at Chase, has been shrinking overall, a brick-and-mortar presence is critical to the bank’s growth, said Thasunda Duckett, CEO, consumer banking for JPMorgan Chase, during an investor day presentation on Feb. 28.

Chase had 5,258 branches overall at the end of 2016, down 3 percent from 5,413 branches in 2015, an investor presentation said (see below). But the average deposits per branch employee, a measure of efficiency, jumped 10 percent, from $11.4 million in 2015 to $12.5 million in 2016.

The company opens branches in higher growth areas and consolidates branches with lower servicing volume, Duckett said.

The bank will open four offices in Ocala and two in Gainesville by the end of year, the press release said. The new branches will offer a full range of services and the bank plans to hire local staff.

Jacksonville and Orlando each are in line for one new branch. Sarasota and Fort Myers will get two branches. One of the Fort Myers branches already has opened, a spokesman said.

Since the 2008 acquisition of Washington Mutual, Chase has added nearly 250 branches in Florida and now has 398 across the state. As of June 30, the most recent date for which information is available from the Federal Deposit Insurance Corp., Chase was the fourth largest retail bank in Florida with a 5.3 percent deposit market share.

In the seven-county Tampa Bay area, Chase had a 3.7 percent deposit market share as of June 30, and was the seventh-largest retail bank.

JPMorgan Chase employs nearly 14,000 people across Florida in all its lines of business and the firm contributed $10.7 million in nonprofits statewide in 2016.

Watch out Venmo: Bank of America launches peer-to-peer payments with Zelle

(Courtesy of Jacksonville Business Journal)

Bank of America Corp. (NYSE: BAC) is now offering peer-to-peer payments through Zelle, a payments network that is embedded in BofA’s mobile banking app.

The Charlotte, N.C.-based bank is one of many companies to join Early Warning’s Zelle Network. Early Warning is a financial-technology company that delivers innovative payment solutions to banks.

Zelle is an inclusive network open to banks and credit unions in the U.S. The idea behind the payments tool was to create a faster, safer and more convenient payment option. It will compete with the likes of Venmo, PayPal’s free mobile wallet that allows users to pay and request payments.

hero-zelle-app-lg_4.png

Bank of America, an early adopter of Zelle, incorporated the tool’s features in its own mobile-banking app. There is now an option to send, request and receive money under transfers in the mobile app.

“The bank’s clients will be first among Zelle users to be able to split expenses among multiple contacts or friends — such as a group dinner check — and they can even add a personal note along with the payment transfer or request,” BofA writes.

Other partner banks are expected to launch Zelle later this year. The network originally said it would launch in early 2017.

Bank of America also says it will continue to add mobile enhancements in 2017, including the ability to add cards to the digital wallet on customers’ devices directly from the mobile-banking app as well as the ability to add cards to services such as Visa Checkout and MasterPass.

Bank of America also says it will continue to add mobile enhancements in 2017, including the ability to add cards to the digital wallet on customers’ devices directly from the mobile-banking app as well as the ability to add cards to services such as Visa Checkout and MasterPass.

Bank of America launched its mobile app 10 years ago. Today, the app is the bank’s most-used channel, with about 22 million active users and more than 3.7 billion logins annually.

“As one of the first banks to offer mobile banking a decade ago, we’re excited to usher in a new era of high-tech, high-touch banking,” said Michelle Moore, head of digital banking. “In 2017, you’ll see a strong focus on payments and intelligent solutions that will deliver personalized experiences clients never imagined were possible.”

Bank of America is the second-largest bank in Central Florida, with $9.46 billion in local deposits.

BDO acquires LBA Wealth Management LLC, continues Jacksonville expansion

(Courtesy of Jacksonville Business Journal)

BDO USA LLP has acquired LBA Wealth Management LLC as it continues its expansion into Jacksonville.

The group had previously purchased the longtime Jacksonville accounting firm the LBA Group in November. This latest move is an attempt by the professional services firm continues a push into Florida.

LBA Wealth Management LLC is a fee-only investment advisory firm that operated with seven professionals managing $350 million in assets. The Florida market will be a “stronghold” for BDO’s continued expansion of its wealth advisory practice throughout the Southeast, according to a statement by BDO.

“LBA’s experience working with high-net worth clients in Jacksonville, Gainesville and throughout North Florida, combined with our previous expansion in South Florida last year, greatly increases our wealth management resources in the state of Florida,” said Steve Parish, National Leader of Wealth Advisory Services at BDO USA.

David Albaneze, who was the chief investment strategist at LBA Wealth Management, said when the LBA Group joined BDO, the company began working on joining BDO’s wealth advisory practice.

“As part of a national firm, our clients will have access to a wider range of services and our people will have access to many more opportunities to pursue career growth,” he said.

BDO USA has about 400 staff serving Florida businesses in offices in Coral Gables, Fort Lauderdale, Jacksonville, Lakeland, Miami, Orlando, Tampa, West Palm Beach and Winter Haven.

Wells Fargo quietly discloses that its annual meeting will be in Jacksonville

(Courtesy of Jacksonville Business Journal)

Wells Fargo has revealed the site of its annual shareholders meeting: It will be at the Sawgrass Marriott in Ponte Vedra Beach, Fla., near Jacksonville, at 10 a.m. on April 25.

This would not be breaking news for most major corporations, where the announcement of details for the annual meeting is routine. Wells, however, has often played cat-and-mouse on the location of the meeting since 2012, when loud and raucous demonstrations against the bank disrupted the gathering in San Francisco. The bank’s meeting hasn’t been in its hometown since, instead taking place in places like Salt Lake City and San Antonio, Tex. The location has been usually announced in its proxy statement roughly a month in advance.

This year the annual meeting details come a bit earlier, amid a 15-page report filed Wednesday detailing steps Wells Fargo (NYSE: WFC) has taken to restore trust and fix its reputation in the wake of a sales scandal. In September, it was publicly disclosed that bank employees had opened up to 2 million accounts over several years without customer permission in a bid to meet stringent sales targets. The bank was fined $185 million by regulators and its culture came under intense scrutiny that culminated in the resignation of CEO John Stumpf.

The bank included a timeline of major events in the past six months including Stumpf’s departure in October, a new compensation plan in January and eliminating bonuses for top executives earlier Wednesday. The bank also eliminated product sales goals for retail bankers and established additional monitoring and controls to provide oversight of sales processes.

All that makes the first annual meeting since the scandal broke a high-profile event for both shareholders and critics alike. At least they’ll have a few more weeks to make travel arrangements.

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.